Measuring Customer Satisfaction and Customer Loyalty

Measuring customer satisfaction and customer loyalty represents a key challenge for firms. In response, researchers and practitioners have developed a plethora of options on how to assess these phenomena. However, existing measurement approaches differ substantially with regard to their complexity, sophistication, and information quality. Furthermore, guidance is scarce on how firms can leverage and combine these approaches to implement a state-of-the-art satisfaction and loyalty measurement system. This chapter attempts to address this vacancy. The authors first define and conceptualize customer satisfaction and customer loyalty. Next, the authors provide an overview of the different operationalization and measurement approaches that companies face when designing a customer satisfaction and loyalty measurement system. The authors also discuss some of the common modeling challenges associated with measuring loyalty, namely, dealing with self-selection bias. Finally, the authors project what the future holds in this area.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Similar content being viewed by others

Measuring Customer Satisfaction and Customer Loyalty

Chapter © 2022

Customer Satisfaction and Loyalty Measurement: A Two-Sided Approach

Chapter © 2015

Customer Loyalty: An Empirical Investigation of Operationalized Measures of Loyalty

Chapter © 2015

References

• Ahn, H., & Powell, J. L. (1993). Semiparametric estimation of censored selection models with a nonparametric selection mechanism. Journal of Econometrics, 58(l–2), 3–29. ArticleGoogle Scholar
• Aksoy, L. (2013). How do you measure what you can’t define? The current state of loyalty measurement and management. Journal of Service Management, 24(4), 356–381. ArticleGoogle Scholar
• Anderson, E. W. (1996). Customer satisfaction and price tolerance. Marketing Letters, 7(3), 265–274. ArticleGoogle Scholar
• Anderson. (2010). Meng marketing trends report 2010. Google Scholar
• Anderson, E. W., & Mittal, V. (2000). Strengthening the satisfaction-profit chain. Journal of Service Research, 3(2), 107–120. ArticleGoogle Scholar
• Anderson, E. W., Fornell, C., & Lehmann, D. R. (1994). Customer satisfaction, market share, and profitability: Findings from Sweden. Journal of Marketing, 58(3), 53–66. ArticleGoogle Scholar
• Anderson, E. W., Fornell, C., & Mazvancheryl, S. K. (2004). Customer satisfaction and shareholder value. Journal of Marketing, 68(4), 172–185. ArticleGoogle Scholar
• Ascarza, E. (2018). Retention futility: Targeting high-risk customers might be ineffective. Journal of Marketing Research, 55(l), 80–98. ArticleGoogle Scholar
• Ascarza, E., Fader, P. S., & Hardie, B. G. (2017). Marketing models for the customer-centric firm. In Handbook of marketing decision models (pp. 297–329). New York: Springer. ChapterGoogle Scholar
• Athey, S. (2018). The impact of machine learning on economics. In The economics of artificial intelligence: An agenda. Chicago: University of Chicago Press. Google Scholar
• Brakus, J. J., Schmitt, B. H., & Zarantonello, L. (2009). Brand experience: what is it? How is it measured? Does it affect loyalty?. Journal of Marketing, 73(3), 52–68. Google Scholar
• Bain andCompany (2013). Management Tools & Trends 2013. http://www.bain.de/Images/BAIN_BRIEF_Management_Tools_%26_Trends_2013.pdf. Accessed 25 July 2016.
• Bearden, W. O., & Teel, J. E. (1983). Selected determinants of consumer satisfaction and complaint reports. Journal of Marketing Research, 20(l), 21–28. ArticleGoogle Scholar
• Bergkvist, L., & Rossiter, J. R. (2007). The predictive validity of multiple-item versus single-item measures of the same constructs. Journal of Marketing Research, 44(2), 175–184. ArticleGoogle Scholar
• Bijmolt, T. H., Dorotic, M., Verhoef, P. C., et al. (2011). Loyalty programs: Generalizations on their adoption, effectiveness and design. Foundations and Trends® in Marketing, 5(4), 197–258. ArticleGoogle Scholar
• Blattberg, R., Kim, B., & Neslin, S. (2008). Database Marketing: Analyzing and Managing Customers. New York: Springer. BookGoogle Scholar
