Financial Performance as a Determinant of Customer Satisfaction

Abstract

Across all businesses, financial indicators are one of the most essential aspects, as they can demonstrate customer satisfaction. The way a firm manages finances will impact the quality of services and products, as well as prices and other factors affecting clients’ experience. Therefore, a company with excellent financial management can allocate resources to improve customer-oriented activities, acquire innovative technologies, and introduce its services or products to the market successfully. In addition to that, targeted advertisements can help establish a trusting relationship with the target audience, remaining a vital asset in any business relationship (Kotler & Keller 2020). For example, the relevance of ads is critical in determining customer behavior towards the promotion, and the right positioning of an ad will ensure that the target audience trusts it (Kotler & Keller 2020). This paper aims to explore the connection between financial indicators such as profitability, liquidity, and cost management, and customer satisfaction. The indicators mentioned above play an essential role in maintaining a firm’s image, building customer relationships and determining its competitive advantage. In other words, financial indicators contribute to a company’s ability to operate sustainably while improving consumer engagement and satisfaction. In fact, studies show that appropriate financial management practices can increase a firm’s profitability by 40% while maintaining customer satisfaction at the highest level (Financial Management, 2021). On the other hand, poor performance management can lead to a 35% decrease in customer base and profit margin within one fiscal year (Financial Management, 2021). Thus, it is evident that financial indicators play a critical role in maintaining customer satisfaction and a firm’s profitability.