Satisfied customers have higher market share growth potential
Research has long since shown that customer satisfaction increases intention to repurchase and actual repurchase as well as higher market share and more positive word of mouth reputation. This isn't all that surprising, really. But recent research from the United States which has won the 2004 award for best article in the respected Journal of Service Research extends this in an interesting and useful way. A quantitative analysis of customer satisfaction and market share for a particular business to business relationship in the American financial services sector (Morgan Stanley, actually) showed that the positive relationship between customer satisfaction and share of wallet was non-linear. The greatest positive impact on share of wallet was at the highest levels of customer satisfaction. In plain English, once a certain level of satisfaction is reached – around 70-80% - any increase in customer satisfaction has a huge effect on share of wallet. Combine this information with Australian academic research by an UltraFeedback director (see the article by me entitled Customer Satisfaction Measurement Practice in Australia on these pages) that shows that the average customer satisfaction score is a little over 80% and the clear implication is that it's very worthwhile to increase the satisfaction of customers who are already more happy than average.
Further information, including a copy of the full paper by Colin Jevons, is freely available by emailing colin.jevons@ultrafeedback.com or by clicking on the contact links at the bottom of this page.
References:
Timothy L. Keiningham, Tiffany Perkins-Munn, and Heather Evans “The Impact of Customer Satisfaction on Share-of-Wallet in a Business-to-Business Environment,” Journal of Services Marketing, Volume 6, no. 1, pages 37-50.
Colin Jevons, “Customer Satisfaction Measurement Practice in Australia”, forthcoming in Asia-Pacific Journal of Marketing.