Customer Satisfaction: Free Essay Sample & Outline
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Sample Essay On Customer Satisfaction
Customer satisfaction is important in any company as all businesses depend entirely on their customers. It is the customers that are responsible for the growth of companies and therefore, they should always take center stage in any company. Customer satisfaction is related to profit because satisfied customers often become repeat customers. They shop regularly or use the services that the company provides more frequently. When this happens they are hooked to the product or service and they become loyal customers.
Therefore, the concept of customer satisfaction, profit and loyalty is important to any company that wants to succeed. For this reason, there is a need to ensure that indeed a company invests in these three crucial items through its marketing and design departments. This paper will describe the concepts of customer satisfaction, profit and loyalty and the relationships that exist between them.
Customer satisfaction, profit, and loyalty
In the 21st century, companies are facing their toughest competition over; they move from a product, and sales philosophy into what can be described as a holistic market philosophy (Nitzan & Libai, 2010). The holistic market philosophy is important as it helps giving them a better chance of outperforming competition. It has been determined that indeed the cornerstone of a well-conceived marketing orientation creates strong customer relationships. It is of the essence to understand that consumers are more educated as well as informed more than ever, and they have tools to verify the company’s claims as well as seek out several superior alternatives.
For the business, getting the customers is hard. Keeping them, on the other hand, is the most challenging part of the business. The fierce competition that currently exists in the market does not make it any easier (Nitzan & Libai, 2010). Therefore, for this reason, there is a need for persons to put real energy and effort into the maintenance of a consistent customer base. Customer’s satisfaction, loyalty and the need for profits from companies is something that has changed in the 21st century. Customers have become conscious and wanted the best in terms of quality and fair price. Companies, on the other hand, have strategized on new and different ways in which they can indeed ensure that they can maintain customers. This paper is going to explore these three important areas in the current marketing matrix.
Customer satisfaction can be described as a measure of how products and services that are supplied by a company meet or even surpass the customer expectation. Customer satisfaction in the 21st century is often seen as a key performance indicator within business and it is often a part of a balanced Scorecard. In fact, in a competitive marketplace where there are businesses that compete for customers, customer satisfaction can often be seen as a key differentiator and it has increasingly become a key element of the business strategy (Yong & Xiaofeng, 2005). In fact, it is of importance to note that within the organization, customer satisfaction rating can often have very powerful effects.
The focus of employees is always to ensure that the customer’s expectation are fulfilled in the best way possible. If customer satisfaction decreases then there could be problems relating to sales as well as profitability. Customer satisfaction is extremely important as it often provides marketers as well as business owners with a metric which the can use to manage as well as improve their businesses.
Customer’s satisfaction can be described as an important sign of how likely a consumer will make a gain in the future (Yong & Xiaofeng, 2005). In fact, asking customers to rate their satisfaction can be described as a good way to see whether the consumers will be repeat customer or even advocates for the brand. Whether a buyer is content after a purchase often depends on the offer’s performance in relationship to the expectations of the buyers and how the buyer interprets any deviations that exists between the two (Lele, 1991).
In general, satisfaction can be described as a person’s feeling of either disappointment or pleasure which results from the comparison of a product perceived performance or outcome to the expectations. If the performance of the product falls below the expectation, then the customer can be described as being dissatisfied. However, if the performance matches of expectations, then the customer can be said to be satisfied, if it exceeds the expectations, the customer, the customer is highly delighted and satisfied.
It is of importance to note that customer assessment of products performance often depends on many different factors and especially the type of loyalty relationship the customer possesses with the brand. Buyers often form their expectations from the past buying experience, and this includes friends and association’s advice as well as marketers and competitors information as well as promises (Cooper, 2010).
Companies should understand that if they raise their expectations too high, then the buyer is more likely to be disappointed. However, on the same instance, if a company sets expectations too low, then it might not be able to attract enough buyers. It is importance to understand that in the 21st century most successful companies are raising expectations and delivering performances to match these expectations. However, it is of importance to understand that high customer satisfaction should not be the ultimate goal. If the company gets customer content by lowering its services, or even increasing its services, then the results may be lower profits (Vincent, 2012). The organization might be able to enhance its profitability by means other than increased customer satisfaction. For example, the improvement of manufacturing processes might bring about profits.
