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The Cost of Customer Satisfaction: A Framework for Strategic Cost Management in Service Industries

Author

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  • Antonella Cugini
  • Antonella Caru
  • Fabrizio Zerbini

Abstract

Customer satisfaction has long been considered a milestone in the path towards company profitability. Although it is widely acknowledged that customer satisfaction leads to higher and more stable revenues, the relationship between customer satisfaction levels and the costs that the company incurs in producing and delivering customer services has received far less attention, and the research results vary significantly across sectors. In fact, there seems to be little guidance for linking company costs to the key elements involved in providing customer satisfaction in services, thereby diminishing the ability of a company to manage its activities accordingly. In this paper, we propose and test a framework to analyse and manage the relationship between company costs and customer satisfaction in service industries. Based on a case study from the tourism industry, we show how service components can be used as a key medium to link customer satisfaction to the cost of service production and delivery. In doing so, we provide guidance for identifying specific sources of customer satisfaction and assessing their cost, thereby extending to service industries previous research on strategic cost management.

Suggested Citation

  • Antonella Cugini & Antonella Caru & Fabrizio Zerbini, 2007. "The Cost of Customer Satisfaction: A Framework for Strategic Cost Management in Service Industries," European Accounting Review, Taylor & Francis Journals, vol. 16(3), pages 499-530.
    • Handle: RePEc:taf:euract:v:16:y:2007:i:3:p:499-530
    DOI: 10.1080/09638180701507130
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    Citations

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    Cited by:

    1. Lino Cinquini & Andrea Tenucci, 2011. "Management Accounting for Service: A Research Agenda," Working Papers 201102, Scuola Superiore Sant'Anna of Pisa, Istituto di Management.
    2. Alexander Himme, 2012. "Critical success factors of strategic cost reduction," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 23(3), pages 183-210, December.
    3. Massicotte, Steeve & Henri, Jean-François, 2021. "The use of management accounting information by boards of directors to oversee strategy implementation," The British Accounting Review, Elsevier, vol. 53(3).
    4. Anna Lucia Missaglia & Alberto Bubbio & Dario Gulino, 2024. "From cost control to cost management: How is the current state of the Italian context?," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2024(1), pages 203-226.
    5. François Meyssonnier, 2011. "Le contrôle de gestion des services : Réflexion sur l'instrumentation et les concepts," Post-Print hal-00650555, HAL.
    6. Grégory Wegmann, 2017. "A typology of cost accounting practices based on activity - based costing - a strategic cost management approach and a case study," Post-Print hal-01858953, HAL.
    7. François Meyssonnier, 2012. "Le contrôle de gestion des services : réflexion sur les fondements et l'instrumentation," Working Papers hal-00694326, HAL.
    8. Omar Chehab & Shiva Ilkhanizadeh & Mona Bouzari, 2021. "Impacts of Job Standardisation on Restaurant Frontline Employees: Mediating Effect of Emotional Labour," Sustainability, MDPI, vol. 13(3), pages 1-17, February.
    9. Henri, Jean-François & Boiral, Olivier & Roy, Marie-Josée, 2016. "Strategic cost management and performance: The case of environmental costs," The British Accounting Review, Elsevier, vol. 48(2), pages 269-282.
    10. PETE Stefan & CARDOS Ildiko Reka, 2010. "A Managerial And Cost Accounting Approach Of Customer Profitability Analysis," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 570-576, July.
    11. Antoine Barbier & Barbara Evrard & Nadine Dermit-Richard, 2023. "Predictive Modelling of Sports Facility Use: A Model of Aquatic Centre Attendance," Sustainability, MDPI, vol. 15(5), pages 1-17, February.

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