A scientific article explains the positive impacts of customer satisfaction on customer loyalty and business success.
Maintaining customer satisfaction builds customer loyalty and thus supports the increase in business profits. Therefore, businesses should aim at achieving customer satisfaction and building long-term customer loyalty as their primary business goals. In doing so, businesses should exceed customers' product expectations and service experiences and provide real post-purchase solutions.
Regardless of business size, customers are probably the most critical business unit. In other words, it is impossible to have a business without customers; they are a business’s main generators of revenue and profit. Therefore, a business may encounter difficulties if customers are not satisfied. That is why a business strategy implementation without the factor of customers may fail in its accomplishment. Notably, it is stated that the price factor of product or service offerings is less significant to customers in contrast to the poor quality of customer service. To put it differently, satisfied customers that have a positive brand or business perceptions are more concerned with how they are treated than how much a product or service costs. In this case, consumers will instead choose the company that makes them happier over a low-cost alternative.
How does customer satisfaction impact customer loyalty and business success?
1. A satisfied customer results in customer retention.
A satisfied customer is more likely to repeat business with the existing company, resulting in customer retention, which benefits business success. For instance, a business has more than a 50% success rate for products and services offered to current customers and less than a 20% success rate if offered to potential customers.
Likewise, satisfied customer would share their experiences about business products and services with as many as 4-6 people.
2. A satisfied customer leads to customer retention, and increasing customer retention can lead to decreasing business costs.
The emphasis on customer satisfaction is vital to business accomplishments. Satisfied customers positively impact the business's financial standings from a revenue-generating and cost-reduction perceptive. For instance, a 2% increase in customer retention equally results in a 10% business cost reduction.
It is proven that it is more expensive to search for and convert a potential customer into a new customer. It is estimated that this conversion cost is 6 -7 times greater than retaining a current customer. In like manner, if customers are unhappy, it is difficult for either a marketing program or strategy to deliver high financial returns.
Original Article: Basari, M.A.M.D. and Shamsudin, M.F., 2020. Does Customer Satisfaction Matters? Journal of Undergraduate Social Science and Technology, 2(1).