#106: Dr Wally's 'Parting Shot' #5

Here is Dr Wally’s Parting Shot #5: Loyal customers are far more important than satisfied customers.

Did you know that customer satisfaction can kill your organization? This happens when you spend more on keeping your customers satisfied than they spend with you. And when you go out of business, you have actually provided the worst possible service to those customers who have been loyal to you all along.

The problem is that there is no simple way to measure customer satisfaction. People have different needs which translate into different levels of satisfaction. This means that some of your customers will never be satisfied. On the other hand, it is easy to measure loyalty – how often does this customer spend money with us?

Loyal customers tend to cost less than satisfied customers. An obvious reason is that it is cheaper to keep an existing customer than to compete for new customers. Less obvious is that loyal customers are more forgiving when you make mistakes.


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Copyright: 2007 James Henry McIntosh

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