Measuring the impact of customer satisfaction on profitability: A sectoral analysis

Customer satisfaction is probably one of the most frequently measured marketing constructs, with most major organisations regularly collecting data on the extent to which their customers are satisfied. This level of interest is perhaps unsurprising given that it is a basic principle of marketing that business performance is enhanced by satisfying customers. The challenges of measuring satisfaction effectively had been extensively researched and there is a growing body of evidence to support the argument that satisfied customers are more loyal. There is rather less evidence to support the proposition that satisfaction contributes to business performance, not least because of the difficulties associated with relating consumer attitudes and behaviour to financial measures of performance as well as the intervening effects of loyalty. This paper focuses exclusively on satisfaction and uses aggregate measures from the American Consumer Satisfaction Index (ACSI) for companies across a range of sectors. It provides mixed evidence for the positive, impact of satisfaction on business performance using a range of different financial measures.