Customer Satisfaction: Importance & Current Trends

“The more relationships the customer has with the firm, the higher the real and
psychological switching costs and the greater the profits. The more relationship
the firm has with the customer,the more the firm has an opportunity to learn about
the customer’s behavior. Good predict areeven better with behavioral data.”

Richard Staelin (Presentation, MSI conference:Taking stock of customer

Relationship, March 3, 2006)There is a strong relationship between Satisfaction
and Loyalty. The relationship betweensatisfaction & loyalty is not a simple linear
relationship. V Kumar & W. J. Reinartz claimed thatthe link between satisfaction
& retention is asymmetric (dissatisfaction has greater impact onretention than
satisfaction) and nonlinear (the impact of satisfaction on retention is greater at
theextremes, with the flat part of the curve in the middle called the zone of
indifference). (SeeFigure 1)Even Reichheld, Markey, and Hopton provided
findings that show that customers buy a lot morefrom companies with which they
are completely satisfied, Reichheld et al. To them a customer issatisfied only if
they are a “5” on a 5-point scale. (Figure 2)It is proved in a several study that
customer loyalty is directly associated with the customer satisfaction. Satisfaction
not only creates loyalty but also helps to build goodwill & word-of-

Gourab Majumder
Customer SatisfactionCustomer retentionZone of indifference