KS Lye Research

Customer satisfaction is a growing concern to many leading companies throughout the world. More and more firms use satisfaction ratings as an indicator of the performance of products and services and as an indicator of the company’s future. Multinationoal firms are now promoting strategies for customer satisfaction instead of some form of market share strategy.

This shift in strategic thinking is based on the assumption that customer satisfaction is the best indicator for the company’s future as a high level of customer satisfaction leads to a high level of customer loyalty.

A high level of loyalty in turn leads to a steady stream of future cash flow, transaction costs should decrease and the costs of attracting new customers should be lower for firms that achieve a high level of customer satisfaction and loyalty.

Customer satisfaction reduces price elasticities, as satisfied customers are willing to pay more for high quality products and services. Hence, satisfied customers are likely to buy more frequently and in greater volume and to purchase other goods and services offered by the firm.