Customer value is a very important factor for a customer contact operation. Companies have to constantly attract and retain loyal customers thus increasing the lifetime value of their customers. In their 1995 article, Why Satisfied Customers Defect, Jones and Sasser describe how companies can increase customer loyalty by focusing on “completely satisfied customers” and targeting “right” versus “wrong” customers (Jones & Sasser, 1995). In the following quote, Jones and Sasser discuss how the “top box” satisfaction score (on a customer satisfaction survey) drives exponential loyalty. Their discussion of the “commodity” products and services is a critical one. For example, think of the consumer products in groceries. Can these customers be loyal to a higher priced brand and lured away from buying discounted “off” brands based on period coupon campaigns? According to Jones and Sasser, under certain circumstances instances, yes.
Completely loyal customers are – to a surprising degree much more loyal than satisfied customers. To put it another way, any drop from total satisfaction results in a major drop in loyalty. The same applies to commodity businesses with thin profit margins; the potential returns on initiatives to increase satisfaction in such businesses can be as high as the return on initiatives in more profitable businesses. In fact, attempts to create complete customer satisfaction in commodity industries will often raise the product or service out of the commodity category. In most instances, totally satisfying the members of the targeted customer group should be a top priority (Jones & Sasser, 1995).
The next quote challenges us to understand that it is not only satisfying a customer that is important in driving customer value. It is a matter of satisfying the right customer. Are we targeting the right customer to satisfy? Are we marketing to the customer that will bring us higher lifetime value? Jones and Sasser speak of the “expensive mistake” of retaining the wrong customer. This financial mistake is the fact that the value of the wrong customer is much lower than the value of the right customer.
Very poor service or products are not the only cause – and may not even be the main cause – of high dissatisfaction. Often the company has attracted the wrong customers or has an inadequate process for turning around the right customers when they have a bad experience. Customers typically fall into one of two categories: the right customers, or target group, whom the company should be able to serve well and profitably, and the wrong customers, whose needs it cannot profitably serve. Having the wrong customers is the result of a flawed process for attracting or obtaining customer. The company that retains difficult-to-serve, chronically unhappy customers is making an expensive long-term mistake” (Jones & Sasser, 1995).
Each of us must consider how to completely satisfy the right customer in order to drive loyalty and increase customer lifetime value.
Jones, T. O. & Sasser, W. E Jr. (2005). Why Satisfied Customers Defect, Harvard Business Review. November – December, 88-99.
