Case : Customer Satisfaction

Your brother, Joe, owns a local oil change business in a small city in the mid-west. You are taking a marketing class in college, and you asked Joe for some information about his business for a class project. You determined that Joe's revenues indicate that he has approximately 10% of a 100,000-customer market. When discussing customer satisfaction with Joe, he stated that perhaps some of his customers might be dissatisfied, but that he didn't think it was any big deal to worry about because only a few have complained to him. However, he did say that he's noticed that some of his customers are not coming back. You wanted to impress Joe with your knowledge and convince him that he should worry about customer satisfaction, so you conducted a survey of a sample of his customers and found that the overall customer satisfaction index (CSI) was 70, an average customer life was 5 years, but that only 20% of Joe's customers surveyed would recommend Joe's business to others. Your results lead you to conclude that approximately 2% of Joe's customers were "dissatisfied" with his service.

1. If well-documented studies related to customer dissatisfaction and exit hold true (4% of dissatisfied consumers complain), Joe might expect how many of his customers to complain? Show your work. (5 points)
a) 4
b) 8
c) 10
d) 40
e) 80

2. Explain to Joe in detail what are the consequences of customer dissatisfaction. (20 points)