The Impact of Uncertainty on Customer Satisfaction

51 Pages Posted: 28 Oct 2022 Last revised: 21 Apr 2024

See all articles by Camila Back

Camila Back

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management)

Martin Spann

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management)

Dominik Molitor

Fordham University - Gabelli School of Business

Date Written: April 21, 2024

Abstract

This paper introduces a theoretical model of customer satisfaction that combines both a reference-dependent and a reference-independent component. Reference points are determined by expectations, which reflect the distribution of individual beliefs about performance outcomes. According to the model, uncertainty shifts subjective reference points, thereby increasing the level of performance at which customers start gaining satisfaction from reference dependence. The model further suggests that uncertainty mitigates the effect of both positive and negative deviations of actual performance from subjective reference points. Consequently, expected poor performance becomes less disappointing, while expected good performance becomes less gratifying compared to unexpected outcomes. The model’s predictions are supported by findings from an experimental study on product delivery and a field study using data from an online retailer. Additionally, the paper features a web-based app that simulates the effect of uncertainty on customer satisfaction in a variety of customizable scenarios. The findings of the paper hold significant implications for firms’ communication, customer valuation, and service strategies.

Keywords: Customer Satisfaction, Uncertainty, Probabilistic Beliefs, Web-Based App

Suggested Citation

Back, Camila and Spann, Martin and Molitor, Dominik, The Impact of Uncertainty on Customer Satisfaction (April 21, 2024). Available at SSRN: https://ssrn.com/abstract=4256115 or http://dx.doi.org/10.2139/ssrn.4256115

Camila Back

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management)

Ludwigstr. 28
Munich, DE 80539
Germany

Martin Spann (Contact Author)

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management) ( email )

Ludwigstr. 28
Munich, 80539
Germany

Dominik Molitor

Fordham University - Gabelli School of Business

113 West 60th Street
Bronx, NY 10458
United States

HOME PAGE: http://www.dominikmolitor.com

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