Does Higher Customer Satisfaction Necessarily Mean More Sales?

In brief, the answer is “No!” – to the question increase customer satisfaction means increase sales , one must do more than merely drive customer satisfaction scores up. Researchers at the Chartered Institute of Management Accountants, who have been delving into the customer service practices of a major American housebuilder, were expecting to find that impeccable customer service would make it easier to keep prices high, reduce marketing costs and improve brand loyalty – all of which would ultimately lead to strong financial performance. But it is not quite work out like that: what they actually found was that although there are financial benefits of keeping customers generally happy, profits start to tumble once you hit satisfaction levels of 90 to 95%.

So what’s going on? Well, put simply, good customer service is expensive. ‘Companies can overspend on satisfaction, ‘ says research wonk Kenneth Merchant. ‘Moderate customer satisfaction may be good enough for many companies, given that there are diminishing returns to the improvements and investments in customer satisfaction. ‘ Customer service already accounts for a high proportion of many companies’ costs – up to 60% in the case of hi-tech firms, according to analyst (which is why an increasing number of firms look to save their pennies by outsourcing their operations). And if you were so minded, you could spend a lot more. So at some point you have to draw the line, or your cost of sale gets too high.

This research rather goes against the grain of recent trends. Many UK firms have raised their game in the customer service stakes in recent years – led by the likes of John Lewis, our companies were recently voted as having the best customer service in the world in the recent UK Customer Satisfaction Index (by UK punters, admittedly). And such measures have increasingly become among the most important quality performance indicators. But this research reminds us that you can go too far – there are times when good is good enough. Another good example is the lunch experience at fast food restaurant. As you decided to go for the lunch at fast food restaurant you decide to use drive through and order a cheese burger, French fries and a larger coke. First you get into a line of others cars , place a order, pay your money and without a word of smile hands out a bag contains your order. You drive away once you pulling out a fry hoping for a crisp and instead it was soggy and luke warm. Surprisingly you got regular burger instead of cheese burger your ordered. Your lunch experience is bad. Let suppose fast food is committed to customer satisfaction.

They advertise that if there is any dissatisfaction they will immediately replace the order free of charge and even deliver a new meal wherever you are. This increase customer satisfaction However, only customer satisfaction is not the ultimate goal. Because to be a profitable business an organization must also be efficient. Thus if the fast food restaurant has to hire more people to cook more burgers then quickly will recognize that the cost of being total focused on effectiveness, without efficiency will result in an unprofitable situation.

Source by Imran Asif

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