CUSTOMER SATISFACTION, CUSTOMER RETENTION, AND MARKET SHARE

We provide a mathematical framework for assessing the value of custome r satisfaction. The framework enables managers to determine which cust omer satisfaction elements have the greatest impact, and how much mone y should be spent to improve particular customer satisfaction elements . This makes it possible to hold customer satisfaction programs accoun table, in the way that other business programs are held accountable, b y forcing them to demonstrate their benefits with respect to bottom-li ne profitability. We use an individual-level model of loyalty and rete ntion, and then build up to market share by aggregation. We demonstrat e the application of our approach in a pilot study of a city's retail banking market.