From customer satisfaction to profitability

Although customer satisfaction is increasingly seen as an important objective for many businesses, the extent to which it is taken seriously is varied, its measurement is problematic and the precise nature of its impact on financial performance and shareholder value remain the subject of debate. While the existence of a link between customer satisfaction and business performance is clearly a central tenet of marketing theory, evaluating the existence, nature and strength of this relationship at the level of the firm has proved problematic. Researchers have had much greater success when focusing on individual behavioural constructs (such as quality and satisfaction and satisfaction and loyalty) and rather less success when exploring the link between behavioural outcomes and financial performance. Using data from the American Consumer Satisfaction Index, the aim of the paper was to evaluate empirically the direct relationship between customer satisfaction and a range of measures of financial performance. In general, the results suggest that satisfaction does have a positive financial impact but the direct effects are generally small.