Investigating the Strategic Influence of Customer and Employee Satisfaction on Firm Financial Performance

Authors:
Jeffrey P. Dotson;Greg M. Allenby
Affiliations:
Owen Graduate School of Management, Vanderbilt University, Nashville, Tennessee 37203;Fisher College of Business, Ohio State University, Columbus, Ohio 43210
Venue:
Marketing Science
Year:
2010

Citing 4
Cited 1

Endogeneity in Brand Choice Models

Management Science
Assessing the Service-Profit Chain

Marketing Science
Customer Metrics and Their Impact on Financial Performance

Marketing Science
The Retail Value Chain: Linking Employee Perceptions to Employee Performance, Customer Evaluations, and Store Performance

Marketing Science

Handling Endogenous Regressors by Joint Estimation Using Copulas

Marketing Science

Quantified Score

Hi-index	0.00

Visualization

Abstract

The ability to demonstrate the impact of marketing action on firm financial performance is crucial for evaluating, justifying, and optimizing the expenditure of a firm's marketing resources. This presents itself as a formidable task when one considers both the variety and potential influence of marketing activity. We propose a hierarchical Bayesian model of simultaneous supply and demand that allows us to formally study the financial impact of a variety of marketing activities, including those that operate on different timescales. The supply-side model provides insight into how the firm allocates resources across its various subunits. We illustrate our approach in a services context by integrating data from three independent studies conducted by a large national bank. Our model allows customer and employee satisfaction to influence firm profitability by moderating the conditional relationship between the bank's operational inputs and its proclivity to produce revenue.