For years, Hampton, Inc. has enjoyed high customer satisfaction scores due to both product quality and outstanding customer service. On a scale of 0 to 4, with zero representing "unacceptable performance" and 4, "outstanding performance," customer satisfaction scores have been 3.0 or higher since the company began tracking the measure. Management also monitors the percentage of monthly sales made to customers from the prior month (that is, repeat sales) and to new customers.
(Not all repeat customers purchase from Hampton every month, which accounts for the fact that these two measures do not add to 100%.) About a year ago, the production manager tried a new supplier of raw materials, expecting no difference in quality. Although she quickly determined that the materials were not of the same high quality, some products had already been sold, and the sales staff began to receive complaints.

The chart above shows the relationship between customer satisfaction, customer retention (% of sales from existing customers), and sales to new customers over the last year. Sales percentages are charted on the left vertical axis and customer satisfaction scores on the right vertical axis.

Required
Explain the relationship that you believe exists between customer satisfaction, customer retention (percentage of sales from existing customers), and percentage of sales from new customers. Be sure to comment on leading and laggingrelationships.

Transcribed Image Text:

4.0 80% 70% 60% , 5096 40% 30% 20% 10% 0% @na 3.0 2.5 - 2.0互 Customer retention -_ Sales to new customers- 1.5 ーCustomer satisfaction 1-0 0.5 咿粣膷ゆ 0.0 Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec Customer satisfaction scores 050505050 sebauealad se les