• Bolton, R. N. (1998). A dynamic model of the duration of the customer’s relationship with a continuous service provider: The role of satisfaction. Marketing Science, 17(l), 45–65. ArticleGoogle Scholar
• Boshoff, C. (1997). An experimental study of service recovery options. International Journal of Service Industry Management, 8(2), 110–130. ArticleGoogle Scholar
• Brandt, D. R., & Reffett, K. L. (1989). Focusing on customer problems to improve service quality. Journal of Services Marketing, 3(4), 5–14. ArticleGoogle Scholar
• Breugelmans, E., Bijmolt, T. H., Zhang, J., Basso, L. J., Dorotic, M., Kopalle, R., Minnema, A., Mijnlieff, W. J., & Wünderlich, N. V. (2015). Advancing research on loyalty programs: A future research agenda. Marketing Letters, 26(2), 127–139. ArticleGoogle Scholar
• Brooke. (2016). Rewards, returns, and ringside seats. Marketing News, 50(6), 28–35. Google Scholar
• Bruhn, M. (2003). Relationship marketing: Management of customer relationships. Harlow: Pearson Education. Google Scholar
• Bruhn, M. (2016). Kundenorientierung: Bausteine fuer ein exzellentes Customer Relationship Management (CRM) (Vol. 50950). München: CHE Beck. Google Scholar
• Cannon, J. P., & Perreault, W. D., Jr. (1999). Buyer-seller relationships in business markets. Journal of Marketing Research, 36(4), 439–460. Google Scholar
• Certo, S. T., Busenbark, J. R., Woo, H.-s., & Semadeni, M. (2016). Sample selection bias and heckman models in strategic management research. Strategic Management Journal, 37(13), 2639–2657. ArticleGoogle Scholar
• Chandrashekaran, M., Rotte, K., Tax, S. S., & Grewal, R. (2007). Satisfaction strength and customer loyalty. Journal of Marketing Research, 44(1), 153–163. ArticleGoogle Scholar
• Churchill, G. A., Jr., & Surprenant, C. (1982). An investigation into the determinants of customer satisfaction. Journal of Marketing Research, 19(4), 491–504. ArticleGoogle Scholar
• Davis, D. F., Golicic, S. L., & Boerstler, C. N. (2011). Benefits and challenges of conducting multiple methods research in marketing. Journal of the Academy of Marketing Science, 39(3), 467–479. ArticleGoogle Scholar
• DeWulf, K., Odekerken-Schrôder, G., & Iacobucci, D. (2001). Investments in consumer relationships: A cross-country and cross-industry exploration. Journal of Marketing, 65(4), 33–50. ArticleGoogle Scholar
• Diamantopoulos, A. (2011). Incorporating formative measures into covariance-based structural equation models. MIS Quarterly, 35, 335–358. ArticleGoogle Scholar
• Dreze, X., & Nunes, J. C. (2008). Feeling superior: The impact of loyalty program structure on consumers’ perceptions of status. Journal of Consumer Research, 35(6), 890–905. ArticleGoogle Scholar
• Ernst & Young (2011), The digitisation of everything: How organizations must adapt to changing consumer behaviour, available at: http://www.ey.com/Publication/vwLUAssets/The_digitisation_of_everything_-_How_organisations_must_adapt_to_changing_consumer_behaviour/$FILE/EY_Digitisation_of_everything.pdf, retrieved on 2016-07-25.
• Ellickson, P. B., & Misra, S. (2012). Enriching interactions: Incorporating outcome data into static discrete games. Quantitative Marketing and Economics, 10(1), 1–26. ArticleGoogle Scholar
• Fornell, C., Johnson, M. D., Anderson, E. W., Cha, J., & Bryant, B. E. (1996). The American customer satisfaction index: Nature, purpose, and findings. Journal of Marketing, 60(4), 7–18. ArticleGoogle Scholar
• Fuerst, A. (2012). Verfahren zur Messung der Kundenzufriedenheit im Ueberblick. Kundenzufriedenheit: Konzepte–Methoden–Erfahrungen, 8, 123–154. Google Scholar
• Gremler, D. D. (2004). The critical incident technique in service research. Journal of Service Research, 7(l), 65–89. ArticleGoogle Scholar
• Griffin, A., Gleason, G., Preiss, R., & Shevenaugh, D. (1995). Best practice for customer satisfaction in manufacturing firms. MIT Sloan Management Review, 36(2), 87. Google Scholar
• Grigoroudis, E., & Siskos, Y. (2009). Customer satisfaction evaluation: Methods for measuring and implementing service quality (Vol. 139). Springer Science & Business Media. Google Scholar
• Gupta, S., & Zeithaml, V. (2006). Customer metrics and their impact on financial performance. Marketing Science, 25(6), 718–739. ArticleGoogle Scholar
