Customer Satisfaction and Revenue Growth

 

Somebody said that all economic activities are focused on reducing the uncertainty of our existence. If this is true,  a consistent rate of  customer satisfaction should bring your company high rates of retention. Their advocacy would help to reduce your expenses acquiring new customers.

Does your personal experience agree with this premise? Does your business experience make you wonder if it is true?

The study of this premise was sponsored by the London School of Economics and created very convincing evidence confirming that there is indeed a strong causation between a high rate of customer satisfaction, growth of advocacy, and growth of revenues in multiple industries.

I think there are two major reasons why many companies struggle to reap the benefits of high CSAT they deliver to their customers:

  • Most businesses today measure CSAT using multiple methodologies, however the complexity and cost of these exercises make it more of an event or a campaign than a consistent process. The result is a series of snapshots of what the rate of customer satisfaction was at that moment or period. That practice contradicts the original condition of our premise –  ” A consistent rate of your customers satisfaction should bring your company high rates of retention”.
  • Let’s assume your customers are very satisfied with your products or services, regardless of how you measure it. What has your company done to help them share their experience with other consumers? Does anybody know if in fact your Net Promoters actually promote? And if they do – what is the impact?

Many great ideas suffer from inadequate implementation and this  is just another example. However it is much easier to question the value of the original premise when it doesn’t agree with our immediate experience, than to have the courage and conviction required to change the status quo. Even after the “quo” has completely lost it’s status.

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2 Responses to Customer Satisfaction and Revenue Growth

  1. Heather says:

    I don’t believe any savvy business executives would disagree with the claim that increased customer satisfaction results in decreased attrition which then leads to increased revenues. While the exact figures will vary by industry and are firm-specific, it is an undisputed fact that acquiring new customers is more costly than maintaining existing ones. For this reason alone firms should place a great deal of emphasis on customer satisfaction. Many businesses are adopting this mentality but for whatever reason, many are slow-adopters of the theory of “the customer is always right” and continue to stagnate where they could excel. In any case, you have made some valid points and I enjoyed your post!

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