B2B | Small Business

Does Maximizing Customer Satisfaction Maximize Profitability?

Author: Ian Linton
Publish Date: 


Your business risks losing customers through the effects of competitive activity and natural wastage. An average business loses 10 percent of its customers each year, according to DestinationCRM.com, an online site dedicated to discussion of customer relationship management, while cutting customer losses by 5 percent can boost profits by 25 to 125 percent. By maximizing customer satisfaction, you can retain customers for longer so that they continue to make a contribution to revenue and profitability. This has a further effect on profitability because the cost of acquiring new customers is much higher than the cost of increasing sales to existing customers.


In sectors such as financial services, the top 25 percent of customers account for the majority of a company’s profits, according to Pitney Bowes. Focusing on customer satisfaction and loyalty is therefore essential to maintaining profitability. You can maximize customer satisfaction by delivering what is valuable to your customers so that they continue to come back to you to buy more of the products and services that meet their needs.

Lifetime Customer Value

The longer customers remain loyal to you, the more valuable they are to your business. You can use a metric such as lifetime customer value to measure the impact of customer satisfaction on long-term profitability. Lifetime customer value represents the total profits a customer generates while they continue to do business with you, according to the software and analytics company SPSS.


Satisfied customers have an indirect impact on profitability when they share their opinions with other consumers. Social networking sites play an important part in shaping attitudes towards a company and its products. By maximizing customer satisfaction and encouraging customers to post their views on a forum or product review site, you can attract new customers who use the reviews to make their purchasing decisions.

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