Satisfaction often depends on the product and service quality. Quality can be described as the totality of features as well as characteristics of product or service which bears its ability to satisfy stated as well as implied needs. Studies have often shown a high correlation between product quality and company profitability. The total quality is everyone’s job and just as marketing is everyone’s job (Noe, 2010). Marketers often play several roles in the helping the company’s definition and delivery of quality goods as well services in order to help target the right customers. In order for customer satisfaction to be met, there is a need for a company first to understand and correctly identify the customer’s requirements and needs.
Secondly, there is a need for a company to communicate the customer’s expectations in the right way to the product designers. This is of the essence in order to ensure that the company can meet the satisfaction levels. Ultimately marketing can be described as the art of being able to attract and keep profitable customers. However, it is of the essence to understand that each and every firm often loses some of its money to its customers (Grigoroudis, 2010). The 20-80 rule states that 20% of the customers in most cases generates around 80% of the firms. There are some cases where this distribution might be extreme.
The implication of this is that a firm can be able to effectively improve its profits by in turn firing its worst customers. In fact, the largest customers do not always yield the most profit because these customers can demand considerable services and often receives the deepest discounts (Grigoroudis, 2010). The midsize customers who receive good services and this pay nearly full price and these persons are often the most profitable. These are often the persons that are the most profitable in the company and the fact; it is the work of the marketing department to target them in order to increase the profitability of the company.
Consistency can be described as extremely important in marketing. Consistency is especially powerful when the retail channels are proliferating, and the consumer choice, as well as empowerment, are effectively increasing. However, it is important to understand that consistency often requires the attention of top leadership. This is because by using several channels and triggering more interactions with companies as they seek discrete needs, customers are often more likely to create clusters of interactions which make individual interactions less important as compared to the general cumulative experience.
The marketing department should look at the customer journey that can often span from all elements of a company and in fact include everything from buying the product to using the product. In fact, in the market it is often understood that companies should continually work in a bid to provide customers with a superior services with each are of the business being given clear rules, policies as well as supporting mechanisms that effectively ensures consistencies during each interaction.
However, it is of the essence to understand that there are only a few companies that can be able to deliver consistently across the whole customer journey. The fact in the market is that consistency is in many cases the most predictor of the overall customer experience and loyalty. For example, banks often show an exceptionally high correlation between their customer’s journeys and the overall performance in regards to customer experience. The company should not only satisfy the needs of the consumers in one phase of the entire customer’s journey but rather it should satisfy the whole journey. It is only through this way that the customers can be satisfied with the products and consequently be loyal to the company and its products. Therefore, there is a huge relationship that exists between profitable customers and customer satisfaction.
A profitable customer can be described as a person, company, households and over time often yields a revenue brook which exceeds by an acceptable amount the company’s cost stream for the attraction, selling as well as servicing the customer. It is important to note that the emphasis on the lifetime stream of cost and revenue and it is definitely not on one’s transaction profitability. The marketers can be able to assess the customer’s profitability individually by several market channel and segmentation. Although many firms often measure customer satisfaction, there are very little that measure the individual customer profitability. It often strikes marketers as being strange that companies still do not know which of their customers they should be able to focus on.
Acquiring the right customers can be described as an essential in a company and it maintains the health of the business.
Acquiring profitable customers often requires one to have an accurate understanding of the different needs, and to target them using the right and preferred channels. In order to get the right customers, the leadership needs to understand that customers are essentially different and, therefore, they should be well understood both from an internal, as well as the external perspective. In order for a company to understand how to capture the market share instead of losing it, it should always carry out a profitability analysis based on the current customers (Neil, 2010). The first thing in a bid to ensure profitability of the customer is to protect the current customer base, and there are very few external factors that often drive the attrition. However, there is a need to address the factors that the client can be able to control. There is a need to improve the onboarding and customer service in a bid to increase the satisfaction rates.
It is important to note that if the value of a customer is known, then one can be able to know effectively how to keep as well as grow them. This value is important as it enables the company to effectively know the strengths of their customers and where as a company they can be able to improve (Ginn, 2010). Too many companies often suffer from high customer churn and defection. In order to effectively reduce this churn which equals to loss of profit, the firm should define and measure the retention of the company and distinguish the different the causes of customer attrition as well as identify those that can be easily managed (Best, 2000). The firm should compare the lost profit versus the customer’s lifetime value from the lost customers to the exact cost of lowering the defection rate. If by any chance the cost to discourage the defection is lower than the lost profit, the firm should be able to spend in a bid to retain the customer. Companies are now studying a profitability of their customers, and they are recognizing the benefits of satisfying and retaining the current customers.
