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The Contribution of Customer Satisfaction to Business Success

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Submitted By ThurayaTalib
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Customer satisfaction is defined as an "evaluation of the perceived discrepancy between prior expectations and the actual performance of the product" (Tse and Wilton, 1988, Oliver 1999). Several studies have proven that customer satisfaction, together with quality provided, is one of the key drivers of service performance for a company (Anderson et al. 1994; Fornell 1992). Main reasons for which a company should seek customer satisfaction are increased loyalty, effective feedback and suggestions, attraction of new customers through free word-of-mouth publicity, saving marketing and advertising costs, as well as retaining existing ones.

According to Keiningham, Munn, and Evans (2003, p. 37), “both practitioners and academics have accepted the premise that customer satisfaction results in customer behavior patterns that positively affect business results.” While it is highly argued that retaining current customers is easier than attracting new ones, as it would normally cost 20 times more to attract new customers rather than keeping existing ones per Carson Research Consulting, Inc. report.

Continuous customer satisfaction from the offered product will lead to an easy purchase decision every time the need for these products and services arises. Thus, customers tend to become loyal to these providers, where their satisfaction helps to increase customer loyalty, reducing the need to allocate marketing budget to acquire new customers, where their word-of-mouth will also bring potential customers, increasing revenue and profit.
According to Hoyer and MacInnis (2001), satisfied customers form the foundation of any successful business as customer satisfaction leads to repeat purchase, brand loyalty, and positive word of mouth.
As positive and negative feelings can coexist, customers may like parts of the service while rejecting other parts; nevertheless, these same

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