IDEAS home Printed from https://ideas.repec.org/a/eee/eurman/v32y2014i3p499-508.html
   My bibliography  Save this article

Customer satisfaction: Cost driver or value driver? Empirical evidence from the financial services industry

Author

Listed:
  • Terpstra, Maarten
  • Verbeeten, Frank H.M.

Abstract

We investigate the relation between customer satisfaction, customer servicing costs, and customer value in a financial services firm. We find that customer satisfaction is positively associated with future customer servicing costs, as well as with customer value. The relation between customer satisfaction and customer value appears non-linear; higher customer satisfaction appears to have a higher return for the most profitable customer segments. Our findings indicate that customer satisfaction is a value driver; however, customer satisfaction is not cost-free and managers have to consider the costs, as well as the benefits, of increasing customer satisfaction.

Suggested Citation

  • Terpstra, Maarten & Verbeeten, Frank H.M., 2014. "Customer satisfaction: Cost driver or value driver? Empirical evidence from the financial services industry," European Management Journal, Elsevier, vol. 32(3), pages 499-508.
    • Handle: RePEc:eee:eurman:v:32:y:2014:i:3:p:499-508
    DOI: 10.1016/j.emj.2013.07.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0263237313000881
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.emj.2013.07.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ittner, CD & Larcker, DF, 1998. "Are nonfinancial measures leading indicators of financial performance? An analysis of customer satisfaction," Journal of Accounting Research, Wiley Blackwell, vol. 36, pages 1-35.
    2. Kothari, S. P., 2001. "Capital markets research in accounting," Journal of Accounting and Economics, Elsevier, vol. 31(1-3), pages 105-231, September.
    3. Lee Cronbach, 1951. "Coefficient alpha and the internal structure of tests," Psychometrika, Springer;The Psychometric Society, vol. 16(3), pages 297-334, September.
    4. Paas, Leonard J. & Bijmolt, Tammo H.A. & Vermunt, Jeroen K., 2007. "Acquisition patterns of financial products: A longitudinal investigation," Journal of Economic Psychology, Elsevier, vol. 28(2), pages 229-241, April.
    5. Haenlein, Michael & Kaplan, Andreas M. & Beeser, Anemone J., 2007. "A Model to Determine Customer Lifetime Value in a Retail Banking Context," European Management Journal, Elsevier, vol. 25(3), pages 221-234, June.
    6. Sunil Gupta & Valarie Zeithaml, 2006. "Customer Metrics and Their Impact on Financial Performance," Marketing Science, INFORMS, vol. 25(6), pages 718-739, 11-12.
    7. Ittner, Christopher D. & Larcker, David F. & Taylor, Daniel J., 2009. "The Stock Market's Pricing of Customer Satisfaction," Research Papers 2036, Stanford University, Graduate School of Business.
    8. Eugene W. Anderson & Claes Fornell & Roland T. Rust, 1997. "Customer Satisfaction, Productivity, and Profitability: Differences Between Goods and Services," Marketing Science, INFORMS, vol. 16(2), pages 129-145.
    9. Dennis Campbell & Frances Frei, 2010. "Cost Structure, Customer Profitability, and Retention Implications of Self-Service Distribution Channels: Evidence from Customer Behavior in an Online Banking Channel," Management Science, INFORMS, vol. 56(1), pages 4-24, January.
    10. Bayón, Tomás & Gutsche, Jens & Bauer, Hans, 2002. "Customer Equity Marketing:: Touching the Intangible," European Management Journal, Elsevier, vol. 20(3), pages 213-222, June.
    11. Robert Jacobson & Natalie Mizik, 2009. "The Financial Markets and Customer Satisfaction: Reexamining Possible Financial Market Mispricing of Customer Satisfaction," Marketing Science, INFORMS, vol. 28(5), pages 810-819, 09-10.
    12. Neil A. Morgan & Lopo Leotte Rego, 2006. "The Value of Different Customer Satisfaction and Loyalty Metrics in Predicting Business Performance," Marketing Science, INFORMS, vol. 25(5), pages 426-439, September.
    13. Blattberg, Robert C. & Malthouse, Edward C. & Neslin, Scott A., 2009. "Customer Lifetime Value: Empirical Generalizations and Some Conceptual Questions," Journal of Interactive Marketing, Elsevier, vol. 23(2), pages 157-168.
    14. Venky Nagar & Madhav V. Rajan, 2005. "Measuring Customer Relationships: The Case of the Retail Banking Industry," Management Science, INFORMS, vol. 51(6), pages 904-919, June.
    15. Verhoef, Peter C. & Lemon, Katherine N., 2013. "Successful customer value management: Key lessons and emerging trends," European Management Journal, Elsevier, vol. 31(1), pages 1-15.
    16. Paas, L.J. & Bijmolt, T.H.A. & Vermunt, J.K., 2007. "Acquisition patterns of financial products : A longitudinal investigation," Other publications TiSEM 6e60376b-b689-4e76-93b8-5, Tilburg University, School of Economics and Management.
