by Thomas O. Jones and W. Earl Sasser, Jr. Harvard Business Review (November-December 1995) Marko Seikola S Acceptability and Quality of Service

Agenda The Article Levels of Satisfaction How to Listen to Customers? The Research Conclusion of the Research Thoughts About the Article Marko Seikola - Why Satisfied Customers Defect

The Article Harvard Business Preview November-December 1995 Still relevant after 13 years Relationship between customer satisfaction and loyalty Presents a research of five different business areas Not fully applicable in Finland Marko Seikola - Why Satisfied Customers Defect

Levels of Satisfaction True long-term loyalty vs. false loyalty Scale 1 – 5 Different satisfaction levels reflect different issues Dissatisfied: problem with core product Neutral: probably happy with core product but would like to get set of support services Marko Seikola - Why Satisfied Customers Defect ResponseDescriptionLoyalty 5Completely satisfiedVery loyal 3 – 4SatisfiedEasily switched to a competitor 1 – 2DissatisfiedVery disloyal

Listen to Customers Feedback, inquiry Market research Frontline personnel Strategic activities Customers with reasonably good product or service quality doesn’t give negative feedback easily The reliability of customer research falls Marko Seikola - Why Satisfied Customers Defect

Listen to Customers Consistent Period-to-period changes has to be evaluated Broadly applied Capture information also on individual level in order to tailor individual experiences Marko Seikola - Why Satisfied Customers Defect6

Marketer’s Point of View Marko Seikola - Why Satisfied Customers Defect7 High MarginMedium MarginLow Margin Many customersAccountableReactive Basic or reactive Medium number of customers ProactiveAccountableReactive Few customers PartnershipProactiveAccountable Source: P. Kotler & K. Keller – Marketing Management 12e, page 157

The Research 30 Different companies 5 Different markets Marko Seikola - Why Satisfied Customers Defect

The Research – Local Telephone Monopolies Not applicable in Finland Regulations Mobility The article was issued 1995  No fixed phones  No locality Marko Seikola - Why Satisfied Customers Defect

The Research – Airlines Virtual monopolies with routes Service on these routes affect on loyalty on other routes Frequent-flier programs Price Time of departure Reliability & security Marko Seikola - Why Satisfied Customers Defect

The Research – Hospitals Very different type of healthcare in Finland and in US Finland: public healthcare Insurer often determines the hospital (US) Location Marko Seikola - Why Satisfied Customers Defect

The Research – Personal Computers Computers in business use Integration Huge effort needed in order to change system How about home users? Any difference? Marko Seikola - Why Satisfied Customers Defect

The Research – Automobiles High comptetition Huge difference between merely and completely satisfied Expensive product Bought very rarely The research included cars with wide price range Marko Seikola - Why Satisfied Customers Defect

Conclusion of the Research People are hard to please Clearly: loyalty ~ satisfaction Differs between markets Different levels different problems Complete satisfaction Difference between merely and completely satisfied customers is huge  Loyalty  Long-term financial performance Satisfaction affects more than managers assume Focus on how to correct the biggest factors of dissatisfaction Marko Seikola - Why Satisfied Customers Defect

Thoughts about the article Is the question relevant to monopolies? End-to-end quality The research is not 100% applicable to Finnish society Fixed phones losing the game to mobile phones No monopolies in local phones Public healthcare Marko Seikola - Why Satisfied Customers Defect