3 Satisfaction

Customer satisfaction was measured using sentiment analysis (S. Kumar and Zymbler 2019; Q. Wei et al. 2020).

Another implementation can be found here

Your assessment of satisfaction can come from:

  1. Emotional part (Affect)
  2. Logical part (Cognitive)

Customer sanctification has an impact on the financial market

  • Stock returns

    • Overall market (Fornell et al. 2006)

    • Only in the Internet and computer sector (Jacobson and Mizik 2009b) (this is the current academic consensus (Jacobson and Mizik 2009a)).

    • Prospect theory validation: A one-unit increase in customer satisfaction increases abnormal returns by.56 percentage points, while dissatisfaction decreases them by 1.34 percentage points.(Malshe, Colicev, and Mittal 2020). Short interest (a measure of short seller activity) mediates the effect of customer (dis)satisfaction on abnormal stock returns.

  • Risk of stock returns: positive changes in customer satisfaction lead to negative changes in overall and downside systematic (i.e., market movements)) and idiosyncratic risk (i.e., stock returns volatility). (Tuli and Bharadwaj 2009)

(Oliver and Burke 1999) Expectation processes in satisfaction formation: A field study

  • Objective: To examine the role and persistence of expectations and related effects within the expectancy disconfirmation and performance model in the context of a novel restaurant experience.

  • Methodology:

    1. Expectation Manipulation: Preconsumption expectations were set using realistic reviews.

    2. Service Experience Recording: Actual dining experiences were documented using protocol methods.

    3. Postconsumption Measurement: Perceptions post dining were captured immediately after the experience.

  • Key Findings:

    1. Immediate Decline of Expectation’s Effect: The manipulated expectations had an immediate impact that faded over the course of the dining experience.

    2. Forward Assimilation: Expectations influenced perceptions of performance.

    3. Backward Assimilation: Retrospective expectations were, to an extent, shaped by actual performance.

    4. Performance Comparisons & Satisfaction: Differences between expectations and actual experience (disconfirmation) played a pivotal role in influencing satisfaction.

    5. Model Dimension-Specificity: The expectancy disconfirmation model works in a dimension-specific manner regarding its components.

(Rebecca J. Slotegraaf and Inman 2004) see Branding

(Gruca and Rego 2005) Customer satisfaction, cash flow, and shareholder value


  • Establish a link between customer satisfaction and characteristics of future cash flows (growth and stability) that affect shareholder value.

Data and Methodology:

  • Utilized longitudinal data from the American Customer Satisfaction Index (ACSI) and COMPUSTAT.

  • Employed hierarchical Bayesian estimation to analyze the relationship.

Key Findings:

  1. Direct Impact: Customer satisfaction plays a vital role in driving future cash flow growth and reducing its variability.

  2. Shareholder Value: By influencing cash flow growth and stability, customer satisfaction contributes directly to increasing shareholder value.

Robustness Tests:

  1. Consistency Across Variables: The relationship between satisfaction and future cash flows remains stable across different firm and industry characteristics.

  2. Multimeasure and Multimethod Estimation: Further analysis using various measures and methods confirmed the initial findings, emphasizing the robustness of the results.

(Neil A. Morgan and Rego 2006) Customer Satisfaction and Loyalty Metrics in Predicting Business Performance


  • To determine which customer feedback metrics are most valuable in predicting future business performance.

Data and Methodology:

  • The study utilizes data from the American Customer Satisfaction Index (ACSI).

  • The research period spans from 1994-2000.

  • Linkages between six satisfaction and loyalty metrics are assessed against measures from COMPUSTAT and CRSP databases related to various aspects of firms’ business performance.

Key Metrics Examined:

  1. Top 2 Box customer satisfaction scores.

  2. Intention-to-repurchase loyalty scores.

  3. Average customer satisfaction scores.

  4. Net promoters.

  5. Repurchase likelihood.

  6. Proportion of customers complaining.

Key Findings:

  1. Most Predictive Metric: Average satisfaction scores were found to be the most valuable in forecasting future business performance.

  2. Strong Predictive Value: Top 2 Box satisfaction scores also exhibited a robust predictive capacity.

  3. Moderate Predictive Value: Metrics like repurchase likelihood and the proportion of customers complaining showed some predictive value, but this varied based on the specific dimension of business performance considered.

  4. Limited Predictive Value: Metrics rooted in recommendation intentions (like net promoters) and recommendation behavior (average number of recommendations) demonstrated little to no value in predicting future business performance.

(Lopo L. Rego, Morgan, and Fornell 2013) Market share - customer satisfaction relationship

  • Objective: Examine the relationship between market share and customer satisfaction, metrics conventionally utilized for assessing marketing performance.

  • Prevailing Assumption: A positive correlation exists between market share and customer satisfaction.

  • Existing Literature: Indicates often a negative or nonsignificant correlation between the two metrics.

  • Methodology: Utilized an extended temporal analysis in a representative sample from U.S. consumer markets.

  • Key Findings:

    • A consistently significant negative relationship was observed between market share and customer satisfaction.

    • Customer satisfaction was not a robust predictor of prospective market share.

    • Market share, conversely, was a strong negative predictor of subsequent customer satisfaction.

  • Conditions for Variation:

    • The predictive power of a firm’s customer satisfaction for future market share is enhanced when:

      • Benchmarked against the firm’s nearest competitor.

      • The costs associated with customer brand switching are minimal.

  • Underlying Mechanism: The generally negative relationship between market share and ensuing customer satisfaction is largely mediated by preference heterogeneity.

  • Strategic Implications:

    • Marketing a broader range of brands attenuates the adverse impact of preference heterogeneity on impending customer satisfaction.

    • A diversified brand portfolio emerges as a tactical resolution for the inherent trade-off between market share and satisfaction.

(Malshe and Agarwal 2015) found that firm financial leverage can affect marketing outcomes and firm value

  • IT decreases customer satisfaction (advertising intensity mediates this effect)

  • moderates the relationship between satisfaction and firm value.

Service firms and firms in competitive industries suffer more from financial leverage

Customer Satisfaction can also impact utility profit (i.e., within the utility industry) (i.e., in monopoly industry). (Bhattacharya, Morgan, and Rego 2020)

(Bhattacharya, Morgan, and Rego 2021) Customer satisfaction and firm profits in monopolies: A study of utilities

  • Objective: Investigate the correlation between customer satisfaction and the financial performance of utility firms, addressing a gap in literature that predominantly focuses on competitive markets, with monopolistic markets like utilities being largely overlooked.

  • Context: The utilities sector offers an intriguing environment due to its stringent regulatory requirements that yield precise operating and accounting data.

  • Data & Methodology:

    • Sourced from U.S. public utility firms.

    • Aims to ascertain the causal dynamics linking customer satisfaction with profitability in the utilities domain.

  • Key Findings:

    • Contrary to the evident lack of influence of customer satisfaction on future revenues, it harbors a positive correlation with future profitability.

    • The crux of this correlation is embedded in the substantial reduction of operational costs affiliated with higher customer satisfaction. Specifically, costs related to utility firm distribution, customer service, and general administration diminish with increased satisfaction.

    • Post hoc evaluations align with two pivotal assertions:

      1. Customer satisfaction mitigates the costs related to direct customer interactions and fosters enhanced employee engagement by curbing the challenges tied to managing dissatisfied customers.

      2. A satisfied customer base is synonymous with heightened levels of trust and collaboration.