    17. Christopher Ittner & David Larcker & Daniel Taylor, 2009. "—The Stock Market's Pricing of Customer Satisfaction," Marketing Science, INFORMS, vol. 28(5), pages 826-835, 09-10.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Asmaul Husna & Ibnu Satria, 2019. "Effects of Return on Asset, Debt to Asset Ratio, Current Ratio, Firm Size, and Dividend Payout Ratio on Firm Value," International Journal of Economics and Financial Issues, Econjournals, vol. 9(5), pages 50-54.
    2. Pradeep Kautish & Arpita Khare & Rajesh Sharma, 2022. "Health insurance policy renewal: an exploration of reputation, performance, and affect to understand customer inertia," Journal of Marketing Analytics, Palgrave Macmillan, vol. 10(3), pages 261-278, September.
    3. Su-Chang Chen & Kuo Cheng Chung & Ming Yueh Tsai, 2019. "How to Achieve Sustainable Development of Mobile Payment through Customer Satisfaction—The SOR Model," Sustainability, MDPI, vol. 11(22), pages 1-16, November.
    4. Ghanbarpour, Tohid & Gustafsson, Anders, 2022. "How do corporate social responsibility (CSR) and innovativeness increase financial gains? A customer perspective analysis," Journal of Business Research, Elsevier, vol. 140(C), pages 471-481.
    5. Subaebasni Subaebasni & Henny Risnawaty & A.R. Arie Wicaksono, 2019. "Effect of Brand Image, the Quality and Price on Customer Satisfaction and Implications for Customer Loyalty PT Strait Liner Express in Jakarta," International Review of Management and Marketing, Econjournals, vol. 9(1), pages 90-97.
    6. Wentao Wu & Ran Hu & Ruxuan Tan & Hehai Liu, 2022. "Exploring Factors of Middle School Teachers’ Satisfaction with Online Training for Sustainable Professional Development under the Impact of COVID-19," Sustainability, MDPI, vol. 14(20), pages 1-18, October.
    7. Timmy H. Tseng & Shao-Hsun Chang & Yu-Min Wang & Yi-Shun Wang & Shin-jeng Lin, 2020. "An Empirical Investigation of the Longitudinal Effect of Online Consumer Reviews on Hotel Accommodation Performance," Sustainability, MDPI, vol. 13(1), pages 1-16, December.
    8. Omoruyi Osayuwamen & Mafini Chengedzai, 2016. "Supply Chain Management and Customer Satisfaction in Small to Medium Enterprises," Studia Universitatis Babeș-Bolyai Oeconomica, Sciendo, vol. 61(3), pages 43-58, December.
    9. Ma Ying & Gashaw Awoke Tikuye, 2024. "The Impacts of Technology Innovation on Customer Satisfaction, Employee and Leadership Commitment in CSR Practice," International Journal of Management Science and Business Administration, Inovatus Services Ltd., vol. 10(3), pages 7-27, March.
    10. Chong Guan & Yu-Chen Hung & Wenting Liu, 2022. "Cultural differences in hospitality service evaluations: mining insights of user generated content," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(3), pages 1061-1081, September.
    11. Ashley S. Otto & David M. Szymanski & Rajan Varadarajan, 2020. "Customer satisfaction and firm performance: insights from over a quarter century of empirical research," Journal of the Academy of Marketing Science, Springer, vol. 48(3), pages 543-564, May.
    12. Le Thai Phong, 2017. "An investigation into customer loyalty in Vietnam retail banking industry," Business & Entrepreneurship Journal, SCIENPRESS Ltd, vol. 6(1), pages 1-5.
    13. Zhaoyang Guo & Siyu Hou & Qingchang Li, 2020. "Corporate Social Responsibility and Firm Value: The Moderating Effects of Financial Flexibility and R&D Investment," Sustainability, MDPI, vol. 12(20), pages 1-17, October.
    14. Lahrour Khalid, 2023. "Public Policies for Financial Inclusion in Latin America and Asia: What Lessons for Developing Countries? [Politiques publiques en matière d'inclusion financière en Amérique latine et en Asie : que," Post-Print hal-04014943, HAL.
    15. Jagjeevan Kanoujiya & Pooja Jain & Souvik Banerjee & Rameesha Kalra & Shailesh Rastogi & Venkata Mrudula Bhimavarapu, 2023. "Impact of Leverage on Valuation of Non-Financial Firms in India under Profitability’s Moderating Effect: Evidence in Scenarios Applying Quantile Regression," JRFM, MDPI, vol. 16(8), pages 1-20, August.
    16. Aejoo Lee & Ki-Joon Back & JungKun Park, 2017. "Effects of customer personal characteristics on the satisfaction-loyalty link: a multi-method approach," Service Business, Springer;Pan-Pacific Business Association, vol. 11(2), pages 279-297, June.
    17. Gamini Gunawardane, 2023. "Enhancing customer satisfaction and experience in financial services: a survey of recent research in financial services journals," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 28(2), pages 255-269, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Guenther, Miriam & Guenther, Peter, 2021. "The complex firm financial effects of customer satisfaction improvements," International Journal of Research in Marketing, Elsevier, vol. 38(3), pages 639-662.
