TY - JOUR
T1 - Customer satisfaction and profitability
T2 - Is there a lagged effect?
AU - Guo, Chiquan
AU - Kumar, Anand
AU - Jiraporn, Pornsit
PY - 2004
Y1 - 2004
N2 - Although customer satisfaction is one of the fundamental concepts in marketing theory and practices, the direct link between customer satisfaction and a firm's bottom line is still somewhat ambiguous and vague. While most research focuses on how customer satisfaction contributes to the firm's profitability, financial resources required to implement satisfaction programs are largely ignored in the literature. This paper takes a conceptual middle ground, proposing that customer satisfaction influences profitability, and at the same time, profitability impacts satisfaction. However, based on recent evidence (Rust, Moorman and Dickson, 2002), we propose that there is a lagged effect between the two. In other words, past satisfaction has a positive effect on current profitability, and similarly, past profitability affects current satisfaction. Furthermore, event study methodology is utilized to examine stock reaction to the announcement of the firm's satisfaction performance, solidifying the relationship between satisfaction, a marketing metric, and financial performance.
AB - Although customer satisfaction is one of the fundamental concepts in marketing theory and practices, the direct link between customer satisfaction and a firm's bottom line is still somewhat ambiguous and vague. While most research focuses on how customer satisfaction contributes to the firm's profitability, financial resources required to implement satisfaction programs are largely ignored in the literature. This paper takes a conceptual middle ground, proposing that customer satisfaction influences profitability, and at the same time, profitability impacts satisfaction. However, based on recent evidence (Rust, Moorman and Dickson, 2002), we propose that there is a lagged effect between the two. In other words, past satisfaction has a positive effect on current profitability, and similarly, past profitability affects current satisfaction. Furthermore, event study methodology is utilized to examine stock reaction to the announcement of the firm's satisfaction performance, solidifying the relationship between satisfaction, a marketing metric, and financial performance.
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U2 - 10.1080/0965254042000262878
DO - 10.1080/0965254042000262878
M3 - Article
AN - SCOPUS:84986181495
SN - 0965-254X
VL - 12
SP - 129
EP - 144
JO - Journal of Strategic Marketing
JF - Journal of Strategic Marketing
IS - 3
ER -