Customer Satisfaction, Market Share, and Profitability: Findings from Sweden

1994/07/01 by Eugene W. Anderson, Claes Fornell, Donald R. Lehmann · 2,281 citations
Business, Management and Accounting · Economics, Econometrics and Finance · #Business #Consumer Retail Behavior Studies #Customer Service Quality and Loyalty #Customer advocacy #Customer delight #Customer equity #Customer profitability #Customer retention #Customer satisfaction #Economic and Environmental Valuation #Finance #Marketing #Profitability index #Quality (philosophy) #Service quality

paper · doi:10.1177/002224299405800304

published in Journal of Marketing 58(3), 53-66 (SAGE Publishing)

openalex publication_date 1994/07/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/04

Abstract

Are there economic benefits to improving customer satisfaction? Many firms that are frustrated in their efforts to improve quality and customer satisfaction are beginning to question the link between customer satisfaction and economic returns. The authors investigate the nature and strength of this link. They discuss how expectations, quality, and price should affect customer satisfaction and why customer satisfaction, in turn, should affect profitability; this results in a set of hypotheses that are tested using a national customer satisfaction index and traditional accounting measures of economic returns, such as return on investment. The findings support a positive impact of quality on customer satisfaction, and, in turn, profitability. The authors demonstrate the economic benefits of increasing customer satisfaction using both an empirical forecast and a new analytical model. In addition, they discuss why increasing market share actually might lead to lower customer satisfaction and provide preliminary empirical support for this hypothesis. Finally, two new findings emerge: First, the market's expectations of the quality of a firm's output positively affects customers’ overall satisfaction with the firm; and second, these expectations are largely rational, albeit with a small adaptive component.

Citations

• Effect of expectation and disconfirmation on postexposure product evaluations: An alternative interpretation.
• A Theory of the Allocation of Time
• Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition
• Information and Consumer Behavior
• Conceptualizing, Measuring, and Managing Customer-Based Brand Equity
• Consumer Perceptions of Price, Quality, and Value: A Means-End Model and Synthesis of Evidence

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