Realization of Customer Importance by Firms

Topics: Customer, Customer service, Sales Pages: 7 (2228 words) Published: February 10, 2011

Why many firms fail to recognize the importance of customers until they are faced with a crisis?

Done by
Mohammed Fawas

word count:2149

Importance of Customers3
Word of mouth3
Feedback from customers4
Link between loyalty and profitability4
Reasons why companies fail to realize the importance of customers until they are faced with a crisis5
An Example: Why U.S Internet giants like E-bay, Amazon, Google and Yahoo failed badly in China6


Customers play a key role in the functioning of any business. For a business to function smoothly they should ensure the satisfaction of their customers. Many researchers have looked into the importance of customer satisfaction. Kotler (2000) defined satisfaction as: “a person’s feelings of pleasure or disappointment resulting from comparing a product’s perceived performance in relation to his or her expectations”. On the run many business organizations fail or neglect the role that customers play. The following essay highlights the importance of customers and the reasons why many business organizations fail to realize the same until they are faced with a crisis, with the help of illustrated examples

Importance of Customers

As the potential growth and success of a business lies on customers, the primary motive of a business should be to create satisfied and loyal customers. Don Peppers and Martha Rogers sum up the importance of customers eloquently as “The only value your company will ever create is the value that comes from customers- the ones you have now and the ones you will have in the future. Businesses succeed by getting, keeping and growing customers. Customers are the only reason you build factories, hire employees, schedule meetings, lay fibre-optic lines, or engage in any business activity. Without customers you don’t have a business” A customer provides an organization with that most organic of all advertising tools Word of mouth

Customers who are satisfied with the services of a business are more likely to create awareness among other people who are not aware of them. Further, there is the potential for repeat business which is the backbone of many businesses. It is obvious that a customer who has been provided with a product or service in the desired manner is likely to maintain a healthy relationship with the seller. (Role of Customer Service In Success Of Business, William King)

On the other hand dissatisfied customers tell at least twice as many friends about bad experience than they tell about good ones. For example, Johnson Controls, Inc.(JCI), discovered that 91 per cent of contract renewals came from customers who were either satisfied or very satisfied. A percentage point increase in the overall satisfaction score was worth $13 million in service contract annually. JCI also learned that those customers who gave a not satisfied rating had a much higher defection rate. After seeing the financial impact of customer satisfaction, JCI made improving customer satisfaction a key initiative. (R.Evans, 2008)

Feedback from customers

When a business receives feedback, it is able to see the customer's image of the organization and the impression of its services. This tool is invaluable in correcting systems as well as image management for the business. It is also an outsider's perspective, which provides the business owner or management a unique insight. Additionally, a satisfied customer would be more likely to participate in activities that help to generate customer preference data. This data goes back to the marketing function in assisting the organization to better target and attract its potential customers. For example: At Mc donalds. They have a form on the table itself for the customers to fill in regarding the services of Mc donalds. They can look into these forms for the customer feed backs if any innovation...

References: Dean, A. (2004). Links between organisational and customer variables in service delivery: Evidence, contradictions and challenges", International Journal of Service Industry.
King, W. (n.d.). Role of Customer Service in success of Business.
O 'Rourke, J. (2007). The Business Communication Casebook: A Notre Dame Collection.
R.Evans, J. (2008). Management & Control of Quality. Thomson Corporation.
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