• Gustafsson, A., & Johnson, M. D. (2004). Determining attribute importance in a service satisfaction model. Journal of Service Research, 7(2), 124–141. ArticleGoogle Scholar
• Halstead, D. (1999). The use of comparison standards in customer satisfaction research and management: A review and proposed typology. Journal of Marketing Theory and Practice, 7(3), 13–26. ArticleGoogle Scholar
• Hartmann, W., & Viard, B. (2008). Do frequency reward programs create switching costs? A dynamic structural analysis of demand in a reward program. Quantitative Marketing and Economics, 6(2), 109–137. ArticleGoogle Scholar
• Hauser, J. R., Urban, G. L., Liberali, G., & Braun, M. (2009). Website morphing. Marketing Science, 28(2), 202–223. ArticleGoogle Scholar
• Hayes, B. E. (2008). Measuring customer satisfaction and loyalty: Survey design, use, and statistical analysis methods. ASQ Quality Press. Google Scholar
• Heckman, J. J. (1979). Sample selection bias as a specification error. Econometrica, 47(1), 153–161. ArticleGoogle Scholar
• Homburg, C., & Fuerst, A. (2005). How organizational complaint handling drives customer loyalty: An analysis of the mechanistic and the organic approach. Journal of Marketing, 69(3), 95–114. ArticleGoogle Scholar
• Homburg, C., Fürst, A. (2010). Überblick über die Messung von Kundenzufriedenheit und Kundenbindung. In Bruhn, M. and Homburg, C. (Eds.): Handbuch Kundenbindungsmanagement (pp. 599–634). Wiesbaden: Gabler. ChapterGoogle Scholar
• Homburg, C. and Klarmann, M. (2012). Die indirekte Wichtigkeitsbestimmung im Rahmen von Kundenzufriedenheitsuntersuchungen: Probleme und Loesungsansaetze. Homburg, C. (Eds.): Handbuch Kundenzufriedenheit: Konzepte - Methoden - Erfahrungen. Wiesbaden: Gabler. Google Scholar
• Homburg, C., & Stock, R. M. (2004). The link between salespeoples job satisfaction and customer satisfaction in a business-to-business context: A dyadic analysis. Journal of the Academy of Marketing Science, 32(2), 144. ArticleGoogle Scholar
• Homburg, C., Koschate, N., & Hoyer, W. D. (2005). Do satisfied customers really pay more? A study of the relationship between customer satisfaction and willingness to pay. Journal of Marketing, 69(2), 84–96. ArticleGoogle Scholar
• Homburg, C., Koschate, N., & Hoyer, W. D. (2006). The role of cognition and affect in the formation of customer satisfaction: A dynamic perspective. Journal of Marketing, 70(3), 21–31. ArticleGoogle Scholar
• Homburg, C., Mueller, M., & Klarmann, M. (2011). When should the customer really be king? On the optimum level of salesperson customer orientation in sales encounters. Journal of Marketing, 75(2), 55–74. ArticleGoogle Scholar
• Homburg, C., Ehm, L., & Artz, M. (2015). Measuring and managing consumer sentiment in an online community environment. Journal of Marketing Research, 52(5), 629–641. ArticleGoogle Scholar
• Howard, J. A. & Sheth, J. N. (1969). The Theory of Buyer Behavior. New York: John Wiley and Sons. Google Scholar
• Hunt, H. K. (1977). Conceptualization and measurement of consumer satisfaction and dissatisfaction (pp. 77–103). Cambridge, MA: Marketing Science Institute. Google Scholar
• Jarvis, C. B., MacKenzie, S. B., & Podsakoff, P. M. (2003). A critical review of construct indicators and measurement model misspecification in marketing and consumer research. Journal of Consumer Research, 30(2), 199–218. ArticleGoogle Scholar
• Keiningham, T. L., Cooil, B., Andreassen, T. W., & Aksoy, L. (2007). A longitudinal examination of net promoter and firm revenue growth. Journal of Marketing, 71(3), 39–51. ArticleGoogle Scholar
• Klarmann, M. (2008). Methodische Problemfelder der Erfolgsfaktorenforschung: Bestandsaufnahme und Empirische Analysen. Ph.D. thesis. Google Scholar
• Kozinets, R. V., De Valck, K., Wojnicki, A. C., & Wilner, S. J. (2010). Networked narratives: Understanding word-of-mouth marketing in online communities. Journal of Marketing, 74(2), 71–89. ArticleGoogle Scholar
• Kumar, V., & Reinartz, W. (2012). Customer relationship management: Concept, strategy, and tools. Berlin: Springer Science & Business Media. BookGoogle Scholar
