Cost Quality Relationship Corporate

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Customer Dissatisfaction

Specifically identify three or more of the potential costs of customer dissatisfaction by type of cost. 2-Describe or explain each of these costs.

There are four types of costs of customer dissatisfaction:

Drop in satisfaction level causes even greater drop in loyalty level:

Many organizations confound the descriptives of "very satisfied" and "somewhat satisfied" clients, but the difference in loyalty is exponential. Very satisfied consumers are apt to return to the company and refer to others, whilst only somewhat satisfied consumers are often unlikely to return or, if they do return, to infrequently employ the service. Sometimes, the drop in loyalty between one and other classification may be as much as 50%, and whilst many organization add the 2 descriptors together in order to arrive at a "better satisfaction" score, they do not realize that the cost of customer dissatisfaction in the latter category is greater than in the former.

2. Problems drive customers away: Although customer loyalty varies according to the type of industry and other industry factors, research shows that there is typically a 25% drop in loyalty amongst clients who experience a problem.

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In revenue terms, this means that as much as one in every four clients will be dissuaded from returning to the company, hence the company will lose one in every four potential revenues. Even if the client will return infrequently, much of that revenue will be lost.

3. Negative reputation: Studies show that customers typically inform twice as many people about a bad service received as they do about a positive experience. Social networks and the Internet today amplify these phenomena. Therefore, a disgruntled consumer may more rapidly harm your reputation than a satisfied consumer will build your reputation. It is for this reason that research, too, indicates that the faster and more effectively the complaint is dealt with the more problems can be prevented.

4. The ratio of complaints are greater than you think: Awareness of customer complaints….....

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