Importance of Customer Satisfaction
Customer satisfaction research is one of the ten ways to understand customer. On the contrary of backward looking metric market share, it is forward looking metric.
"Most companies pay more attention to their market share than to their customers' satisfaction. This is a mistake. Market share is a backward-looking metric; customer satisfaction is forward-looking metric. If customer satisfaction starts slipping, then market share erosion will sooon follow.
Companies need to monitor and improve the level of customer satisfaction. The higher the customer satisfaction the higher the retention. Here are four facts:
"Acquiring new customers can cost 5 to 10 times more than the costs involved in satisfying and retaining current customers.
"The average company loses between 10 and 30 percent of its customers each year
"A 5 percent reduction in the customer defection rate can increase profits by 25 to 85 percent, depending on the industry.
"The customer profit rate tends to increase over the life of the retained customer.*"
Methodology and Sampling
Satisfaction importance matrix
Radar graphical analysis
Customer satisfaction index
Observation or mystery shopper
Competition and tracking analysis
*: Philip Kotler, Marketing Insights From A to Z: 80 Consepts Every Manager Needs to Know, Hoboken , NJ: John Wiley & Sons, USA 2003, s.41
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