• Kumar, V., & Shah, D. (2004). Building and sustaining profitable customer loyalty for the 21st century. Journal of Retailing, 80(4), 317–329. ArticleGoogle Scholar
• Kumar, V., Dalla Pozza, I., & Ganesh, J. (2013). Revisiting the satisfaction–loyalty relationship: Empirical generalizations and directions for future research. Journal of Retailing, 89(3), 246–262. ArticleGoogle Scholar
• Larivière, B., Keiningham, T. L., Aksoy, L., Yalgin, A., Morgeson, F. V., III, & Mithas, S. (2016). Modeling heterogeneity in the satisfaction, loyalty intention, and shareholder value linkage: A cross-industry analysis at the customer and firm levels. Journal of Marketing Research, 53(1), 91–109. ArticleGoogle Scholar
• Liu, J., & Toubia, O. (2018). A semantic approach for estimating consumer content preferences from online search queries. Marketing Science, 37(6), 930–952. ArticleGoogle Scholar
• Liu, Y., & Yang, R. (2009). Competing loyalty programs: Impact of market saturation, market share, and category expandability. Journal of Marketing, 73(1), 93–108. ArticleGoogle Scholar
• Luo, X., & Homburg, C. (2007). Neglected outcomes of customer satisfaction. Journal of Marketing, 71(2), 133–149. ArticleGoogle Scholar
• Ma, L., Sun, B., & Kekre, S. (2015). The squeaky wheel gets the grease - an empirical analysis of customer voice and firm intervention on twitter. Marketing Science, 34(5), 627–645. ArticleGoogle Scholar
• McAlexander, J. H., Schouten, J. W., & Koenig, H. F. (2002). Building brand community. Journal of Marketing, 66(l), 38–54. ArticleGoogle Scholar
• McAlexander, J. H., Kim, S. K., & Roberts, S. D. (2003). Loyalty: The influences of satisfaction and brand community integration. Journal of Marketing Theory and Practice, 11(4), 1–11. ArticleGoogle Scholar
• McCall, M., & Voorhees, C. (2010). The drivers of loyalty program success: An organizing framework and research agenda. Cornell Hospitality Quarterly, 51(l), 35–52. ArticleGoogle Scholar
• McCollough, M. A., Berry, L. L., & Yadav, M. S. (2000). An empirical investigation of customer satisfaction after service failure and recovery. Journal of Service Research, 3(2), 121–137. ArticleGoogle Scholar
• McNeal, J. U. (1969). Consumer satisfaction-measure of marketing effectiveness. MSU Business Topics-Michigan State University, 17(3), 31–35. Google Scholar
• Mellens, M., Dekimpe, M., & Steenkamp, J. (1996). A review of brand-loyalty measures in marketing. Tijdschrift voor economic en management, 4, 507–533. Google Scholar
• Morgan, N. A., & Rego, L. L. (2006). The value of different customer satisfaction and loyalty metrics in predicting business performance. Marketing Science, 25(5), 426–439. ArticleGoogle Scholar
• Morgan, N. A., Anderson, E. W., & Mittal, V. (2005). Understanding firms customer satisfaction information usage. Journal of Marketing, 69(3), 131–151. ArticleGoogle Scholar
• Morgeson, F. V., Mithas, S., Keiningham, T. L., & Aksoy, L. (2011). An investigation of the cross-national determinants of customer satisfaction. Journal of the Academy of Marketing Science, 39(2), 198–215. ArticleGoogle Scholar
• Oliver, R. L. (1980). A cognitive model of the antecedents and consequences of satisfaction decisions. Journal of Marketing Research, 17(4), 460–469. ArticleGoogle Scholar
• Oliver, R. L. (1981). Measurement and evaluation of satisfaction processes in retail settings. Journal of Retailing, 57, 25. Google Scholar
• Oliver, R. L. (1999). Whence consumer loyalty? Journal of Marketing, 63(4_suppl 1), 33–44. ArticleGoogle Scholar
• Palmatier, R. W., Dant, R. P., Grewal, D., & Evans, K. R. (2006). Factors influencing the effectiveness of relationship marketing: A meta-analysis. Journal of Marketing, 70(4), 136–153. ArticleGoogle Scholar
• Peters, L. D., Pressey, A. D., & Greenberg, P. (2010). The impact of CRM 2.0 on customer insight. Journal of Business and Industrial Marketing, 25, 410. ArticleGoogle Scholar
• Peterson, R. A., & Wilson, W. R. (1992). Measuring customer satisfaction: Fact and artifact. Journal of the Academy of Marketing Science, 20(1), 61. ArticleGoogle Scholar
• Reeves, M., & Deimler, M. (2011). Adaptability: The new competitive advantage. Harvard Business Review, 89(4), 134–141. Google Scholar