    2. Huang, Ming-Hui & Trusov, Michael, 2020. "Customer satisfaction underappreciation: The relation of customer satisfaction to CEO compensation," International Journal of Research in Marketing, Elsevier, vol. 37(1), pages 129-150.
    3. Robert Jacobson & Natalie Mizik, 2009. "—Customer Satisfaction-Based Mispricing: Issues and Misconceptions," Marketing Science, INFORMS, vol. 28(5), pages 836-845, 09-10.
    4. J. Andrew Petersen & V. Kumar & Yolanda Polo & F. Javier Sese, 2018. "Unlocking the power of marketing: understanding the links between customer mindset metrics, behavior, and profitability," Journal of the Academy of Marketing Science, Springer, vol. 46(5), pages 813-836, September.
    5. Ha-Yeon Park & Cheong-Kyu Park, 2024. "The Impact of COVID-19 on the Value Relevance of Customer Satisfaction," Sustainability, MDPI, vol. 16(18), pages 1-16, September.
    6. Robert Merrin & Arvid Hoffmann & Joost Pennings, 2013. "Customer satisfaction as a buffer against sentimental stock-price corrections," Marketing Letters, Springer, vol. 24(1), pages 13-27, March.
    7. Anne Schmitz & Nieves Villaseñor-Román, 2018. "Do Brands Matter in Unlisted Firms? An Empirical Study of the Association between Brand Equity and Financial Performance," Administrative Sciences, MDPI, vol. 8(4), pages 1-12, October.
    8. Vikas Mittal & Kyuhong Han & Carly Frennea & Markus Blut & Muzeeb Shaik & Narendra Bosukonda & Shrihari Sridhar, 2023. "Customer satisfaction, loyalty behaviors, and firm financial performance: what 40 years of research tells us," Marketing Letters, Springer, vol. 34(2), pages 171-187, June.
    9. Cameron Truong & Thu Ha Nguyen & Thanh Huynh, 2021. "Customer satisfaction and the cost of capital," Review of Accounting Studies, Springer, vol. 26(1), pages 293-342, March.
    10. Zeynep Ton, 2008. "The Effect of Labor on Profitability: The Role of Quality," Harvard Business School Working Papers 09-040, Harvard Business School, revised Jul 2009.
    11. Sven Baehre & Michele O’Dwyer & Lisa O’Malley & Nick Lee, 2022. "The use of Net Promoter Score (NPS) to predict sales growth: insights from an empirical investigation," Journal of the Academy of Marketing Science, Springer, vol. 50(1), pages 67-84, January.
    12. Sunil Mithas & M. S. Krishnan & Claes Fornell, 2016. "Research Note—Information Technology, Customer Satisfaction, and Profit: Theory and Evidence," Information Systems Research, INFORMS, vol. 27(1), pages 166-181, March.
    13. Anselmsson, Johan & Bondesson, Niklas, 2015. "Brand value chain in practise; the relationship between mindset and market performance metrics: A study of the Swedish market for FMCG," Journal of Retailing and Consumer Services, Elsevier, vol. 25(C), pages 58-70.
    14. Kohsuke Matsuoka, 2020. "Exploring the interface between management accounting and marketing: a literature review of customer accounting," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 31(3), pages 157-208, September.
    15. Baehre, Sven & O'Dwyer, Michele & O'Malley, Lisa & Story, Vicky M, 2022. "Customer mindset metrics: A systematic evaluation of the net promoter score (NPS) vs. alternative calculation methods," Journal of Business Research, Elsevier, vol. 149(C), pages 353-362.
    16. Paul-Valentin Ngobo & Jean-François Casta & Olivier J. Ramond, 2012. "Is customer satisfaction a relevant metric for financial analysts?," Post-Print halshs-00680003, HAL.
    17. Ganna V Demydyuk & Mats Carlbäck, 2024. "Balancing short-term gains and long-term success in lodging: The role of customer satisfaction and price in hotel profitability model," Tourism Economics, , vol. 30(4), pages 844-875, June.
    18. Steven, Adams B. & Dong, Yan & Dresner, Martin, 2012. "Linkages between customer service, customer satisfaction and performance in the airline industry: Investigation of non-linearities and moderating effects," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(4), pages 743-754.
    19. Tuli, Kapil R. & Mukherjee, Anirban & Dekimpe, Marnik G., 2012. "On the Value Relevance of Retailer Advertising Spending and Same-store Sales Growth," Journal of Retailing, Elsevier, vol. 88(4), pages 447-461.
    20. Jonas R. Jahnert & Hato Schmeiser, 2022. "The relationship between net promoter score and insurers’ profitability: an empirical analysis at the customer level," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 47(4), pages 944-972, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eurman:v:32:y:2014:i:3:p:499-508. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/115/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.