Title

The impact of customer-related strategies on shareholder value

Date of Award

1-1-2008

Degree Type

Thesis

Degree Name

Doctor of Philosophy

School

School of Accounting, Finance and Economics

Faculty

Faculty of Business and Law

Abstract

Marketing strategy has been justified by a number of criteria, including brand awareness, consumer attitudes, repeat buying and ratings of customer satisfaction; but the existing literature indicates the existence of weak relationships between these variables and sales, and almost no relationship with profitability. The 'customer perspective' of the balanced scorecard (BSC) suggests that measures of customer satisfaction might provide leading indicators with the ability to predict a firm's future financial performance; but empirical research has thus far failed to establish the existence of a consistent causal relationship between increased customer satisfaction and a firm's profitability. Similar findings cast doubt on the relationship between customer loyalty and firm profitability. Such empirical evidence is in conflict with the expectations of the service-profit chain which suggests that increases in customer satisfaction will increase customer loyalty and earn additional profits from customers. Management focus on the achievement of customer satisfaction and customer loyalty, and associated investment, might, therefore, be misguided, if they believe that the available empirical evidence supports a link between these variables and firm performance.

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