What are the benefits to a business of having a satisfied customer?

Key Benefits of Customer Satisfaction in Marketing

Customer satisfaction is a fundamental concept addressed in all marketing textbooks and many organizations consider it the most important marketing goal, because it should deliver ongoing customer loyalty and resultant enhanced profitability.

Table of Contents Show

Key Benefits of Customer Satisfaction in Marketing
Simple Model of Customer Satisfaction Benefits
Interrelated Benefits of Customer Satisfaction
1 — You will stand out
2 — Customers will appreciate that you are invested in helping them
3 — And they will be more invested in helping you
4 — Happy customers will help you attract new business
5 — Happy customers will help you improve consumer confidence
6 — Happy customers are more likely to remain loyal
7 — Measuring satisfaction doesn’t have to be hard

But there are actually many more benefits of customer satisfaction, as shown and discussed in the following table:

Benefits of Customer Satisfaction	Discussion
Increased customer loyalty	Satisfied customers are more likely to stay with the firm for a longer period, which can significantly increase sales revenue and profitability over time
A strong competitive switching barrier	Existing customers will be less interested in competitive offers
Higher amount of average purchases	The firms will generally gain greater share of customers’ purchases in that product category. Typically satisfied customers will increase their purchase quantity over time
Increased word-of-mouth (WOM)	Satisfied customers are more likely to recommend the brand, product or firm to their family, friends and social media connections
Lower promotional expenditure is required	As a steady flow of new customers should be generated from word-of-mouth referrals, reducing the need to generate new customers from various promotional activities
More stable sales revenues (cash flows)	This occurs from the combination increased customer loyalty, the competitive switching barrier and enhanced new product successes.
Greater success of new products and line extensions	The firm will achieve greater success with new product launches, as generally they can target existing satisfied customers with a significant degree of success. In fact, many satisfied customers look forward to new products from the companies that they like to deal with.
Increased opportunity for product/service recovery	Service recovery refers to a firm (usually a service firm) being able to fix a problem/complaint for a customer in order to keep the customer satisfied. This is more likely to happen as satisfied customers are more likely to approach the firm for a solution.
Greater voice-of-customer inputs	Satisfied customers are more likely to be interested in working with the firm (through forms of market research) to provide input to new product, process and service initiatives.
Stronger staff-customer relationships	Many service firms pursue strong customer relationships as a key part of their marketing strategy. Clearly relationships are stronger and more productive when working with satisfied customers.
Reduced price sensitivity	Satisfied customers value the overall experience and product of the firm and are less concerned with price in their overall assessment.

Simple Model of Customer Satisfaction Benefits

Here is a straightforward model for outlining the benefits of customer satisfaction.

A more complex and interrelated model is provided in the next section down.

As shown in the model, the key benefits of customer satisfaction includes greater customer loyalty, reduced price sensitivity, enhanced positive word-of-mouth and increased share of customer – which all adds up to increased long-term profitability.

Key Benefits of Customer Satisfaction
(Click to enlarge)

Interrelated Benefits of Customer Satisfaction

As can be seen, there are quite a number of strong reasons why customer satisfaction is often actively pursued in a firm. Many of these reasons have a direct impact on the firm’s bottom-line financial performance.

In addition, many of these factors are interrelated and help reinforce each other. For example, strong and positive word-of-mouth helps drive new customers, which increases sales revenue streams and profitability.

But strong and positive word-of-mouth also enables the firm to reduce (or get more impact from) its overall promotional budget, which in turn reduces marketing costs and helps deliver enhanced profitability.

These interesting and important interrelationships are outlined in the following model:

Interrelated benefits of customer satisfaction
(Click to enlarge)

1 — You will stand out

The Harvard Business Review reports that 84% of customers say their expectations were not met during their most recent interaction with a business. This, of course, leaves a lot of room for improvement. A sure fire way to set yourself apart from your competition is to provide customers with friendly, knowledgeable, and easy-to-use customer support. If you can provide a consistent and relevant experience, you will give your customers no reason to complain or, worse, look for a better option. And there is always a better option.

2 — Customers will appreciate that you are invested in helping them

The number one reason why customers leave a business is not, as many assume, because they found a better price. The U.S. Small Business Administration and the U.S. Chamber of Commerce report that 68% of customers leave a business because they are upset with the treatment they’ve received from companies who seem indifferent to their wants and needs. Of course one way you can make sure you are meeting those wants and needs is to ask, over time, for feedback.

3 — And they will be more invested in helping you

Customers will provide you with feedback if it means you can provide them with a more efficient and relevant experience. And, in fact, that’s just what many businesses are doing. According to Gartner, brands which are most successful at delivering a superior customer experience are those who regularly implement customer experience improvements based on customer feedback. Feedback provides them with insights into how their customers actually think and behave, making it easier to plan, create, and improve the customer experience for maximum payoff.

4 — Happy customers will help you attract new business

These days, consumers regularly read reviews before they make a purchasing decision. Search Engine Land reports that about 85% of consumers read as many as 10 online reviews just to determine whether or not they can trust a business. With these kinds of numbers, the last thing you want is for potential customers to stumble across negative reviews of your business. Survey your customers to find out what they like about you and don’t shy away from sharing their feedback. Let your most satisfied customers be your business’s biggest advocates.

5 — Happy customers will help you improve consumer confidence

eMarketer finds that while consumers are eager to purchase products from brands they know and love, they place less importance on product descriptions offered by manufacturers and more on the opinions of other consumers who have actually used the products. For this reason, you should not only make sure that all of your customers are satisfied with your offerings but also ask your customers to share their positive opinions. And, again, be sure to prominently highlight those opinions on social media and your website! You’ll build more trust and, as an added bonus, even improve your SEO ranking!

6 — Happy customers are more likely to remain loyal

Forrester reports that 81% of customers are more likely to engage in repeat business with companies that exceed their expectations. What this means is that much of your business’ growth is likely to stem from focusing on retention. You will not only spend less on acquiring customers, but improve your chances of selling more – and at higher costs – to your existing customer base. Investing in the design and delivery of a superior experience will pay for itself when you see your customers returning time and again.

7 — Measuring satisfaction doesn’t have to be hard

Measuring customer satisfaction doesn’t have to be chore. There are a number or easy-to-use but effective metrics you can use to ensure that your customers are happy with the design and delivery of your customer experience. Simple metrics like CSAT, CES, and NPS have become increasingly popular as they provide reliable data businesses can use to assess both their current performance and future prospects. In their own ways, each metric will help you understand what you need to do to improve your customer experience, increase retention, and beat the competition.

Encouraging customers to provide you with feedback is an integral part of delivering and maintaining a superior customer experience. Routinely requesting, analyzing, and implementing their feedback will ensure that you are aware of your strengths, able to address your weaknesses, and always stay on top of whatever expectations your customers have of you.