Keeping above points in context, Guo et al attempts to determine if there is there is an immediate or lagged effect on profitability. Following hypothesis are formulated:
H1: Customer satisfaction has positive lagged influence on a firm’s profitability.
H1a: Customer satisfaction has immediate influence on a firm’s profitability.
How profitability affects customer satisfaction
Most of the literature focuses on the impact of customer satisfaction on profitability. This particular research acknowledges the possibility of profitability affecting the customer satisfaction. Research attempts to analyse the effect of past profitability on customer satisfaction. Considering this aspect, following hypothesis is proposed:
H2: A firms past
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As the difference between customer desires and the firm’s offerings increase (which will happen as the firm increases their sales and gets more customers with diverse needs), the level of satisfaction with the firm’s offerings will decrease.
H4: The level of a firm’s past sales will be related to customer satisfaction.
How satisfaction information affects stock prices
While there is no clear consensus on the effect of customer satisfaction of stock prices, authors believed that the participants in the financial markets are likely to use satisfaction information as a proxy for other information related to the firm’s profitability. Thus, they are likely to conclude that if a firm’s satisfaction scores have dropped (increased), that would be an indicator of future drop (rise) in earnings and cash flows for that firm. Thus, they hypothesize that customer satisfaction will positively influence a firm’s stock prices
H5: Customer satisfaction will positively influence a firm’s stock prices.
One of the unique aspect of the study was to use panel modelling technique to examine the possible mutually influential relationships between satisfaction, sales, and profitability. Study lead to following observations:
• Company satisfaction performance in the past period positively affects current return on assets (ROA). ROA is the ratio of net income to assets. Thus, an increase in ROA means an unevenly larger
The company knows the demands of the customers and they are well orientated in the service and the knowledge of the products and this is the element that makes them prosperous. Jean’s Rare Find Books belief in customer service and satisfaction enables a comfortable and peaceful atmosphere and in return produces a strong customer loyalty for the company. Customer satisfaction and customer retention externally and internally is measured by the perspective of the customers and thus implements the reason for the company’s prosperity. Customer perspective is a key factor on how the customer views the company.
Today’s world competition is very strong in every kind of businesses. Every organisations must provide high quality products or services in order to survive, however their competitors also providing the same or comparable products or services. An important way to an organisation to get an edge over its competitors is to provide extra service to satisfy and delight their customers, which can retain them and also gain new customers. Therefore the achievement of customer satisfaction must be a major objective in all organisations.
Most every organization must deal with the issues of employee satisfaction in order to achieve their customer satisfaction targets and, consequently profitability. The paper considers the determinants of employee satisfaction using an empirical approach and premising arguments on extant literature. The focus on this paper is to explain the level of satisfaction among employees with an aim of providing dynamic recommendations to improve the worker satisfaction in firms. This will be achieved by examining published research and robust data obtained from interviews related to employee satisfaction, customer retention, and corporate profitability. The paper recognizes that employee satisfaction has fundamental implications for
In the competitive market where corporations vie for customers, customer satisfaction is an integral element of the organizational business strategy. Wal-Mart customers’ satisfaction ratings have powerful effects on the organization’s bottom line. If Wal-Mart’s customer satisfaction rate drops, this tells the organization that there are problems in areas of the organization that affects the customer satisfaction rating. Wal-Mart will have to correct these problems to ensure the organization customer satisfaction rate improves. A drop in satisfaction ratings for the organization affects sales and profit. Wal-Mart always ensures that their customer satisfaction rating is high enough to keep current customers and to attract new customers. Customer satisfaction is the key element of Wal-Mart to exist in this modern day world of business with such a diverse society.
Sales take place on facts more readily than on assumptions. Customer satisfaction is also a result of actually delivering value to the customer which he measures by factors like price, delivery and quality. Service is an important feature in any customer relationship and this too is dependant on these reasons that convey a perception of reliability.
