Customer Satisfaction, Loyalty Behaviors, and Firm-Financial Performance: What 30 Years of Research Tells Us

59 Pages Posted: 11 Jul 2017

See all articles by Carly Frennea

Carly Frennea

Jones Graduate School of Business

Vikas Mittal

Rice University

Date Written: July 2, 2017

Abstract

The authors synthesize research on the relationship between customer satisfaction (CS) and customer- and firm-level outcomes in a meta-analytic framework. Overall, the results point to positive associations between CS and customer behaviors, financial performance, and shareholder value. However, the magnitude of the relationship between CS and firm-level outcomes is smaller than that between CS and customer-level outcomes. Moderator analysis shows substantial variability in the effect sizes reported across customer-level studies, which can be partially attributed to contextual factors and measurement characteristics. The authors conclude with a discussion of the theoretical and managerial implications of these effects and propose future research directions. Although strength of the association with CS differs across customer behaviors, research has rarely examined multiple customer outcomes simultaneously. In addition, there is an opportunity to specify mechanisms that drive the differences in effect sizes across contexts. Finally, the results reveal that the still-emerging literature on the impact of CS on financial performance would benefit from a systematic investigation of moderators and the means through which CS affects firm performance.

Keywords: customer satisfaction, retention, share of wallet, word of mouth, financial performance, meta-analysis

Suggested Citation

Frennea, Carly and Mittal, Vikas, Customer Satisfaction, Loyalty Behaviors, and Firm-Financial Performance: What 30 Years of Research Tells Us (July 2, 2017). Available at SSRN: https://ssrn.com/abstract=2996330 or http://dx.doi.org/10.2139/ssrn.2996330

Carly Frennea

Jones Graduate School of Business ( email )

6100 South Main Street
P.O. Box 1892
Houston, TX 77005-1892
United States

Vikas Mittal (Contact Author)

Rice University ( email )

6100 South Main Street
250 McNair
Houston, TX 77005-1892
United States

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