Marketing Campaign & Strategic Planning - Assignment Example

Business Explain how satisfaction and retention positively impact profitability? The objective of any company around the world is to build long-term profitable relationships with its customers. Wherever the word profit arises the importance of customer satisfaction becomes more and more important. Most of the research results show that customer satisfaction is highly related to the financial performance of the company in the long-run as well as in the short-run. The existence of this positive relationship has been justified by many researchers like, Nelson, Rust, Zahorik, Rose, Batalden, and Siemanski (1992).

(Zhang et al 2009)Everything a company does is done for one sole objective; to increase customer loyalty. Once the customer is loyal to a company then an imaginary contract is signed between the company and the customer which becomes hard to break. A loyal customer will be hard for the other companies to influence and in this way loyalty will act as a revenue sustaining agent for the company. Another major benefit of satisfied customers is that they become an un-paid marketing agents for the company’s brand, as they are unintentionally carrying out a word of mouth campaign for the company which further gives a boost to the sales of the company.

Explain how customer dissatisfaction makes it difficult to attract new customers and why it increases the cost of marketing.It is true that a satisfied customer increase the profitability of a company, but a dissatisfied customer decreases it by two folds. It is important for a company to pay special attention to what the customers wants rather than giving them something they hardly value. A dissatisfied customer will always share his/her poor experience with others which will further hurt the brand name.

According to an article of customer service facts, a happy customer will share his/her experience with 4-6 people however a dissatisfied customer will tell it to 9-15 people. (Customer Satisfaction Facts)In this way a bad experience of one customer can take away 9-15 possible customers. This high risk of bad mouthing of a dissatisfied customer increases the marketing costs of the company which in the struggle to regain the initial position runs heavy advertisements and promotions to re-capture the place in the customers mind.

(Richins et al 1983)Works CitedCustomer Service Facts. (n.d.). Customer Service Facts. Retrieved June 15, 2014, from http://www.customerservicemanager.com/customer-service-facts.htmHallowell, R. (1996). The relationships of customer satisfaction, customer loyalty, and profitability: an empirical study. International journal of service industry management, 7(4), 27-42.Richins, M. L. (1983). Negative word-of-mouth by dissatisfied consumers: a pilot study. The Journal of Marketing, 68-78.Zhang, C.

, & Pan, F. (December 2009). THE IMPACTS OF CUSTOMER SATISFACTION ON PROFITABILITY: A STUDY OF STATE-OWNED ENTERPRISES IN CHINA.