May 23, 2010

A link between profit and customer!

Customer satisfaction means customer loyalty which in turn is related to profitability. Customer loyalty can be defined in two distinct ways; the first defines loyalty as an attitude. Different feelings create an individual’s overall attachment to a product, service, or organization. These feelings define the individual’s (purely cognitive) degree of loyalty. The second definition of loyalty is behavioral. Examples of loyalty behavior include continuing to purchase services from the same supplier, increasing the scale and or scope of a relationship, or the act of recommendation.
When we talk about profitability we must consider satisfaction at first step towards the growth and profits. As more and more businesses is rapidly adopting e-commerce for customer convenience in term of transaction routine processes. So, what employees needs to know is the input-output information of services components and requires little domain knowledge.
Normally a customer satisfaction process for a product is based on the following steps:
1.      Need recognition - realization of the difference between desired situation and the current situation that serves as a trigger for the entire consumption process
2.      Search for information - search for data relevant for the purchasing decision, both from internal sources (one's memory) and/or external sources
3.      Pre-purchase alternative evaluation - assessment of available choices that can fulfill the realized need by evaluating benefits they may deliver and reduction of the number of options to the one (or several) preferred
4.      Purchase - acquirement of the chosen option of product or service
5.      Consumption - utilization of the procured option
6.      Post-purchase alternative re-evaluation - assessment of whether or not and to what degree the consumption of the alternative produced satisfaction
7.      Divestment - disposal of the unconsumed product or its remnants
Moreover, to earn more and more profits from same type of customer is quite a tough job. To address this problem, either behavioral or service system design changes are needed. Changing human behavior and existing lifestyles contribute to the vision of sustainable development, but it proves to be an insurmountable task over a short period of time.
Alternatively, changing the design of product-service system to reduce the behavioral drawback could be a potentially easier way towards sustainable development. Changing system design requires understanding how consumer acceptance of more sustainable solutions is formed, influenced or changed, what are the influencing factors and what is the leverage points for the best results with lowest costs and understanding consumer perceptions and behavior in this context is crucial. However, the consumer decision-making process is much more complex and involved than just a simple decision about shifting from owning a product towards paying per use of it.  
The consumer is a moody creature that swinging between rationality and emotional behavior. In order to foster the development and profitability it is necessary for organizations to go toward sustainable production and consumption systems, the development of new market offers that would be designed as environmentally and functionally sound and tested for customer acceptance prior to market launch is desirable.

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