The Ca$e for Customer Satisfaction

A Simple Concept: The People – Service – Profit Chain

• Treat your people well, value them, empower and enable them
• They will treat the customers well
• High Customer Satisfaction/Loyalty leads to above-average profitability and more…
  • Customers want: “Hear Me” – “Grow Me”
  • Their loyalty is based on delivering what is expected and more - ‘wrapped up’ in trust
  • Enduring relationships are more profitable than new relationships because:
    • Lower sales cost (Acquiring a new customer costs five times a much as retaining an existing one)
    • Increased knowledge of the customer and his/her business yields more opportunities for proactivity and suggesting initiatives

The Facts Make the Ca$e

• Price-to-Earnings Ratio is Higher
  • Companies with loyal customers have a price-to-earnings ratio that's 9% higher than your average product-centric company
    (Source: Satmetrix Systems survey of 27,000 respondents)
• Market Value is Higher
  • One point in customer satisfaction translates into 3% Market Value increase
    (Source: American Customer Satisfaction Index/University of Michigan)
• Profitability Increases
  • Reducing customer defection by 5% could increase profitability by 25 to 80%, depending on the cost of acquisition of a new customer
    (Source: Bain & Company: “The Loyalty Effect” by Frederick Reichheld)
• Dissatisfaction Siphons $$
  • A Totally Satisfied Customer contributes 2.6 times as much revenue to a company as a Somewhat Satisfied Customer
  • A Totally Satisfied Customer contributes 17 times as much revenue as a Somewhat Dissatisfied Customer
  • A Totally Dissatisfied Customer decreases revenue at a rate equal to 1.8 times that contributed to the business by a Totally Satisfied Customer.
    The Point: Even with twice as many totally satisfied as completely dissatisfied customers, the business would be doing little better than standing still.
    (Source: InfoQuest, based on 46,000 business-to-business surveys)

The PIMS Database Says it All

Businesses rated high by their customers for service grow faster and are more profitable than businesses rated low.