Claes Fornell

University of Michigan | U-M · Department of Marketing

This article provides a sample of survey data collected by the American Customer Satisfaction Index (ACSI). Using online sampling and stratified interviewing techniques of actual customers of predominantly large market-share (“large cap”) companies, the ACSI annually collects data from some 400,000 consumers residing across the United States for mo...

We systematically review the literature on customer satisfaction, partitioning the literature into three generations of thought and focus, with the most recent, third generation, heavily emphasizing international business phenomena. Following a brief, stage-setting review of the first two generations – which address, respectively, the psychological...

Firms spend substantial resources responding to customer complaints, and the marketing profession has a long history of supporting that enterprise to promote customer loyalty. The authors question whether this response is always warranted or whether its effectiveness instead depends on economic, industry, customer–firm, product/service, and custome...

Customers’ perceptions of value have improved enormously over the years, more so than for any of the other drivers of customer satisfaction. Given this fact, we focus on the feasibility—for both individual companies and the economy—of a continued focus on the value proposition as the primary driver of customer satisfaction. We discuss the pros and...

Because of its tremendous brand recognition, this chapter is titled “ACSI” (American Customer Satisfaction Index) as an alternate way of saying customer satisfaction. The ACSI score has become synonymous with the metric to measure customer satisfaction—the central, most critical metric for understanding the customer experience and the health of the...

The world is becoming increasingly more global, interconnected, and, by population, significantly larger. An increase in worldwide population of billions of people in the last decades means more potential customers for small, medium, and large companies in the dynamic international marketplace. More customers also mean more diversity in what compan...

Learning to love your angry customers—what? Most companies view customer complaints as a negative, perhaps as an annoying part of their business that needs additional resources to attend to and fix. But companies that handle complaints well actually create stronger customer loyalty. And those companies that take complaints to heart, when warranted...

Viewed from the lens of the American Customer Satisfaction Index (ACSI), customer satisfaction is a strategic company asset that should be optimized, not maximized, and certainly not ignored. Companies do not thrive only by delivering on increasingly higher customer satisfaction. They thrive by managing the optimization of customer satisfaction. Co...

Customer loyalty has increased substantially to the brands customers opt to engage with over the years. Interestingly, contrary to warnings by many businesspeople, we find that Millennials are among the most loyal customers across generational cohorts, behind only the dwindling Silent Generation. Striving for loyalty across generational cohorts is...

What do customers demand in their experiences with companies? Our focus in this chapter is on what many have claimed to be the sky-rocketing expectations in the modern economy. We dive into the wisdom of the popular imperative for businesses to aim to “always exceed customer expectations,” and what future trends in customer expectations will look l...

We began the book by positioning customer satisfaction as a strategic company asset, but it can only be a strategic asset if it is connected to a company’s financial performance. Thankfully, we can unequivocally conclude that the link between customer satisfaction and a company’s financial performance is very strong. To justify this, we go a bit te...

How have customer perceptions of the quality of products and services developed over the years? Core to this discussion are two perspectives on what constitutes “quality”—reliability and customizability—and why the latter dominates the former as a predictor of customer satisfaction in today’s economy. The chapter tackles the prospects for continuin...

With major retailers closing brick-and-mortar stores every month and the continued shift to online shopping, there is a major push to strengthen customer loyalty by improving the customer experience. The two most important qualities that consumers look for are convenience and efficiency. Finally a source is available that will give retailers and co...

Information technology (IT) plays a vital role in customer relationship management (CRM), because CRM processes include the collection and analysis of customer information, firms use technology tools to interact with customers, and IT created the conditions under which firms can offshore CRM processes. Customers have negative perceptions toward off...

Sorescu and Sorescu (2016) and Bharadwaj and Mitra (2016) have made a number of insightful observations and suggestions for future research regarding stock returns on customer satisfaction. They have also provided a series of assessments of a study by Fornell, Morgeson, and Hult (2016) that focus on abnormal returns on customer satisfaction. Buildi...

The ability of a firm’s managers to understand how its customers view the firm’s offerings and the drivers of those customer perceptions is fundamental in determining the success of marketing efforts. We investigate the extent to which managers’ perceptions of the levels and drivers of their customers’ satisfaction and loyalty align with that of th...

