KATHMANDU: At times, companies are misguided by the notion that customers depend on them. But it is actually the companies that depend on customers. Several researchers and academia have highlighted the import-ance of customers in today’s market. The level of satis-faction a customer has with a company has profound effects.
“Customer satisfaction — a term frequently used in marketing — is a measure of how products and services supplied by a company meet or surpass customer expectations,” says Laxmi Narayan Manandhar, owner of Quality Food at Lambagar. Indeed, it is seen as a key performance indicator within business and is often part of a balanced score card. In a competitive marketplace, customer satisfaction is seen as a key differentiator and has increasingly become a key element of business strategy. It helps employees focus on the importance of fulfilling customers’ expectations. Furthermore, when these ratings dip, they warn of problems that can affect sales and profitability. These metrics quantify an important dynamic.
“When a brand has loyal customers, it gains positive word-of-mouth marketing, which is both free and highly effective,” says Sameep Babu Malla, proprietor of Mars Photocopy. Therefore, it is essential for businesses to effectively manage customer satisfaction. To be able to
do this, firms need reliable and representative measures of satisfaction.
In researching satisfaction, firms generally ask custom-ers whether their product or service has met or exceeded expectations. When customers have high expectations and the reality falls short, they will be disappointed and likely rate their experience as less
than satisfying. The importance of customer satisfaction diminishes when a firm has increased bargaining power.
“Customer satis-faction has direct effect on an organisation’s profitability,” explains Manandhar. Growth Strategies International (GSI)
performed a statistical analysis of customer satisfaction data encompassing the findings of over 20,000 customer surveys conducted in 40
countries by Info Quest. The conclusion of the study was that a totally satisfied customer contributes 2.6 times more revenue to a company
as opposed to a somewhat satisfied customer.Numerous other studies that have looked at the impact of customer satisfaction on
repeat purchase, loyalty and retention all convey a similar message — that satisfied customers are most likely to share their experiences with perhaps five or six other people. Similarly, dissatisfied customers are more likely to tell 10 others of their unfortunate experience. It is also important to realise that many customers will not complain and this will differ from one industry or sector to another. Lastly, if people believe that dealing with customer satisfaction is costly, they need to realise that it costs as much as 25 per cent more to
recruit new customers.
It is evident that customer satisfaction is important because satisfaction influences repurchase intentions, whereas dissatisfaction has been seen as a primary reason for customer defection or discontinuation of purchase. Though customer satisfaction does not guarantee repurchase on the part of the customers, it still plays a very important part in ensuring customer loyalty and retention. Customer satisfaction is a direct determining factor in customer loyalty, which, in turn, is a central determinant of customer retention. Therefore, organ-isations should always strive to ensure that their customers are very satisfied.