Customer satisfaction does not always lead to loyalty. But, dissatisfied customers are very likely to be disloyal. Dissatisfied customers will sometimes complain. More often, they will just silently defect. If new customer acquisition rate is less than the defection rate, then it could lead to a rapidly shrinking customer base. So, how do we measure customer dissatisfaction and find out what is causing it?

Relationship between loyalty and satisfaction. Typically, the relationship between satisfaction and loyalty is modeled as linear - that is, loyalty increases as satisfaction increases. However, research shows that is not true in most cases. The relationship is best modeled as non-linear with two thresholds. Below a certain level of satisfaction, there is a sharp drop in loyalty. Above a certain level of satisfaction, there is a sharp increase in loyalty. In between these two thresholds, there is a zone of indifference where an increase in satisfaction does not lead to an increase in loyalty.

The dissatisfaction model. The lower threshold of the loyalty-satisfaction curve marks the dissatisfaction zone. What is causing the dissatisfaction can be estimated by running a regression only on this part of the curve with product or service features and benefits as the drivers and loyalty ratings as the outcome. The model helps to pinpoint the attributes and features that are causing dissatisfaction.