Dual Emphasis and the Long-Term Financial Impact of Customer Satisfaction

  • Authors:

  • Vikas Mittal;Eugene W. Anderson;Akin Sayrak;Pandu Tadikamalla

  • Affiliations:

  • University of Pittsburgh, 360 Mervis Hall, Pittsburgh, Pennsylvania 15260;University of Michigan, 701 Tappan Street, Ann Arbor, Michigan;University of Pittsburgh, 364 Mervis Hall, Pittsburgh, Pennsylvania 15260;University of Pittsburgh, 258 Mervis Hall, Pittsburgh, Pennsylvania 15260

  • Venue:
  • Marketing Science
  • Year:
  • 2005

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Abstract

This paper draws on the quality profitability emphasis framework of Rust, Moorman, and Dickson (2002) (Rust, Roland T., Christine Moorman, Peter R. Dickson. 2002. Getting returns from service quality: Revenue expansion, cost reduction, or both. J. Marketing66(October) 7-24.) to examine the association between customer satisfaction and long-term financial performance among firms that achieve a dual emphasis (focusing on both revenue-expansion and cost-reduction simultaneously, rather than solely emphasizing one over the other). Using a longitudinal data set of 77 firms from the United States, we test this hypothesis and find that the association between customer satisfaction and long-term financial performance is positive and relatively stronger for firms that successfully achieve a dual emphasis. We build on the work of Rust, Moorman, and Dickson (2002), who investigated the financial impact of engaging in the process of achieving a dual emphasis. Collectively, these studies show that while achieving a dual emphasis is desirable for long-run financial success, the process of achieving a dual emphasis may not be as financially rewarding in the short run. Firms pursuing a dual emphasis need to consider both short- and long-term consequences of their strategy.