The loyalty-satisfaction model. Often, the two threshold values are not known in advance. We infer the threshold values from data using a non-linear regression model to estimate the relationship between loyalty and satisfaction. Satisfaction can be measured with a global measure of satisfaction. In some cases, if we want to understand the drivers of overall satisfaction, we can look at perceived quality, prior expectations, and perceived value as the drivers of satisfaction. Loyalty is typically measured by repurchase intentions, willingness to pay a premium, complaint behavior, or willingness to recommend the brand to others.

Why should you care? The market today is full of me-too look alike products and services. Delighting customers with superior product attributes or services may be costly and difficult. It may be easier to focus on retaining customers by reducing churn. A well designed customer tracking program may help you to keep an eye on why customers leave or become dissatisfied and fix the major problems before they become a serious drain on your customer base. The tracking program should look at not only customers who have defected, but also those who are showing tell tale signs of dissatisfaction such as reduction in purchases over time.