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Have you seen The Customer-Focused Marketing Playbook?

This comprehensive and practical guide to the latest ideas in customer-focused marketing hands you over 200 packed pages of strategy, best practices, do's and don'ts, practical know-how, facts and figures, and ideas to optimise your marketing strategy, boost sales, market share, increase ROI and profit.

Get it on Amazon (Kindle/Print)

Customer satisfaction tied to stock performance

Customer satisfaction has now been directly linked to a company's stock market performance, with companies showing higher scores on the American Customer Satisfaction Index (ACSI) and the National Customer Satisfaction Index UK (NCSI-UK) also producing higher stock returns than competitors and greatly outperforming market indices, according to a study from the University of Michigan.

The study examined the relationship between customer satisfaction and financial success by creating portfolios in which stocks are bought long or sold short based on performance in the ACSI and NCSI, which use the same measurement technology.

The cumulative return of a US$100 investment in the ACSI fund from April 2000 to April 2012 was US$490, a gain of 390%. By comparison, the S&P 500 returned only US$93, a 7% loss.

In the United Kingdom, the NCSI portfolio earned a return of 59% from April 2007 to June 2011, and the FTSE 100 had a negative return of 6%.

"Companies with highly satisfied customers generate superior returns because customer satisfaction is critical for repeat business, and that type of business is usually very profitable," said ACSI founder, Claes Fornell. "That is, loyal customers tend to be highly profitable as long as their loyalty comes from their satisfaction and not because prices are low."

The study also found that high levels of customer satisfaction lead to high levels of positive cash flows with low volatility, and increases in customer satisfaction are associated with subsequent positive earnings surprises.

However, the market fails to incorporate the full value of this intangible into stock valuations. Investors tend to react to the tangible results of customer satisfaction rather than information about customer satisfaction itself, which is why customer satisfaction funds have outperformed the market.

Sources: ACSI; CFI Group; University Of Michigan / The Marketing Factbook.
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Categorised as:

Customer Loyalty
Knowing The Customer
Marketing Know-How
Marketing Technology

Have you seen The Customer-Focused Marketing Playbook?

Learn the insider's tricks and techniques to turn every customers into a 'super spreader' for your brand. It's better than free advertising. Once you start this ball rolling, your brand can grow rapidly through word-of-mouth, advocacy, influencers, and customer loyalty. Super-charge your company's marketing strategy, build up your market share, and make more sales through repeat business and customer loyalty.

Find out what works - and what doesn't - and who's succeeded, and how they did it. See how the world's top brands keep their competitive edge against all odds.

The Customer-Focused Marketing Playbook walks you step-by-step through the techniques, metrics, reporting, analysis, marketing models, technologies, tools and innovations for successful marketing strategies - both traditional and emerging - with expert guidance from thought leaders in every major market. Find out the best ways to gather, analyse, and act on customer data to increase profitability, build your brand, empower your customers, beat the competition, reduce churn, and increase customer profitability. This is a marketing book you simply can't afford to be without.

This book aims to hand you all the facts, figures and research data you need for the best decisions for a more profitable, more engaging marketing strategy. It also highlights all the facts, forecasts and trends identified by our experts from the global Marketing Factbook's vast database of market data, news, studies, research and articles, and presents you with an invaluable library of ideas and practical support you can call upon at will.

With The Customer-Focused Marketing Playbook at your side, you'll have instant access to a true goldmine of easily adaptable and up-to-date strategies, walk-throughs, trends, research and market data, plus all the supporting arguments you need to build a solid, profitable marketing strategy.

Get it on Amazon (Kindle/Print)