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The Economic Research Institute, Stockholm School of Economics SSE/EFI Working Paper Series in Business Administration

No 1999:1:
Customer Satisfaction and Links to Customer Profitability: An Empirical Examination of the Association between Attitudes and Behavior

Magnus Söderlund () and Mats Vilgon ()

Abstract: This paper explores links between customer satisfaction, repurchase intentions, purchase behavior, and customer profitability with empirical data on attitudes, behavior, and profitability at the customer level of analysis. Purchase behavior and profitability data, derived from the accounting system of a firm, are matched with the responses of the firm's customers to survey questions distributed prior to the behavior and profitability outcomes. The analysis reveals a strong link between customer behavior and customer profitability, while modest links exist between repurchase intentions and subsequent behavior. Only a weak and non-significant direct link can be observed between customer satisfaction and customer profitability. This paper, then, questions customer satisfaction's commonly assumed role as a proxy for profitability.

Keywords: Customer satisfaction; customer profitability; (follow links to similar papers)

22 pages, January 15, 1999

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