Author: | Chiquan G. Kumar, A. Jiraporn, P. |
Title: | Customer satisfaction and profitability: is there a lagged effect? |
Journal: | Journal of Strategic Marketing
2004 : SEP, VOL. 12:3, p. 129-144 |
Index terms: | Consumer satisfaction Customer relations Marketing Management Finance Profitability |
Language: | eng |
Abstract: | The direct link btw. customer satisfaction (henceforth as: cust-sat.- for 'satisfaction' as: sat.) and a firm's bottom line is still somewhat ambiguous and vague, despite of cust-sat. being one of the fundamental concepts in marketing theory and practices. This paper proposes that cust-sat. influences profitability (here as: prof-ty.), and at the same time, prof-ty. impacts sat. However, based on recent evidence (by Rust, Moorman and Dickson, 2002), it is proposed that there is a lagged effect between the two, that is, past sat. has a positive effect on current prof-ty, and similarly, past prof-ty. affects current sat. Furthermore, event study methodology is utilized to examine stock reaction to the announcement of the firm's sat. performance, solidifying the relationship btw. sat., a marketing metric, and financial performance. |
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