Customer satisfaction is a measure of how the customer perceives the product or the service and how satisfied is he or she with it. Customer satisfaction is very important because to this companies can understand where to improve their product or service. In fact most of the leading managers across the world have vouched that customer satisfaction measures can help in improving the way they run their business. This article talks about how this is possible.
- Understanding of Consumer Repurchase Intentions
If a customer is satisfied he or she will recommend the product to people around him or her. This is reflection of the customer’s loyalty towards a product and the direct indicator of whether the customer will buy the product again. This influences other people to buy product since it shows how much confidence the existing customers have in the product.
- Differentiation Factor
Since the competition in the market is very stiff, customer satisfaction can be a great differentiator. While the products offered by competing companies will be the same, the customer satisfaction score can be a good differentiating factor for the product not only does this help in recommendation and repurchase but also helps in generating good market reviews.
- Reduces Customer Churn
If customer is not satisfied then he or she will leave and try another product. This means the company will have to put in extra efforts to get another customer and thus maintain the same level of revenue. This is called customer churn and can be a huge cost drain on the company. Therefore a customer satisfaction scores can help a company put in place stringent processes that can help and retaining customers and ensuring that the product meets customer expectations. Companies often practice secret shopper routines to understand customer perceptions and prevent them from leaving.
- Improvement in Customer Life Cycle Value
This is in continuation with the above point. If the customer churn is low then the life cycle of the customer is high and the company can extract a lot of value form the customer during this time. This can only happen if the customer is satisfied with the product and sticks around as a result.
- Reducing Negative Perception About the Product
The customer satisfied him or she will always give positive reviews about the product this not only helps in preventing the negative reviews but also helps in reducing any sort of negative or confusing perception about the product.
- Savings on Cost
Once a customer has been acquired by a company it is always cheaper to retain this customer than to get a new one. Since one has already established some sort of connection with the customer therefore it is easy to make the customer stick around. To acquire a new customer the company has to spend a lot of marketing budget. Therefore the customer satisfaction is very important and it helps directly in saving costs. This is again an extension of the reduction in the churn of the customers.