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Small-Business Advertising: The Customer Satisfaction Boost

Advertising and marketing can get costly, especially if you’re a small business with limited resources. It’s not for nothing that Internet and social media marketing, which are considered to be more affordable, are widely used among SMBs. A quick search on Google and you come up with 10,000 ideas on how to market on Twitter, Facebook, blogs, and whatnot. We even wrote about it here extensively. In this post I’m going to talk about how you can make more out of any dollar you spend, no matter where, with a little help from something called customer satisfaction.

Researchers from the University of Central Oklahoma and the University of Texas have researched the links between brand equity, advertising, and customer satisfaction. Brand equity is marketing term referring to the monetary value a brand name has, assuming that a well-known and established brand can command higher margins for its owners. Though hard to quantify, brand equity is strategically crucial and therefore is something that businesses, small and large, aspire to obtain and enhance.

Two main ways were found to be useful in increasing brand equity: advertising spending and customer satisfaction, which are both believed to have a linear connection with brand equity. While each method’s relationship with brand equity was tested separately, no one ever researched the combined effect of the two, until now.

The researchers found that when your customers are more satisfied with your service then with your competitors’, you need to spend less on advertising to gain greater brand value. On the other hand, if customers are less satisfied with you, increasing your advertising efforts will only achieve you limited brand equity. In sum, the research results suggest that by providing superior customer service, you can enhance your brand equity for cheaper, and I believe that is great news for small businesses. Though these findings are pretty intuitive, they are a call to action for small business owners to start acting on their intuition.

Small businesses are known to be better at providing personal and attentive customer service; 81% of Americans believe this, and clearly small businesses should continue to build this experience among consumers. When times are tough and especially, but definitely not only, when budgets are tight, providing superior customer experience is a differentiating factor for small businesses. With that said, using smart marketing methods and leveraging inexpensive marketing channels to promote your business can take customer satisfaction even higher.

Based on: Samaraweera, Manoshi and Betsy D. Gelb. “Wringing More Value from Advertising Dollars: the Customer Satisfaction Boost.” Journal of Business Strategy 32.6 (2011): 24-29. Web. 11 Nov. 2012.

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