Research Articles

ROGER HALLOWELL

Presents the findings of a study performed on data from a large bank’s retail?banking operations. Illustrates the relationship of customer satisfaction to customer loyalty, and customer loyalty to profitability, using multiple measures of satisfaction, loyalty, and profitability. An estimate of the effects of increased customer satisfaction on profitability (assuming hypothesized causality) suggests that attainable increases in satisfaction could dramatically improve profitability.

Hallowell, R. (1996). The relationships of customer satisfaction, customer loyalty, and profitability: an empirical study. International Journal of Service Industry Management, 7(4), pp.27-42.

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C. FORNELL

This study explored how Product-related attributes of customers financial performance. Despite ongoing debate regarding the specific dimensions of the customer relationship orientation construct, the link with organizational performance is almost universally recognized. The findings suggest that financial service managers could consider treating consumers as partners in their provision of existing services or their quest to develop successful new services. Reciprocal behavior will foster a positive atmosphere, remove barriers arising from risk, and enable relationships to progress, ultimately improving financial performance. Marketing research has shown that firms are more successful when they focus on their customers’ needs. Although some empirical studies have investigated the relationship between Product-related attributes of customers and financial performance, they have failed to show the mechanism by which Product-related attributes of customers promotes financial performance.

Fornell, C. (1992), ‘‘National customer satisfaction barometer: the Swedish experience’’, Journal of Marketing, Vol. 56 (January), pp. 6-21.

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RICHARD L. OLIVER

Designed for advanced MBA and doctoral courses in Consumer Behavior and Customer Satisfaction, this is the definitive text on the meaning, causes, and consequences of customer satisfaction. It covers every psychological aspect of satisfaction formation, and the contents are applicable to all consumables – product or service. Author Richard L. Oliver traces the history of consumer satisfaction from its earliest roots, and brings together the very latest thinking on the consequences of satisfying (or not satisfying) a firm's customers. He describes today's best practices in business, and broadens the determinants of satisfaction to include needs, quality, fairness, and regret ('what might have been'). The book culminates in Oliver's detailed model of consumption processing and his satisfaction measurement scale. The text concludes with a section on the long-term effects of satisfaction, and why an understanding of satisfaction psychology is vitally important to top management.

Satisfaction: A Behavioral Perspective on the Consumer

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EUGENE W. ANDERSON

Do dissatisfied customers engage in more or less word of mouth than satisfied customers? There is theoretical and empirical support for both possibilities. To better understand this issue, the authors developed a utility-based model of the relationship between customer satisfaction and word of mouth. The hypothesized functional form-an asymmetric U-shape-cannot be rejected based on data from the United States and Sweden. In addition, the estimation results based on the two samples are similar, suggesting that the proposed relationship is generalizable. The findings also indicate that although dissatisfied customers do engage in greater word of mouth than satisfied ones, common suppositions concerning the size of this difference appear to be exaggerated.

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EUGENE W. ANDERSON

This study investigates the association between customer satisfaction and willingness-to-pay or price tolerance. The goal is not only to determine whether the association between customer satisfaction and price tolerance is positive or negative but also to gauge the degree of association. The Swedish Customer Satisfaction Barometer provides the data. The empirical analysis indicates a negative association between the level of customer satisfaction provided by the firm and the degree of price tolerance exhibited by its customers. However, a positive association is found between year-to-year changes in the levels of customer satisfaction and price tolerance.

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SHRIHARI SRIDHAR, FRANK GERMANN, CHARLES KANG AND RAJDEEP GREWAL

Firms spend billions of dollars on advertising every year but remain uncertain about allocation across various advertising vehicles. Allocation decisions are even more complex as online advertising has proliferated and consumers’ media usage patterns have become more fragmented. To determine advertising effectiveness, the authors group firms’ advertising vehicle choices into three theoretically grounded and empirically verified smaller subsets: national, regional, and online advertising. Subsequently, they assess how the three advertising vehicles independently and jointly affect firm performance. Using 12 years of data covering 662 manufacturing firms, the authors find that while national, regional, and online advertising each have a positive and significant main effect on firm performance, each advertising vehicle weakens the effectiveness of the respective other two advertising vehicles (e.g., a 1% increase in online advertising increases firm performance by .32% but also decreases national [.15%] and regional [.03%] advertising effectiveness). A battery of robustness checks triangulates this result. Although all three media vehicles contribute to net increases in performance, the authors discuss the need to strategically integrate them to maximize combined effectiveness.

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ETF.COM STAFF

On November 1, 2016 ETF newcomer CSat Investment Advisory, doing business as ACSI Funds, launched its first ETF on the Bats Exchange, which owns ETF.com. The fund will base the selection and weighting of its components on the satisfaction of their customers. The American Customer Satisfaction Core Alpha ETF (ACSI) comes with an expense ratio of 0.65%.

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CARLY FRENNEA, VIKAS MITTAL AND ROBERT A.WESTBROOK

The Satisfaction Profit Chain (SPC) is a theoretical framework that helps link attribute-level perceptions, overall customer satisfaction, customer intentions/behaviors, and financial outcomes. This chapter reviews existing empirical research in this area and provides guidance and recommendations for future research. It is intended to be helpful to managers and academics who are interested in understanding how customer satisfaction — a focal construct — is embedded in the context of its antecedents and consequences.

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