Economic truths of satisfaction

In recent years, private and public sector organisations have been forced to reduce costs and increase productivity in order to remain profitable or operate within budget.  Unfortunately, for many this has had counter-productive results on productivity, effectiveness and corporate growth.

All-too-often, “productivity improvements” or “cost reductions” have been made at the expense of customer satisfaction and employee satisfaction.  This, in turn, leads to lost customers, high staff turnover, lost revenue and lost profit!

The cost of customer dissatisfaction

The intuitive link between customer satisfaction and loyalty is one that some find hard to quantify.  The fact that even satisfied customers defect has done more to drive companies to inaction than it has to demonstrate the clear business gains that can be derived from maximising customer satisfaction and harnessing the link between customer and employee value, satisfaction, loyalty and profit.

Customer satisfaction is seldom expressed in financial terms but there are five key economic truths that impact an organisation wishing to improve the bottom-line of customer service:

For customer lifetime value and revenue at risk calculators, and for further insight into how customer dissatisfaction may be impacting your business, please see our Tools and references page.

The cost of employee dissatisfaction

Employee dissatisfaction can also be measured in financial terms.  When employees experience problems and concerns with their employer or their job it can have a serious impact on:

Since customer satisfaction and employee satisfaction have such a direct influence on each other, when correctly managed, this can have a positive influence on profitability and growth.

Conversely, endemic dissatisfaction quickly leads to increased costs, reduced profits and corporate decline.