- Greg Daines
What about the Customer Satisfaction Paradox?
If customer satisfaction has nothing to do with retention, then why do companies with high satisfaction tend to have high retention?
Past research consistently shows that companies with high overall NPS scores tend to have higher customer retention. Does this contradict our finding that satisfaction does not drive retention? No, and here's why...
⦿ It’s not a question of correlation but of causality. ⦿
CUSTOMER SATISFACTION IS REAL
Customer experience/satisfaction is a real thing, and we know this because it can be reliably measured, and also because there are reliable methods and processes for improving it.
But it's not easy to do, which is why only very well-managed companies are able to produce consistently high overall NPS at scale.
CUSTOMER RESULTS DRIVE RETENTION
The data consistently shows that while customer satisfaction scores do not correlate with how long customers stay, by far the best predictor of customer lifespan is achieving measurable customer results.
Just like customer experience, customer results are a real thing that we can reliably measure and produce. And, just like customer experience, only well-managed companies are able to consistently produce good customer results at scale because it’s not easy to do.
SOLVING THE SATISFACTION PARADOX
The real reason companies with high NPS also tend to have high retention is that they are both the result of highly effective management and processes.
So that's the answer...
► Well-managed companies produce BOTH high satisfaction AND good results.
That's why we tend to see them together, even though customer satisfaction does not cause high retention.