Outcomes of Customer Satisfaction Customer satisfaction, in conjunction with customer and selling firm efforts, is a precursor to the development of strategic partnerships. Additionally, customer satisfaction in association with the development of strategic partnerships, is posited to positively affect corporate profitability by both increasing sales and decreasing costs. These two outcomes are discussed next. 1.Customer Satisfaction and Strategic Partnerships The development of strategic partnerships has been a recurring theme in both logistics and marketing for several years. Strategic partnership is a business relationship in which two or more independent organizations decide to work closely together to yield differentiated and intermediate or long-term benefits to the parties involved. Strategic partnerships are important because satisfied customers tend to remain loyal and continue to repurchase even after an unsatisfactory experience with a firm. In contrast, the consequences of having dissatisfied industrial customers of logistics services are significant. Not only do the parties fail to develop strategic partnerships, but they may switch to a new supplier whose performance is closer to their expectations, or reduce the amount they are buying with their existing supplier. Strategic partnerships generally evolve from a relationship between logistics suppliers and satisfied customers who have become repeat purchasers and loyal to a particular firm. Over time and with repeated transactions, this loyalty may lead to a strategic partnership. In order for a strategic partnership to develop, the selling and buying firms must demonstrate considerable effort in the following areas: 1.) Having high expectations of the relationship 2.) Displaying mutual loyalty 3.) Developing systematic operational information exchange (e.g., EDI) 4.) Utilizing operating controls (e.g., shipment tracking, inventory management, sales projections) 5.) Willing to help in difficult situations 6.) Sharing risks 7.) Handling exceptions through negotiations 8.) Employing joint committees or task forces 9.) Exchanging technical information 10.) Having ongoing studies of operations and planning 2. Customer Satisfaction and Profitability There are several reasons why customer satisfaction leads to increased corporate profitability. First, the development of strategic partnerships through satisfied customers facilitates an increase in sales as well as a reduction in costs. Second, satisfied customers are less sensitive to price than either dissatisfied customers or new customers. Third, they are more willing to pay for the services they receive. Fourth, it is far less expensive to maintain an existing account than to develop a new one. Finally, customers tend to purchase more frequently and in greater volume than less satisfied customers. Thus, it is prudent to cultivate satisfied customers. An additional reason why customer satisfaction leads to corporate profitability is that satisfied customers are likely to engage in positive word-of-mouth publicity for the selling firm. On the other hand, dissatisfied customers tend to engage in negative word-of-mouth publicity. Word-of-mouth is an important source of information for buyers and has been shown to be a major purchasing influence. Therefore, a satisfied customer base should lead to higher sales and profits.