An article in this month’s Professional Marketing magazine called From Satisfaction to Loyalty: Services Marketing Musts reminds us that ’satisfying’ customers is not enough to keep them. The article cites the famous research by Jones and Sasser on Why Satisfied Customers Defect and illustrates the point with three examples

Within the retail banking industry, completely satisfied customers were 42% more likely to be loyal (i.e., continue accounts, purchase new services) than merely satisfied customers.At Xerox Corporation, completely satisfied clients were six times more likely to repurchase products and services than merely satisfied clients.

Across the auto industry, greater than 90% of customers state that they are satisfied with their purchase of a new car; however, less than 50% will return to the same dealership to purchase another vehicle.

To illustrate his point further, the author cites Frederick Reichheld’s financial research that a 5% decrease in the customer defection rate can boost profits by 25-90%. Loyalty is important because (as you’ve probably heard many times) the costs of serving a current client are far lower than acquiring a new client. In addition, return clients buy more and are more likely to refer others to your company.

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