Why Satisfied Customer Defect

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ARTICLE
www.hbr.org

Why Satisfied
Customers Defect
by Thomas O. Jones and W. Earl Sasser, Jr.

Included with this full-text Harvard Business Review article: 1 Article Summary
The Idea in Brief— the core idea
The Idea in Practice— putting the idea to work
2 Why Satisfied Customers Defect
14 Further Reading
A list of related materials, with annotations to guide further exploration of the article’s ideas and applications

Product 6838

Why Satisfied Customers Defect

The Idea in Brief

The Idea in Practice

Satisfied customers—a sure sign of your
company’s success? Actually not, as Xerox
Corporation discovered. Its merely s atisfied customers were six times less likely to buy again from Xerox than its totally satisfied customers.

To secure your best customers’ loyalty, take
these steps:

companies with proprietary technologies) can
create “false loyalty.”

1. Clearly define your target customers, i.e.,
those you can serve best and most profitably.
Be willing to let chronically unhappy customers
go—they’re an expensive drain on corporate
resources and aren’t likely to feel satisfied, no
matter what you do.

5. Completely satisfy customers by providing top-notch support services (making your basic product or service easier to use) and a
highly responsive recovery process when
something goes wrong.

What explains this? And how can companies ensure true customer loyalty—that single most important driver of long-term
financial performance?

COPYRIGHT © 2001 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.

There’s a tremendous difference in loyalty
between merely and totally satisfied customers. Whether in highly competitive markets (e.g., cars), virtual monopolies (e.g., local phone service), or industries with
strong loyalty-promotion programs (e.g.,
airlines), customers will stray the instant
they’re no longer completely satisfied—and
have a choice.
Yes, totally satisfying customers requires
some investment and ingenuity—but it
pays for itself many times over. Here’s how
to keep your best—i.e., most profitable—
customers delighted and devoted.

2. Measure customer satisfaction systematically by ensuring that the process: • is unbiased, i.e., not distorted by interest
groups within your company,
• lets you compare products, locations, and
business units,
• lets you capture and store information on
individual customers, so you can tailor improvements to their needs. 3. Use a variety of measurement methods,
including:
• customer surveys,
• customer complaints and questions,

You also have to listen carefully to find out
how target customers perceive the service experience and what they want most—and then give it to them.
Example:
Lexus dealers provide the basics—and
much more. They reexamined the carservicing experience from the customer’s perspective, finding that customers most
want car repairs done with minimum inconvenience. Dealers completely satisfy customers by picking up their cars at their
homes or offices; leaving loaners; repairing, cleaning, and returning cars later that day; retrieving loaners; and, of course,
checking later to make sure the repairs
were done properly.

• market research, and
• feedback from frontline personnel.
Also, include customers in strategic activities,
such as product-development sessions.
4. Translate customer-satisfaction information into loyalty measurements: Completely satisfied
Satisfied
Dissatisfied

very loyal

easily lost
very disloyal

Also, compare your industry to others to determine how much of your customers’ loyalty is true (based on your delivery of superior
value) and how much is false.
Factors such as loyalty-promotion programs
(e.g., airline frequent-flier plans) or high costs
of switching to a rival (e.g., hospitals when a
patient is in the midst of treatment; computer
page 1

The gulf between satisfied customers and completely satisfied customers can...
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