Neglected Outcomes of Customer Satisfaction

Abstract

Although there is significant evidence that customer satisfaction is an important driver of firm profitability, extant literature has largely neglected two intermediate outcomes of customer satisfaction, namely, a firm’s advertising and promotion efficiency and its human capital performance. On the basis of longitudinal analyses of large-scale secondary data from multiple sources, the authors find that customer satisfaction boosts the efficiency of future advertising and promotion investments. This finding can be explained by the possibility that customer satisfaction generates free word-of-mouth advertising and saves subsequent marketing costs. In addition, customer satisfaction has a positive influence on a company’s excellence in human capital (employee talent and manager superiority). This finding is highly novel, indicating that human resources managers should have a strong interest in customer satisfaction as well. Finally, the authors investigate the moderating influence of market concentration on both relationships. The uncovered results have important implications for marketers in their dialogue with financial executives and human resources managers.

JEL Classification: M21, M31, G00, G12, L86, M00, M30, M14