Realization of Customer Importance by Firms - 2214 Words

MBUS INDIVIDUAL ASSIGNMENT: Why many firms fail to recognize the importance of customers until they are faced with a crisis? Done by Mohammed Fawas tp023152 word count:2149 Contents Introduction 3 Importance of Customers 3 Word of mouth 3 Feedback from customers 4 Link between loyalty and profitability 4 Reasons why companies fail to realize the importance of customers until they are faced with a crisis 5 An Example: Why U.S Internet giants like E-bay, Amazon, Google and Yahoo failed badly in China 6 Conclusion 9 References 10 Introduction 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†¦show more content†¦Companies should be able to retain their customers in order to attain high profitability. It is claimed by Reichheld and Sasser (1990) that a 5 % improvement in customer retention can cause an increase in profitability between 25% and 85%. According to Buchanan and Gilles (1990), loyal customers tend to be less prices sensitive and are satisfied with their relationship with the company and also less likely to switch to competitors. As loyal customers have more experience with the business, they need less assistance, make fewer calls to the call centre and require fewer visits from the sales representative. This reduces cost for the business and increases profit. (Dean, 2004) Reasons why companies fail to realize the importance of customers until they are faced with a crisis Many companies fail to take into consideration the desired needs of the customers which result in their failure. They do not do a proper research of the market which leads to misconceptions and finally the customers switch to other firms from which the desiredShow MoreRelatedFormulation and Implementation of Corporate Strategy Essays709 Words   |  3 Pagesand human organization it is or intends to be, and the nature of the economic and non-economic contribution it intends to make to its shareholders, employees, customers, and communities (Ghoshal, Lampel, Mintzberg, Quinn, 2004, pp. 72). This paper will discuss formulating strategy. It will also discuss implementation and its importance. Formulation Corporate strategy has two components; formulation and implementation. Formulation produces a clear set of recommendations that help revise theRead MoreThe Relevance Of An Organization898 Words   |  4 Pagesrelevance that knowledge has in an organization. According to Popsa and Nicula, knowledge is directly proportional to the competence of employees working in a firm. 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