Customer satisfaction and business performance: a firm‐level analysis

Abstract

Purpose

This study aims to examine the relationships between customer satisfaction and a variety of company performance metrics at the firm‐level of analysis.

Design /methodology/approach

The primary research method used in the study was a longitudinal analysis of series of quarterly surveys of customer attitudes, in relation to various company performance metrics of one large Fortune 100 company. The data were collected over a five‐year period and were analyzed with several statistical tests of association.

Findings

It was found that there are significant, and moderate‐to‐strong associations between satisfaction levels and a firm's financial and market performance. More specifically, there are strong links between customer satisfaction, and retention, revenue, earnings per share, stock price, and Tobin's q.

Research implications/limitations

The main implication of this study is that the longitudinal findings demonstrate a strong consistent link between customer attitudes and financial performance at the firm level. The study is clearly limited to one firm, from one industry sector, but offers future researchers a wealth of replication opportunities.

Originality/value

Numerous experts have noted that marketing needs to document the financial impact of marketing activities. Unlike most studies in this area, this study investigated these associations at the firm level, rather than at the aggregate or industry level where some relationships are potentially masked. The study also investigated the links between satisfaction and financial performance in the business‐to‐business services sector, rather than in business‐to‐customer services. Finally, the firm provided access to large samples of real customer attitude data over a five‐year period, rather than from a cross‐sectional study.

Citation

Williams, P. and Naumann, E. (2011), "Customer satisfaction and business performance: a firm‐level analysis", Journal of Services Marketing, Vol. 25 No. 1, pp. 20-32. https://doi.org/10.1108/08876041111107032