Customer satisfaction plays a big part here, but how is not always as clear. Research shows that customer satisfaction is a definitely a driver for keeping customers. There does appear to be an association between customer satisfaction and retention, although how much effect one has on the other varies greatly depending on the industry, the customer themselves, the product involved, the market and so on.
In a 2015 study by Accenture, 56% of U.S. consumers said the number of brands they consider for a given product or service has increased significantly over the past 10 years. This highlights the importance of good customer retention since the internet has given consumers access to hundreds or thousands more products and suppliers than they may have had even just a few years before.
Chiming with our point 7 below, McKinsey agrees that satisfaction does have an impact on retention, highlighting in their research that inconsistency of satisfaction with an experience is a critical improvement point for businesses:
“Our research indicates that since 2009, customers are valuing an “average” experience less and have even less patience for variability in delivery. In addition, companies that experience inconsistency challenges often expend unnecessary resources without actually improving the customer journey. Making additional investments to improve the customer experience without tightening the consistency of experience is just throwing good money after bad.”