Customer satisfaction significantly impacts bottom-line. Studies indicate that loyal customers generate higher profit margins compared to new customers. As it stands, there are no systematic ways to measure cost of customer defections. Traditional accounting systems don't measure value of customer loyalty and treat customer acquisition costs as current expenses. As a result companies fail to understand the potential impact of customer loyalty and defection on net income. This paper looks at different levels of customer satisfaction, relationships between customer satisfaction, customer retention and profit. Two independent models that facilitate measuring value of long-term customers and cost of customer defections are described.
展开▼
