1. by Thomas O. Jones and W. Earl Sasser, Jr. Harvard Business Review (November-December 1995) Marko Seikola marko.seikola@tkk.fi S-72.2530 Acceptability and Quality of Service 4.12.2008

2. Agenda The Article Levels of Satisfaction How to Listen to Customers? The Research Conclusion of the Research Thoughts About the Article 4.12.20082Marko Seikola - Why Satisfied Customers Defect

3. The Article Harvard Business Preview November-December 1995 Still relevant after 13 years Relationship between customer satisfaction and loyalty Presents a research of five different business areas Not fully applicable in Finland 4.12.20083Marko Seikola - Why Satisfied Customers Defect

4. Levels of Satisfaction True long-term loyalty vs. false loyalty Scale 1 – 5 Different satisfaction levels reflect different issues Dissatisfied: problem with core product Neutral: probably happy with core product but would like to get set of support services 4.12.20084Marko Seikola - Why Satisfied Customers Defect ResponseDescriptionLoyalty 5Completely satisfiedVery loyal 3 – 4SatisfiedEasily switched to a competitor 1 – 2DissatisfiedVery disloyal

5. Listen to Customers Feedback, inquiry Market research Frontline personnel Strategic activities Customers with reasonably good product or service quality doesn’t give negative feedback easily The reliability of customer research falls 4.12.20085Marko Seikola - Why Satisfied Customers Defect

6. Listen to Customers Consistent Period-to-period changes has to be evaluated Broadly applied Capture information also on individual level in order to tailor individual experiences 4.12.2008Marko Seikola - Why Satisfied Customers Defect6

7. Marketer’s Point of View 4.12.2008Marko Seikola - Why Satisfied Customers Defect7 High MarginMedium MarginLow Margin Many customersAccountableReactive Basic or reactive Medium number of customers ProactiveAccountableReactive Few customers PartnershipProactiveAccountable Source: P. Kotler & K. Keller – Marketing Management 12e, page 157

8. The Research 30 Different companies 5 Different markets 4.12.20088Marko Seikola - Why Satisfied Customers Defect

9. The Research – Local Telephone Monopolies Not applicable in Finland Regulations Mobility The article was issued 1995  No fixed phones  No locality 4.12.20089Marko Seikola - Why Satisfied Customers Defect

10. The Research – Airlines Virtual monopolies with routes Service on these routes affect on loyalty on other routes Frequent-flier programs Price Time of departure Reliability & security 4.12.200810Marko Seikola - Why Satisfied Customers Defect

11. The Research – Hospitals Very different type of healthcare in Finland and in US Finland: public healthcare Insurer often determines the hospital (US) Location 4.12.200811Marko Seikola - Why Satisfied Customers Defect

12. The Research – Personal Computers Computers in business use Integration Huge effort needed in order to change system How about home users? Any difference? 4.12.200812Marko Seikola - Why Satisfied Customers Defect

13. The Research – Automobiles High comptetition Huge difference between merely and completely satisfied Expensive product Bought very rarely The research included cars with wide price range 4.12.200813Marko Seikola - Why Satisfied Customers Defect

14. Conclusion of the Research People are hard to please Clearly: loyalty ~ satisfaction Differs between markets Different levels different problems Complete satisfaction Difference between merely and completely satisfied customers is huge  Loyalty  Long-term financial performance Satisfaction affects more than managers assume Focus on how to correct the biggest factors of dissatisfaction 4.12.200814Marko Seikola - Why Satisfied Customers Defect

15. Thoughts about the article Is the question relevant to monopolies? End-to-end quality The research is not 100% applicable to Finnish society Fixed phones losing the game to mobile phones No monopolies in local phones Public healthcare 4.12.200815Marko Seikola - Why Satisfied Customers Defect