Increasing Business Profitability By Improving Customer Satisfaction

We all know that highly satisfied customers results in big sales with huge profits. And so every business tries hard to satisfy its target market by delivering extreme satisfaction in hope to achieve the aforementioned benefits (big sales + huge profits).

Related Fact:  Research shows that in case of extreme customer satisfaction WOM (Word of mouth marketing) occurs more frequently (1)

Now the problem is How are you going to deliver that extreme level of satisfaction when you aren’t sure what actually constitute it. Or in other words what makes that satisfaction, what are the ingredients ?!

And once you know what really makes it, only then your brand will be in a position to deliver it effectively and earn the above mentioned benefits.

And that is what you are going to learn from this article. This brief article is not only dealing with the identification of those exact ingredients, but also provides an actionable approach on how to utilize those identified ingredients to provide extreme customer satisfaction.

So let's get to the article ;-).

Most Profitable Customers Identification

This is the first and very important step of the whole process; you got to identify precisely those customers who are the most profitable ones (in your target market). And to do that you need to set a benchmark or a measuring standard for your target market that divides your target on the basis of profitability (for instance least profit customer group, average profit customer group, above average profit customer group, high profit customer group). 

And once you identify the high profit customer group (HPCG) , go for the next step.

Motives/Reasons

Now you have identify the high profit customer groups motives, reasons that Induce, persuade them to consider your brand (product/service), push them to buy your products/services.

For instance some customers from the HPCG would consider your product/service for its quality, effectiveness in fulfilling the intended purpose, while others would consider it for its symbolic value (Symbolic Value: The abstract value or brand position in customer mind), in brief there could be myriad of reasons/motives.

Related Fact: Studies have shown that a dissatisfied customer tells, on average, 10-20 people about his or her unfavourable service experience (2).

Now the problem is how to identify such motives/reasons precisely, well it’s easy and you got to do this one by the book. According to well documented, objective research, traditional research (qualitative and quantitative) can provide  precise data on markets, market structures, market trends, customer behavior, attitude so on and so forth ⁽³⁾.

So traditional research is the way to go and to make it even more refine (to make your research data more objective, clear, exact), another study has shown that using web and social media research techniques can help you in gaining insights on those areas where traditional research (qualitative and quantitative) techniques aren’t able to get any information or data ⁽⁴⁾.

Clear Picture

Once you get the precise, clear, objective picture regarding the major motives/reasons of HPCG via traditional/internet research, it’s time to improve your brand (product/service) on basis of those findings. 

While at the same time assessing the whole situation, as some improvements (motives/reasons) would work better than others therefore focusing more on those would be a lot beneficial than focusing on all of them.

That's it, that's how you can utilize the identified ingredients (reasons/motives) to deliver extreme customer satisfaction!

That's how you increase your business profitability by improving customer satisfaction!

Over to you guys, share your ideas about increasing customer profitability through customer satisfaction, comment box is just under ;).

Related Fact: It costs 6-7 times more to gain a new customer than to keep or retain an existing one (5).

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References:

1. Anderson, E.W. (1998), “Customer satisfaction and word of mouth”, Journal of Service Research, Vol. 1 No. 1, pp. 5-17.

2.  Brown, S.W. (1997), “Service recovery through IT”, Marketing Management Journal, Vol. 6 No. 3, pp. 25-7.

3.      Proctor, T. (2000), Essentials of Marketing Research, Pearson Education Limited, Essex.

4.      Mahr, D. (2011), “Customer co-creation of knowledge during the innovation process”, European Marketing Academy Conference (EMAC 2011), Ljubljana, May 24-27, 2011

5. White House Office of Consumer Affairs