Research Handbooks in Business and Management series
Edited by V. Kumar and Denish Shah
Chapter 11: The chain of effects from customer satisfaction to customer profitability
The goal of all public companies is to generate reliable profits year in and year out. Consistently delivering profits requires having customers who not only initially buy, but consistently re-buy. As a result, to ensure that customers want to repurchase, the measurement and management of customer satisfaction has become critical to managers and researchers. The obvious reason is that they believe that customer satisfaction represents the starting point of a positive chain of effects, which ultimately leads to desirable business outcomes (e.g., profitability, market share, shareholder returns). The core chain of effects can be thought of as follows: satisfaction _ purchase intention _ repurchase _ firm performance. In fact, the seminal models in the service marketing literature that attempt to link customer satisfaction to firm performance either explicitly or implicitly presume this chain of effects, that is, SERVQUAL (Parasuraman, Zeithaml, and Berry, 1988), return on quality (ROQ) (Rust, Zahorik, and Keiningham, 1995), the service profit chain (Heskett, Sasser, and Schlesinger, 1997), and the satisfaction–profit chain (Anderson and Mittal, 2000). Without question, there is both theoretical and empirical support for the above chain of effects.
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