The Contribution Of Business Units To Overall Company Customer Satisfaction And Profitability

Abstract

The relationship betweencustomer satisfaction and profitability is well-researched and accepted.  There seems to be a lack of information oncompanies with business units and how satisfaction with these business unitsaffects the business units’ profitability and the overall customer satisfactionwith the company. The article aims to determine whether customer satisfactioncan be used as a predictor of the level of profitability a business unit shouldachieve and how this impacts on the company as a whole. The study is of aquantitative nature and uses both questionnaires and financial data. All activecustomers of a major agricultural business in Central South Africa wereapproached to determine customer satisfaction. Published financial reports overa five-year period provided the contribution to net profit data for eachbusiness unit. The results indicated that there is a definite relationshipbetween the business unit performance from a customer satisfaction standpointand profitability, with a few exceptions. However, the level of profitabilitycould not be predicted as all of the business units had relatively high levelsof customer satisfaction, but profitability spanned a wide range. Businessunits with the least satisfied customers have a bigger impact on overall customersatisfaction, indicating that in order to reach higher profitability levels,the main focus should reside with the worst performing business units. Thegreater good of the company should be paramount for all the business units, asthe ‘bad apples’ can have an inflated negative impact on overall customersatisfaction and affect other business units adversely.