The acquisition of new customer can often cost more than five times the cost of satisfying and retaining current customers. In the average industry, companies often lose around 10% of their customers each year. However, by reducing the customer defection rate by around 5%, the companies can be able to increase their profits by up to 25% to around 85% depending on the industry that they are exist in. Further, it is important to note that the customer profit rate often tends to increase over the life of a retained customer, and this is because to increased purchases, price premiums, reduced servicing costs and referrals. A company should understand these different fundamentals in order to move forward and make more profits from the existing consumers.
Marketing should always take on the role of an information manager in the business.
This is important especially in regards to the profits that the company can be able to get. It is the information an organization holds as well as its application that often enables differentiation to be achieved in the company leading to greater customer profits. In fact, it is imperative to understand that there are some organization that have taken the role of getting information from the consumers as their core competencies (Pearson, 2012). In fact, armed with the view of profitability on a customer to customer basis, and the different needs of the customer, any organization can be able to position itself in a way that it can start to understand the customer base in terms of profitability.
In-depth customer profitability information often enables one to focus on an individual customer identification. In fact, the opportunity to design products as well as services that appeal to the individual and it becomes possible when individual profitability of a person is coupled with the different behavioral propensities.
A different range of customer values and can often be calculated, and it is in many cases to feed a range of different customer action models. If a company wants to design new products and services, a good place to start from its customer profitability (Cook, 2012). It is important to understand that the complexity that comes with making of these opportunities a reality is often reduced as technology in the 21st century has taken over the burden of analysis and administration. Marketing should therefore, not be about only making the sales but also the securing of a volume for future revenues from customers that are described by the company as having a long-term tenure as well as high propensity to purchase services and products. Once the company has had information about the relative customer profitability, it can be able to shift in the managing retention as well as the acquisition as a means of creating a stable stream of profit for the company (Cook, 2012).
Therefore, individual customer profitability that is coupled with several range of propensity models can be said to form the foundation by which an organization can design and supply new services in to the market in a bid to increase customer satisfaction. In this modern world, companies should always try and learn different ways in which they can increase the profit of the company. They should not retain customers that are loyal, but not profitable. This is because the most important thing in business is profit, and this is the reason as to why the business was founded in the first place.
Customer loyalty can be described as both an attitudinal as well as a behavioral tendency to favor one brand over others. This is often due to various factors such as the satisfaction with the product, the convenience of the product or even the familiarity with the brand. Customer loyalty often encourages the customers to shop in a more consistent way, spend a great share of money and consequently feel positive about the shopping experience. If a company wants to build customer loyalty, it must start by making a decision. This decision should be to put the customer at the center of everything that one does, and at the center of the company, the daily routines, and the way they design the web forms. However, it is of importance to understand that the customer at the center is a more complicated adventure than it sounds.
This is because it involves the creation of emotions with the consumer. Loyalty runs hand in hand with emotions; customer loyalty can be described as the result of consistent positive emotional experience, and physically attribute-based satisfaction and perceived value of different experiences that includes services and products. Therefore, in order for a company to improve the customer loyalty, there is a need to prompt customer loyalty in to be able to build an emotional bond with the customers. Therefore, in order to build customer loyalty, the customer experience management often blends the physical, emotional as well as value elements of experience into a cohesive experience.
Research has shown that retaining customers is less expensive than the acquisition of new ones and the customer experience management can be described as the most cost effective way in which persons can drive customer satisfaction, customer loyalty and retention. It is important to note that loyal customers often reduce the costs that are associated with consumer education and marketing and especially when they become the Net promoters for your organization (Pupo, 2010).
Given the highly discommoded competitive landscape that exists, the customer experience programs can be described as the most effective ways when it comes to the differentiation of an organization from the competition. It is of the essence to understand that such differentiation effectively drives customer loyalty when the customers are engaged in an emotional, intellectual, as well as a spiritual level. The customer can effectively cherish the product and service, during and after its use (Kazanjian, 2012).
