According to a recent study, companies that strive to satisfy customers may not necessarily retain them.
Posted Nov 15, 2002
A study recently conducted by research firm Miller-Williams Inc. across six industries and 33 companies found that companies that strive to satisfy customers may not necessarily retain them.
The study found that the industries with the highest correlation between satisfaction and loyalty were media and telecommunications. E-commerce and software, however, has the lowest correlation.
According to the study, the more dissatisfied with software a customer becomes, the more theoretically loyal they become. This odd relationship is explained by the fact that since companies invest large sums on enterprise systems, they are forced to be loyal regardless of satisfaction.
The study says that value drivers must be identified in every industry; these value drivers are factors that determine what keeps customers loyal. In the case of computer software, a company must possess a corporate culture that appears consumer focused, yet cutting edge.
Using Siebel Systems Inc. and Microsoft as examples of satisfaction and loyalty respectively, the study says that though Siebel has high customer satisfaction ratings due to its customer focused approach, its customers are not generally loyal. "It seems Siebel's focus is more on ensuring that customers are satisfied with past investments rather than on what their continued and future needs are that will keep them loyal," says Amy Ferraro, director of research for Miller-Williams.
Conversely, Microsoft's constant product releases make for a loyal customer base, but one that is not necessarily satisfied with the product. Rather, most users are forced into loyalty due to Microsoft's "enviable position of having such high market saturation," Ferraro says.
The study suggests that each company seeking to increase satisfaction and loyalty must view these as separate tasks. By focusing on what both satisfaction and loyalty stand for in a respective industry, companies can then alter strategy to increase the perceived value of its offerings, the study says.
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