• Reichheld, F. F. (1996). Learning from customer defections. Harvard Business Review, 74, 56–69. Google Scholar
• Reichheld, F. F. (2003). The one number you need to grow. Harvard Business Review, 81(12), 46–55. Google Scholar
• Richins, M. L. (1983). Negative word-of-mouth by dissatisfied consumers: A pilot study. Journal of Marketing, 47(l), 68–78. ArticleGoogle Scholar
• Roehm, M., Pullins, E., & Jr, H. R. (2002). Designing loyalty-building programs for packaged goods brands. Journal of Marketing Research, 39(2), 202–213. Google Scholar
• Rust, R. T., & Zahorik, A. J. (1993). Customer satisfaction, customer retention, and market share. Journal of Retailing, 69(2), 193–215. ArticleGoogle Scholar
• Sarstedt, M., Mooi, E., (2019). A Concise Guide to Market Research: The Process, Data, and Methods Using IBM SPSS Statistics (3rd edition). Springer Google Scholar
• Schwartz, E. M., Bradlow, E. T., & Fader, R. S. (2017). Customer acquisition via display advertising using multi-armed bandit experiments. Marketing Science, 36(4), 500–522. ArticleGoogle Scholar
• Shankar, V., Smith, A. K., & Rangaswamy, A. (2003). Customer satisfaction and loyalty in online and offline environments. International Journal of Research in Marketing, 20(2), 153–175. ArticleGoogle Scholar
• Sheppard, B. H., Hartwick, J., & Warshaw, P. R. (1988). The theory of reasoned action: A meta-analysis of past research with recommendations for modifications and future research. Journal of Consumer Research, 15(3), 325–343. ArticleGoogle Scholar
• Sheth, J. N. (1970). Measurement of multidimensional brand loyalty of a consumer. Journal of Marketing Research, 7(3), 348–354. ArticleGoogle Scholar
• Shugan, S. (2005). Brand loyalty programs: Are they shams? Marketing Science, 24(2), 185–193. ArticleGoogle Scholar
• Singh, J., & Pandya, S. (1991). Exploring the effects of consumers’ dissatisfaction level on complaint behaviours. European Journal of Marketing, 25(9), 7–21. ArticleGoogle Scholar
• Smith, A. K., & Bolton, R. N. (1998). An experimental investigation of customer reactions to service failure and recovery encounters: Paradox or peril? Journal of Service Research, 1(1), 65–81. ArticleGoogle Scholar
• Szymanski, D. M., & Henard, D. H. (2001). Customer satisfaction: A meta-analysis of the empirical evidence. Journal of the Academy of Marketing Science, 29(l), 16–35. ArticleGoogle Scholar
• Umashankar, N., Bhagwat, Y., & Kumar, V. (2017). Do loyal customers really pay more for services? Journal of the Academy of Marketing Science, 45(6), 807–826. ArticleGoogle Scholar
• Van Doorn, J., & Verhoef, P. C. (2008). Critical incidents and the impact of satisfaction on customer share. Journal of Marketing, 72(4), 123–142. Google Scholar
• Verhoef, P. (2003). Understanding the effect of customer relationship management efforts on customer retention and customer share development. Journal of Marketing, 67(4), 30–45. ArticleGoogle Scholar
• Watson, G. F., Beck, J. T., Henderson, C. M., & Palmatier, R. W. (2015). Building, measuring, and profiting from customer loyalty. Journal of the Academy of Marketing Science, 43(6), 790–825. ArticleGoogle Scholar
• Weinberg, B. D., Milne, G. R., Andonova, Y. G., & Hajjat, F. M. (2015). Internet of things: Convenience vs. privacy and secrecy. Business Horizons, 58(6), 615–624. ArticleGoogle Scholar
• Wieseke, J., Alavi, S., & Habel, J. (2014). Willing to pay more, eager to pay less: The role of customer loyalty in price negotiations. Journal of Marketing, 78(6), 17–37. ArticleGoogle Scholar
• Woodruff, R. B., Cadotte, E. R., & Jenkins, R. L. (1983). Modeling consumer satisfaction processes using experience-based norms. Journal of Marketing Research, 20(3), 296–304. ArticleGoogle Scholar
• Zairi, M. (2000). Managing customer satisfaction: A best practice perspective. The TQM Magazine, 12(6), 389–394. ArticleGoogle Scholar

Author information

Authors and Affiliations

1. McCombs School of Business, The University of Texas, Austin, TX, USA Sebastian Hohenberg
2. Cox School of Business, Southern Methodist University, Dallas, TX, USA Wayne Taylor

1. Sebastian Hohenberg