The relevance of customer satisfaction in SME

Below is the introduction of a working paper on the relevance of customer satisfaction for Small and Medium Enterprises. The purpose of this academic paper is to show the gap which exists in the literature on customer satisfaction and customer loyalty between what has been studied (big companies) and what actually constitutes the very essence of business in Europe, i.e. small companies.

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Introduction

Small and Medium Enterprises (SMEs) account for more than ninety-nine percent of firms in Belgium and at the European level about ninety-five percent of firms are SME’s, i.e. have less than 250 employees. The societal role of SMEs is widely recognized and has attracted the attention of most western governments. Although debated, varying from study to study, and depending on the very definition of mortality and on the timeframe observed, the mortality rate of new ventures is acknowledged as being high. Gilbert and Eyring (2010) cite a 85% mortality rate after three years, whereas Shepherd et al. (2000) report a 90% rate after ten years.

The socio-economic impact of SME’s going out of business is tremendous which explains why authorities and institutions are dedicating so many resources to assist and help SME’s. Crutzen (2009) showed that twenty-eight percent of bankruptcies are due to deficiencies in strategic management and among others to a misalignment with the market, underlying thus the importance of marketing. The importance of marketing within SMEs is also recognized by Knight (2000): «for most companies, because it tends to be the nexus of the strategic gestalt, skillful marketing strategy can be the most important requirement for success».

Among modern marketing, customer satisfaction is one major construct. It has attracted the attention of practitioners because of the popularized relationship between customer satisfaction and loyalty and further between loyalty and profits. Satisfying customer might therefore be a cornerstone for the success of SMEs and yet no comprehensive research has been dedicated to it in this context.

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By Pierre-Nicolas Schwab Dr. Pierre-Nicolas Schwab is the founder of IntoTheMinds. He specializes in e-commerce, retail and logistics. He is also a research fellow in the marketing department of the Free University of Brussels and acts as a coach for several startups and public organizations. He holds a PhD in Marketing, a MBA in Finance, and a MSc in Chemistry. He can be contacted by email, Linkedin or by phone (+32 486 42 79 42)