Neglected Outcomes of Customer Satisfaction

Abstract

Although there is significant evidence that customer satisfaction is an important driver
\nof firm profitability, extant literature has largely neglected two intermediate outcomes
\nof customer satisfaction - a firm’s advertising and promotion efficiency and its human capital performance. Based on longitudinal analyses of large-scale secondary data from multiple sources, the authors find that customer satisfaction boosts the efficiency of future advertising and promotion investments. This finding can be explained by the possibility that customer satisfaction generates free word-of-mouth advertising and saves subsequent marketing costs. In addition, customer satisfaction has a positive influence on a company’s excellence in human capital (employee talent and
\nmanager superiority). This finding is highly novel, indicating that human resources
\nmanagers should have a strong interest in customer satisfaction as well. Finally, the
\nmoderating influence of market concentration on both relationships is investigated.
\nThe uncovered results have important implications for marketers in their dialogue
\nwith financial executives and human resources managers.