1. WHY SATISFIED CUSTOMERS DEFECT by Thomas O. Jones, W. Earl Sasser, Jr

2. Customer Satisfaction Example
Survey by a light manufacturing, wholesale, distribution and consumer service company ( 8 divisions).
82% of customers scored as “Satisfied” or “Completely Satisfied”
48% - Completely Satisfied (5)
34% - Satisfied (4)
“The battle plan is to find out what is making our least satisfied customers mad and fix it!”

3. Customer Satisfaction Example
False Managerial Assumptions
If a customer responds with “satisfied” or above, the company-customer relationship is strong
The investment required to change customers from satisfied to completely satisfied will not result in enough financial return
Addressing those who are least satisfied is the best use of resources

4. Customers
Complete customer satisfaction is key to securing customer loyalty generating superior long-term financial performance.
Completely satisfied customers are much more loyal than satisfied customers.
Any drop in total satisfaction results in a major drop in loyalty, especially in highly competitive industries.
In less competitive markets, providing outstanding value is the only reliable way to achieve outstanding customer satisfaction and loyalty.

5. Measures of Loyalty Intent to repurchase
Primary behavior( recency, frequency, amount, retention, & longevity)
Secondary behavior( customers referring other customers)

6. Loyalty True long-term loyalty vs. false loyalty
False loyalty can be generated by government regulations, high switching cost, proprietary technology, and strong loyalty promotion programs (e.g., frequent flyer).
Define a target customer, and deliver a product or service which completely meets their needs, in order to secure long term loyalty
Often company attract wrong customers and lack adequate process for turning around the customers. Different satisfaction levels require different actions

7. Satisfaction-Loyalty Link
Xerox finding: Totally satisfied customers were six times more likely to repurchase Xerox products than its satisfied customers.
Findings of 5 markets: automobiles, personal business computers, hospitals, airlines, and local telephone services. (most competitive to least competitive).
In most competitive industries, only highly satisfied customers are loyal.
In least competitive industry, most customers are loyal regardless of satisfaction level; however, once barrier is eliminated, the loyalty shifts in remarkable speed.

8. Customer Types Loyalist/Apostle
Completely satisfied customer who keeps coming back (company’s bedrock)
Defector/Terrorist
Defector- merely/dissatisfied, neutral (can be turned into loyalist)
Terrorsist- very dissatisfied customers who tell others of their bad experience
Mercenary
Those who may be completely satisfied but not loyal (chase low price, buy on impulse, pursue new trends, seek change for change sake, etc.
Hostage (monopolistic environment)

9. Customer Satisfaction, Loyalty, and Behavior
Loyalist-
Apostle
HIGH
Stay and Support
Defector-
Terrorist
LOW-MEDIUM
Leave and Unhappy
Mercenary
Coming and going
Hostage
Trapped

10. Elements of Customer Satisfaction
Basic elements of the product or service (all competitors expected to provide these)
Basic support services (make the product or service effective, and easy to use)
Recovery process (for countering bad experiences)
Extraordinary services (make the product or service seem customized )

11. How to Listen to Customers
Customer satisfaction indices
Feedback (comments and complaints)
Market research
Frontline personnel
Strategic activities (e.g., Intuit bring in customers to participate in product development, MTV have employees with similar demographics of its viewers – 18 to 24 year olds)

12. Lessons Learned
Complete customer satisfaction is key to securing customer loyalty generating superior long-term financial performance.
Completely satisfied customers are much more loyal than satisfied customers. In most competitive industries, only highly satisfied customers are loyal. In least competitive industry, most customers are loyal regardless of satisfaction level; however, once barrier is eliminated, the loyalty shifts in remarkable speed.
Define a target customer, and deliver a product or service which completely meets their needs, in order to secure long term loyalty
Using a variety of measurement methods including surveys, unsolicited or casual customer feedback, and market research, frontline personnel, and strategic activities.