Customer satisfaction and
Future profitability
Special Issue 1
Western business culture is often accused of being short sighted and reactive. If that’s the case the following exert from Contemporary Marketing Management (Guidergan and Perrot, 2004) shows that managers today can indeed influence profitability instead of announcing a poor result.
“Customer satisfaction is a forward-looking indicator of business success that measures how well customers will respond to the company in the future.
Other measures of market performance, such as sales and market share are backward looking measures of success. They tell you how well the firm has done on the past.
A business may have excellent financial results while underwhelming and disappointing a growing number of its customers. Because customers can’t always immediately switch to alternative solutions, customer dissatisfaction often precedes customer exit and reductions in sales and profitability.
Thus for many businesses, quarterly measures of customer satisfaction provide an excellent leading indicator of future performance. If customer satisfaction is on the decline, an early warning signal is given, providing the opportunity to correct the problem, before the real damage is done. Of course, if business does not track customer satisfaction, it forgoes the opportunity to correct the problem before declines in sales and profits result”
This excerpt may also apply to internal organisational customers. I wonder how measuring internal customer satisfaction would impact the great “centralize vs. decentralize” debate or indeed to “in source or outsource” business services.
Of course there are many other factors which impact business results. Guidergan and Perrot (2004) indicate here that measuring customer satisfaction is critical but doing something with the results is even more important. |
Personally speaking
We all have customers or clients, be that internal or external to your business. So over the coming months Whats Happening will cover many different customer topics in series of special issues specifically dedicated to the customer or client.
There will some interesting research, case studies and models that you will be able to apply with your customers or within your business. I hope you like this new series and if you need assistance in implementation you are welcome to call.
I had an email last month from a subscriber to What’s Happening asking if it ok to forward to people in her organisation.
Please be assured that the time I spend writing Whats Happening is there to serve as many people as possible. So you are welcome to forward this on to anyone you feel may benefit or may be interested.
Until next month’s special issue, take care.
Kind regards, Sam
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