Our Thoughts

The exponential benefits of extreme satisfaction

11th January 2019

In a classic Harvard Business Review article, "Why Satisfied Customers Defect", Thomas Jones and Earl Sasser made a compelling case that only very high levels of satisfaction are enough to guarantee loyalty. All these years later, that basic premise remains poorly understood by most organisations. As Ray Kurzweil observed, "our intuition is linear", and this can hamstring our understanding of the world.

It's a great article, and still well worth reading (partly for the nostalgia of phrases like "...a transparency is placed on the overhead projector"!). Some people have taken entirely the wrong message from it - that customer satisfaction isn't important because satisfied customers still defect. That's sometimes true, but it's really not the point.

The point is that there is a non-linear relationship between satisfaction and retention. That means customers who are "satisfied" (let's say they give a score of 8 out of 10) are perfectly happy with the experience you create for them, but they're not necessarily going to be loyal because it's likely that other suppliers can make them just as satisfied. Depending on the market they may keep a portfolio of suppliers, or they may switch frequently based on price, convenience, or simply to try something new. To lock customers in, or to become their sole supplier, you need to make customers extremely satisfied (let's say 10 out of 10), which no one else is likely to be able to do.

If you think of your own behaviour as a consumer, most of the previous paragraph is pretty obvious, but that simple insight has important conclusions which organisations rarely address:

  • Increasing top box satisfaction is probably more important than moving your average score
  • Improving satisfaction may have little impact on sales...unless you focus on very satisfied customers
  • Analysis based on your whole customer base probably underestimates the value of creating good experiences
  • The drivers of satisfaction are often different from the drivers of dissatisfaction

If you want to understand the true value of customer experience, look at your most satisfied customers...and then figure out how to make more of them.

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