Loyalty experts challenge satisfaction myth

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By: Wise Marketer Staff |

Posted on April 7, 2014

Customer satisfaction is often touted as the most important issue among business leaders. It's said that if you want to win your customers' repeat business, they have to be highly satisfied but, in an article recently published in MIT Sloan Management Review, thought leaders Timothy Keiningham and Alexander Buoye from Ipsos Loyalty have argued that the reality is far more complex.

In the article entitled 'The High Price of Customer Satisfaction', Keiningham and Buoye worked with Sunil Gupta from Harvard Business School and Lerzan Aksoy from Fordham University to present an in-depth analysis of the relationship between customer satisfaction and profitability, aiming to to answer the age-old question: is customer satisfaction worth the cost?

"The promise has traditionally been that satisfaction improves market performance. But we are starting to see that this isn't necessarily the case," said Keiningham. "While increasing satisfaction levels can be a useful component of a firm's strategy, it often isn't compatible with market share growth, or even good business. In fact, there are a myriad of other factors to consider for creating a profitable loyalty strategy."

The authors honed in on three issues that have a negative impact on translating customer satisfaction into positive business outcomes, while offering strategies that managers can easily implement to ensure that these two goals remain in alignment.

The insights presented in their MIT Sloan Management Review article are the cornerstones of Keiningham's and Buoye's next book (with Lerzan Aksoy and Luke Williams), entitled The Wallet Allocation Rule: Winning the Battle for Share, which is scheduled for release in Q4 2014.

The full article can be purchased in the spring issue of MIT SMR, here.

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