A longitudinal analysis of satisfaction and profitability

Recently, significant attention has been focused on customer satisfaction. However, few studies link satisfaction with performance, and even fewer studies examine this link through the use of time-series data. In this study, a longitudinal analysis of satisfaction and performance for a national chain of fast-food restaurants is conducted. A total of 342,308 consumer responses, 3,009 employee responses, and 12 months of restaurant performance measures are analyzed. Whereas there is a positive and significant relationship between customer satisfaction and employee satisfaction in any one given time period, no significant relationship between customer satisfaction and performance, and employee satisfaction and performance, is uncovered in this cross-sectional analysis. However, the analysis of time-series data reveals that a positive and significant relationship exists between changes in customer satisfaction and changes in the performance of the firm. Therefore, the impact of an increase in customer satisfaction on profits, although, obscured in the short run by many factors, is significantly positive in the long run. (C) 1999 Elsevier Science Inc.