Customer Satisfaction, Loyalty Behaviors, and Firm-Financial Performance: What 30 Years of Research Tells Us

CARLY FRENNEA AND VIKAS MITTAL

The authors synthesize research on the relationship between customer satisfaction (CS) and customer- and firm-level outcomes in a meta-analytic framework. Overall, the results point to positive associations between CS and customer behaviors, financial performance, and shareholder value. However, the magnitude of the relationship between CS and firm-level outcomes is smaller than that between CS and customer-level outcomes. Moderator analysis shows substantial variability in the effect sizes reported across customer-level studies, which can be partially attributed to contextual factors and measurement characteristics. The authors conclude with a discussion of the theoretical and managerial implications of these effects and propose future research directions. Although strength of the association with CS differs across customer behaviors, research has rarely examined multiple customer outcomes simultaneously. In addition, there is an opportunity to specify mechanisms that drive the differences in effect sizes across contexts. Finally, the results reveal that the still-emerging literature on the impact of CS on financial performance would benefit from a systematic investigation of moderators and the means through which CS affects firm performance.

Frennea, Carly and Mittal, Vikas, Customer Satisfaction, Loyalty Behaviors, and Firm-Financial Performance: What 30 Years of Research Tells Us (July 2, 2017).

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Four Fatal Flaws of Strategic Planning

EDWARD A. BARROWS JR.

Strategy execution is drawing a lot of attention these days, but that in no way means companies have abandoned their time-tested strategic planning processes. In fact, as far as management tools are concerned, strategic planning is as popular as ever, with 88% of large organizations engaging in some form of formal strategic planning, according to Bain & Company’s global 2007 Management Tools and Trends survey. This number may still be on the rise as economic conditions force companies to search for new ways to jump-start business growth.

Barrows, Edward. “Four fatal flaws of strategic planning.” Harvard Management Update 14, no. 4 (2009): 1-5.

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Customer-Centric Org Charts Aren’t Right for Every Company

JU-YEON LEE, SHRIHARI SRIDHAR AND ROBERT W. PALMATIER

The new conventional wisdom on corporate structure is that companies can do better by organizing themselves around customer groups. The logic sounds compelling: A customer-centric structure, as the approach is known, can help a company understand its customers better, develop deeper relationships with them, and improve customer satisfaction. Some 30% of Fortune 500 firms, including Intel, Dell, IBM, and American Express, are already on board, and the numbers are growing all the time.

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Customer Satisfaction: A Strategic Review and Guidelines for Managers

VIKAS MITTAL AND CARLY FRENNEA

Superior customer satisfaction provides a clear strategic advantage and an inimitable resource for a firm—particularly in today’s complex and often uncertain markets. Two decades of academic research has quantified the impact of customer satisfaction on a number of beneficial customer behaviors and consequent financial performance. It is clear that firms that manage their customers as well as costs realize greater financial returns compared to firms who ignore customer satisfaction.

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