In order to understand customer loyalty, there is a need for one to understand the different types of degree of loyalty. There is monogamous loyalty as well as polygamous loyalty. There are also behavioral as well as attitudinal aspects. It is after understanding these concepts that one totally understands what customer loyalty truly is and the importance that is put in the understanding of loyalty. The 21st century can be described as the world of polygamous loyalty.
For example, a person might be able to eat at McDonalds, Safeway, Thrifty foods and unfailingly shot at all three. The person is loyal to the three restaurants and yet loyal to none (Pupo, 2010). Therefore, it is important to note that in the real world, 100% loyal customers are extremely rare. In the majority of the cases, therefore, attempting to make customers completely loyal is often unrealistic.
A more realistic goal for businesses is often to make the customers loyal is unrealistic. A more realistic goal for businesses is, therefore, to make customers as loyal as possible. Consequently, there is a need to maximize the customer share of the disposal income, frequency of purchase as well as overall profitability. The objective of businesses and loyalty programs is to make sure that the organization’s share of customer loyalty in the highest levels possible.
Persons have often defined loyalty in behavioral terms, for example, if a person make most purchases in a given product category from one supplier and regardless of the reason then the person can be described as loyal (Nili & Keramati 2010). A majority of existing loyalty programs has attitudinal loyalty. In fact, like behavioral loyalty, the attitudinal definitions have often existed for a long time. The second element of loyalty often focuses on how powerful the psychological engagement or attachment is to a different brand. For example, there are people that rave about a product and develop it to their friends, and then for whatever reason they often fail to buy it regularly themselves.
Two customer loyalty programs that companies often face include frequency programs as well as club membership programs. The frequency programs are often designed to provide different rewards for customers to buy frequently and in several substantial amounts. They often help in building what can be described as a long-term loyalty with several high-end customers (Stefura, n.d). Originally the frequency programs were pioneered by airlines, credit card companies, and hotels.
The FPs are often used in many other industries. It is essential to note that the first firm to introduce the FPs in an industry often gains the most benefit. However, after competitors respond, FPs can often become a fiscal burden to all the offering companies. However, although some marketers are more efficient as well as creative in the management of the FPs, there is a need to ensure that they hit the industry.
Many companies often create club membership programs either to open to everyone that purchases a product or service that is often limited to an affinity group. The open clubs are often known to be good in terms of building a database or snagging customers from competitors. However, the limited membership clubs are often known to be powerful long-term loyalty builders. This is because the fees and membership conditions prevent those that with only a fleeting interest in the company’s products that come from joining while at the same time retaining the customers that are responsible for the largest portion of business.
There are several types of customer loyalty program users. They include never, light, heavy & extreme reward program users. Consumers can often be divided into several loyalty program users, never extreme, heavy and light. The never customers are those that are not affected by loyalty programs and their recompense incentives in any way. The light loyalty program users are often defined by having a reward program membership, and this is often being influenced by the different incentives in a moderate way. Heavy loyalty program users are the consumers that are active and are often highly influenced members of reward programs. Finally, the extreme loyalty program users are those that have virtually addicted, and they are obsessed with several loyalty programs (Rodríguez, 2011).
The company personnel can often create strong bonds with customers by individualizing and personalizing relationships. Not surprisingly, there is often the right technology in an increasingly essential ingredient when it comes to the purpose. Companies that often use e-mail, call centers, databases as well as database software helps in fostering continuous contact with the customers. In fact, E-commerce companies are now looking to attract as well as retain the customers are discovering the personalization that goes beyond the creation of customized information. The personalized marketing is extremely important in the 21st century when it comes to brand loyalty (Stahl, 2012).
There is a need for a business to always communicate with the customers on a regular basis. These people are the ones that are known to hold the influence of the company in regards to their buying and merchandising decisions. In fact, nothing can make a loyal customer feel better by being able to solicit their input and to show the consumers how much the company values them and their decisions.
In conclusion, there is a relationship that exists between customer loyalty, profit, and satisfaction. It starts with customer satisfaction (Damm, 2011). When a customer buys a certain product or gets a particular service, and he or she likes it then chances are very high that the customer will be what is described as a repeat customer. Repeat customers increase the profitability of the business as they often generate more sales. The company can effectively reward these repeat customers and in essence and time they become loyal customers to the brand. They feel like they own the brand and are proud to be associated with it and everything that it stands for. Every business wants loyal customers as they are the ones that ensure that indeed the company can achieve financial success.
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