In most cases, managers perceive that improvement of the customer satisfaction directly influences financial performances. However, the reality proves to be more complex and complicated. For this article, “The High Price of Customer Satisfaction,” the leading research question is “does increasing customer satisfaction produce increased profitability?” The increment of customer satisfaction does not directly influence the business’s profitability. This is the hypothetical statement being tested in the research.
The method of data collection and the research design utilized in the research study is complex and valid. The primary information used in the assessment of the connectivity between customer satisfaction and increment of the business profitability was obtained from two sources. Dataset one that was contained in American Customer Satisfaction Index information ranging from 2000 to 2009 across AMEX, NASDAQ and NYSE-United States Companies. Dataset two contained around 162,552 customer satisfaction ratings as well as categories that are cutting across more than 315 brands within the United States.
The results of the study suggest that the connectivity between the satisfaction of the customer and the customer expenditure behaviour depicts are a shallow and weak relationship. This means that even if the customers are satisfied with the products or services offered by the business organization, it is not a guarantee that the customers will spend more or increase their purchase rate. Also, the research finds that the organization’s returns on improving customer satisfaction is in most cases is trivial or even negative return. This shows that there is the very minimal influence of the customer’s satisfaction with the business profitability.
In conclusion, the research has proved a positive hypothesis since there is no direct connection between customer satisfaction and business profitability. What mainly matters is not the satisfaction of the customers but how the clients rank the business’s brand within the satisfaction in comparison with the other potential competitors. Therefore, on top of the customer’s satisfaction, the business organization should ensure quality services and products that are competitive.
Keiningham, T., Gupta, S., Aksoy, L., & Buoye, A. (2014). The high price of customer satisfaction. MIT Sloan Management Review, 55(3), 37.