Article: ‘Neglected Outcomes of Customer Satisfaction’
The article focuses on how firms can improve their marketing strategies to satisfy consumer needs. Firms with satisfied consumers are likely to experience return sales and higher profitability. In the study, the authors designed the hypothesis around issues that are normally neglected by marketers. These relate to impacts of consumer satisfaction on efficiency of future advertisement and promotions and employee performance. The two hypotheses investigated are; H1 “customer satisfaction has a positive influence on a company’s future advertising and promotion efficiency and H2 customer satisfaction has a positive influence on a company’s future human capital performance”. The H3 states “customer satisfaction has a stronger influence on a company’s future advertising and promotion efficiency in markets with a high concentration than in markets with a low concentration” (Luo and Homburg, 133). The article demonstrates that an excellent customer satisfaction can be achieved by using systematic measurements to determine its level. In this case, the process applied in measuring the customer satisfaction level should be free from bias. A system that captures and store information pertaining to individual customers in order to make improvements according to their needs is highly recommended. It is also important to be attentive to target customers and establish their perceptions about the service. The business will be able to establish what is highly valuable to the target customers in order to meet their expectations.
Data collection and analysis
The researchers used secondary data in the study. The data from the annual American Customer Satisfaction Index was used in measuring the level of customer satisfaction. The data measures the level of customer satisfaction at the firm level. This data is obtained from various industries and account for about 43% of the American economy. The advertising and promotion efficiency measurement data was derived from Competitive Media Reporting and COMPUSTAT. Data from America’s Most Admired Corporations (AMAC) was used to analyze human capital performance. The data was then analyzed using various tools, using the estimating techniques. The researchers, however, ensured that error terms were eliminated. The Two-limit Tobit model was used in data analysis to determine the relationship among the variables.
Hypothesis Testing and Analysis
The study established that firms that improve the levels of customer satisfaction are able to develop superior human capital. These developments take place at the levels of front office employee and the management. The course article is based on strategic marketing that leads to overall profitability, customer satisfaction and better employees’ performance. From the article, it is evident that the quality of human capital in a firm influences customers’ satisfaction, as hypothesized in H2. The study confirms this hypothesis by showing that customer satisfaction is an expensive undertaking, which requires commitment of resources and creativity. However, it pays a lot in the long-term. To safeguard the loyalty of customers, the business should take various steps. First, the business should clearly identify the customer segment. After identifying the target customers, the business should commit resources and serve them i in a cost-effective manner. The findings call for the creation of employee performance measurement tools in relation to customer satisfaction. Firms can ensure total satisfaction of employees by utilizing a wide range of measurement approaches. The most appropriate methods include customer surveys, independent market research, using feedback from frontline employees, and using data from customer enquiries and complaints. Firms should incorporate customers in strategic tasks like product development decisions. Businesses can guarantee customer satisfaction by transforming the customer-satisfaction data into measurements of loyalty. In this case, the company can use a scale in order to gauge the loyalty level. The scale can range from completely satisfied (extremely loyal) to dissatisfied (extremely disloyal). To achieve a more accurate and realistic information about customer satisfaction, firms should make an inter-industry comparison. For instance, false loyalty may occur due to factors like loyalty-promotion programs such as airline ticket promotions. False loyalty can also occur due to high costs of switching to competitors as in hospital services when a patient is already under treatment or computer firms with reputable technology. Firms need to focus on attraction of high quality employees and strive to maintain them to realize customer satisfaction.
The article suggested that customers’ satisfaction influences a firm’s competitive advantage and market positioning. While frequent advertisements and surveys help to gauge customer loyalty, monitoring a firm’s communications strategies and their efficiency help to design customer satisfaction benchmarks. In the process, the firm would design customer satisfaction value propositions, and align them with its marketing communication strategies. Such approaches would lead to efficiency improvement and better positioning than competitors. In the growing intense competition, it is not enough for any business to satisfy customers. Any business seeking to gain competitiveness must ensure that its customers are fully satisfied in order to guarantee their loyalty. The study indicates that the customer satisfaction is the single most crucial driver of business success. There is a significant discrepancy in behavior between satisfied and very satisfied customers in every sector. Customer satisfaction presents a dynamic approach in measuring the business’ competitiveness from the customer’s perspectives. Since satisfaction influences behavior, a comprehensive understanding of the drivers of customer satisfaction will offer service businesses the information necessary in influencing the customer behavior to achieve sustainable success. Organizations use various methods to measure the level of customer satisfaction. Tracking customer satisfaction is a challenging task for businesses. Despite the challenges, customer satisfaction ratings are important in management decisions since they inform them of the need for strategy changes and design.
The study attempts to justify the benefits of customer satisfaction improvements. Firms struggle to balance the costs of customer satisfaction and advertisements against the intended benefits. The authors suggested that every firm needs to conduct a cost-benefit analysis using their own data to regulate marketing budget allocations. The study established that the customer satisfaction leads to lower resources’ consumption while realizing better efficiencies and improved marketing communication. This finding affirms hypothesis 1. The cost savings realized from customer satisfaction can be used to improve efficiency and competitiveness.
From the course resources, it is evident that firms cannot underestimate the value of customer satisfaction. Every firm must be proactive in defining and measuring customer satisfaction instead of waiting for customers to complain. The findings imply that customers rarely present their complaints directly to the business. Rather, they express dissatisfaction through actions like switching to competitors as well as talking to potential and existing clients.
Though there is a debate that customers may have unreasonable expectations, customer satisfaction confers many valuable benefits to the service industry that is mainly characterized by personalized services. The outcome supports the H3 that states “customer satisfaction has a stronger influence on a company’s future advertising and promotion efficiency in markets with a high concentration than in markets with a low concentration”. Consequently, customer satisfaction is achievable, more so in high concentration markets. Satisfied customers usually use the service more regularly and are less likely to switch to competitors compared to the less satisfied customers. Firms with a high rating in customer satisfaction survey are well insulated from price competition than those with a low rating. Additionally, organizations with superior customer satisfaction rating often provide a better working environment compared to those with a low rating.
Luo, Xueming and Homburg, Christian. “Neglected Outcomes of Customer Satisfaction.”
Journal of Marketing, 71.2 (2007): 133-149. Print. Web. < http://www.fox.temple.edu/cms/wp-content/uploads/2013/09/Neglected-outcomes-of-customer-statisfaction.pdf>.
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