2.2.2. Influence of satisfied customers

In general, the success achieved with customer satisfaction increases the value of the company, but how do both parameters link together? Matzler and Stahl have visualized this in a simple flow chart, showing how customer satisfaction results in the increase of enterprise value:

Value" class="wp-image-10672 size-full" height="250" src="https://sgbs.ch/wp-content/uploads/Figure-4-Customer-Satisfaction-and-Enterprise-Value.png" width="441"> Figure 4: Customer Satisfaction and Enterprise Value²¹

Satisfied customers stay loyal longer and are willing to buy more products or services. They not only tend to repeat purchase, but also to cross-sell, as they might also extend their interest and buy other products, too. Customers can also be a source for new product or service ideas. Existing customers cost less than new customers because all transactions are routine. A satisfied customer is also less price-sensitive and will not immediately react on price campaigns from competitors or also accepts minor price increases, if he is satisfied with the product. In general, a satisfied customer pays less attention to competition. Last but not least, they might talk favorably about the company and its products.²² Thus satisfied customers are a secure source for positive word-of-mouth propaganda. This unpaid form of promotion, in which satisfied customers tell other people how much they like a business, product or service is considered to be the most effective form of promotion.²³

²¹ Matzler, K., Stahl, H. (2000), p 631
²² Kotler, P; Keller, K. L. (2007), p. 138
²³ http://www.businessdictionary.com/definition/word-of-mouth-marketing.html [27 May 2013]