Dissatisfaction with Customer Satisfaction

Billions of dollars are spent every year measuring and managing customer satisfaction. What could be more obvious than the need to create products and services that satisfy our customers? Many companies have customer satisfaction as a goal in their mission statements, and icon Philip Kotler puts the concept in his definition of marketing. The only problem is that customer satisfaction tells us almost nothing about what our customers will do in the future.

We return to this topic in Chapter 5, but at this point, suffice it to say that 85% of customers who defect report being satisfied or highly satisfied with the company they are leaving. In large-scale meta-analyses, satisfaction explains only 8% of repurchase. Having written my doctoral dissertation on the subject, this information was as dismaying to me as any marketing manager trying to figure out why satisfying customers isn’t enough to keep them.

To illustrate this point, let’s look at a company that is routinely criticized for making defective and frustrating products but that nonetheless dominates the world.