Neglected Outcomes of Customer Satisfaction

SUMMARY

According to the Luo and Homburg; customer satisfaction is a major factor in firm’s profitability and it positively affects further business results. There are several outcomes of customer satisfaction. In this journal, Luo and Homburg distinguish four categories. One of the basic category is overall performance related outcomes which is mostly about financial performance measuring return on investment and return on assets. Other three categories explain us the positive impact of customer satisfaction on profitability named customer related, efficiency related and employee related outcomes. The two intermediate outcomes of customer satisfaction which are firms advertising and promotion efficiency (efficiency related) and its human capital performance (employee-related) are always neglected. Luo and Homburg investigate and made data analysis in order to show the positive results of these neglected outcomes. They maintained that; customer satisfaction has a positive influence on companies’ future advertising and promotion efficiency mostly in high concentrated market. They defined dependent variable, ads and promotion efficiency, as the optimized conversion ratio of a firm’s marketing costs to its sales performance, or firm’s ability to convert marketing communication costs into results. Result shows us better customer satisfaction lead to positive word of mouth communication, that is free advertising, also satisfied customer are less price sensitive therefore willing to pay a higher price premium. Also another important result is that; there is a strong evidence of customer satisfaction over improving customer loyalty. Regarding to the empirical findings of Luo and Homburg; customer satisfaction leads to save future advertising money.
Moreover; customer satisfaction has a positive influence on a company’s future human capital performance in markets with low concentration than high concentrated market. This other neglected outcome related employee results explain us; customer satisfaction promotes firms attractiveness to highly qualified potential employees and executives. This highly employee satisfaction; boots employee’s loyalty. Therefore, increase in firm human capital performance is that there is positive atmosphere in firms with satisfied and loyal customers because employees enjoy their job and work harder. It is also inevitable that there is a strong interaction between firm’s employee and its customer.

Source

Luo, X. & Homburg, C. 2007. “Neglected Outcomes of Customer Satisfaction” Journal of Marketing. Vol.71. p: 133-149.

Hülya Nur Kocaman
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