Customer satisfaction refers to the ability of commodities, services and products that are supplied by a company to meet the consumer expectations (Beard, 2014). Profitability on the other hand refers to the ability to realize extra revenues from their total earnings after paying all their expenses (Grimsley, 2016). Customer satisfaction and profitability link of Whole Foods Company is vested in the company’s mission and values charter under the company’s core values. The company has got five key steps to realizing the link between consumer satisfaction and profitability link according to (WholeFoodMarkets,
It is imperative to satisfy customers and give them an amazing experience at the company. While it cost less to sell to existing customers and companies can increase profit by selling to the same customers; if customers are satisfied, there is more chance they will come back for more services or products. Satisfied customers are a free marketing for the company. However, it is the opposite if customers are dissatisfied. Dissatisfied customer will tell 8 to 10 people about his or her experience (O’Brien, A & Marakas, G. 2004). If by any reason, representatives see that the customer is not satisfy, they should act fast and fix the problem. Furthermore, there is more chance for sale representatives to sell to an existing customer that to a new customer. A good strategy for customer retention is to reward good customers. Companies can easily do
One interesting way to analyze customer satisfaction is to look at the apostles and terrorists. Apostles are those customers that are so pleased with a product or company, that they get more people to like the product as well. Terrorists are those customers who are so displeased that
Every for-profit business has one main goal: to maximize profits by selling as much of its products or services to as many customers as possible. It seems logical to think that the more customers that a business has, the more profitable the company will be. However, business managers should also be aware that some customers are more profitable to the company than others. Managers should analyze their customers to determine those that are the most profitable, and most important to keep satisfied, as well as those customers that may not be contributing to the profit of the business. Once these customers are determined, a manager can develop strategies to
Satisfaction is an evaluation of finite duration, made by the customer on product performance of the same, be it a good or service (Oliver, 1980). This review, according to the author, it tends to turn into a positive attitude (or not) by the consumer. Tse and Wilton (1988), defined as consumer response to the evaluation of the discrepancy between the previous and current performance expectations of a product as perceived after consumption. Oliver (1980) and Selnes (1998) argue that this is an essential variable to the continuity of a relationship and for future customer retention.
In a competitive marketplace where businesses compete for customers, customer satisfaction is seen as a key differentiator and increasingly has become a key element of business strategy.
Successful organizations today, typically all have one thing in common, great customer service and an effective means for measuring overall customer satisfaction. Whether the industry is sales or hospitality, the customer is internal or external, customer satisfaction is the key to an organizations overall success. Each one of us can think of great customer service we have experienced, but more importantly, human nature is to dwell on the bad experiences we have endured. In most organizations, operations managers play a key role in analyzing the customer experience, learning from the good and bad, and using this information to drive a customer centric culture. Thorpe (2012) conducted interviews with retail customers and found that most do not believe organizations take customer service and satisfaction seriously. The reality in today’s business world is organizations are placing the customer experience at the top of the list, primarily due to the vast competitive landscape and the continued increase in e-commerce. Organizations that are having success are listening to the consumers, building the customer experience through specific customer service measurements, therefore differentiating themselves from the competition.
“The marketing concept holds that the key to achieving organisational goals consists in determining the desired satisfactions more effectively and efficiently than competitors, in a way that preserves or enhances the customers’ and the society’s well-being.” Kotler (1991:16 & 26) this identifies that it is important for businesses to determine customer satisfactions more efficiently and effectively to gain a competitive advantage and help reach organisational goals.
Gupta, McLaughlin and Gomez (2007) “…set out to determine the principal drivers of customer satisfaction in a restaurant chain and, subsequently, to determine how customer satisfaction data can be most effectively used to improve the chain’s performance.” Their goals, therefore, were very similar to our own. The researcher’s constructed two separate models for analysis and interpretation of both perceived links. Data for the first model was obtained from the results of an intricately designed
There had been literatures and arguments that express the importance of improving employee satisfaction as it increases service quality and, in turn, improve customer loyalty and profitability. In a study about the relationship between and among employee satisfaction, customer satisfaction, and financial performance, the proponents cited the work of Rucci, Kirn, & Quinn (1998) in which discussed and analysed the case of Sears and used the Service Profit Chain. The report revealed that by improving employee satisfaction by 5 points customer satisfaction and sales increased by 1.3 points and 0.5% respectively. One of the literatures presented in the study explained that the reason why employee satisfaction has a direct impact on customer satisfaction (and in