A debate about whether firms with superior customer satisfaction earn superior stock returns has been persistent in the literature. Using 15 years of audited returns, the authors find convincing empirical evidence that stock returns on customer satisfaction do beat the market. The recorded cumulative returns were 518% over the years studied (2000-2...

This paper studies the effect of aggregate information technology (IT) investments on customer satisfaction and profits at the firm level. Using data on 109 U.S. firms for the 1994-1996 and 1999-2006 periods, we find that aggregate IT investments have a positive association with customer satisfaction. However, the strength of the relationship varie...

Market share and customer satisfaction are often used to assess marketing performance. Despite the widespread assumption of a positive relationship between these two variables, the limited extant empirical literature on the subject indicates either a negative or a nonsignificant relationship. The authors reexamine this relationship over a longer ti...

Predicting aggregate consumer spending is vitally important to marketing planning, yet traditional economic theory holds that predicting changes in aggregate consumer spending is not possible. Previous attempts to predict consumer spending growth using standard macroeconomic predictor variables have met with little success. The authors show that th...

According to Jacobson and Mizik [Jacobson, R., N. Mizik. 2009. The financial markets and customer satisfaction: Reexamining possible financial market mispricing of customer satisfaction. (5) 810–819], excess stock portfolio returns for firms with strong customer satisfaction are small and statistically insignificant, and if there is any above-marke...

Market share and customer satisfaction are among the most widely used criteria for assessing marketing performance among both researchers and managers. Despite the intuitively appealing service-profit chain logic suggesting a positive link between customer satisfaction and market share, the limited empirical literature indicates either a negative o...

Web sites are important components of Internet strategy for organizations. This paper develops a theoretical model for understanding the effect of Web site design elements on customer loyalty to a Web site. We show the relevance of the business domain of a Web site to gain a contextual understanding of relative importance of Web site design element...

Do investments in customer satisfaction lead to excess returns? If so, are these returns associated with higher stock market risk? The empirical evidence presented in this article suggests that the answer to the first question is yes, but equally remarkable, the answer to the second question is no, suggesting that satisfied customers are economic a...

This research evaluates the effect of customer relationship management (CRM) on customer knowledge and customer satisfaction. An analysis of archival data for a cross-section of U.S. firms shows that the use of CRM applications is positively associated with improved customer knowledge and improved customer satisfaction. This article also shows that...

Anecdotal reports suggest that offshoring may have negative implications for North American consumers. Despite the anecdotal reports, North American firms are increasingly offshoring front office functions such as customer service and back office functions such as IT. This leads to two primary research questions. Does front office offshoring actual...

Do investments in customer satisfaction lead to excess returns? If so, are these returns associated with higher stock market risk? The empirical evidence presented in this article suggests that the answer to the first question is yes, but equally remarkable, the answer to the second question is no, suggesting that satisfied customers are economic a...

This research addresses the following questions: Do information technology (IT) investments have an effect on customer satisfaction? What are the causal mechanisms that mediate the effect of IT systems on customer satisfaction? Does the effect of IT on customer satisfaction differ across industry sectors? Based on an analysis of longitudinal data o...

In this article, the authors develop a theoretical framework that specifies how customer satisfaction affects future customer behavior and, in turn, the level, timing, and risk of future cash flows. Empirically, they find a positive association between customer satisfaction and shareholder value. They also find significant variation in the associat...

How do we know if an economy is performing well? How do we know if a company is performing well? The fact is that we have serious difficulty answering these questions today. The economy-for nations and for corporations-has changed much more than our theories and measurements. The development of national customer satisfaction indices (NCSIs) represe...

There is widespread belief that firms should pursue superiority in both customer satisfaction and productivity. However, there is reason to believe these two goals are not always compatible. If a firm improves productivity by “downsizing,” it may achieve an increase in productivity in the short-term, but future profitability may be threatened if cu...

The American Customer Satisfaction Index (ACSI) is a new type of market-based performance measure for firms, industries, economic sectors, and national economies. The authors discuss the nature and purpose of ACSI and explain the theory underlying the ACSI model, the nation-wide survey methodology used to collect the data, and the econometric appro...

The American Customer Satisfaction Index (ACSI) is a new type of market-based performance measure for firms, industries, economic sectors, and national economies. The authors discuss the nature and purpose of ACSI and explain the theory underlying the ACSI model, the nation-wide survey methodology used to collect the data, and the econometric appro...

The models currently used to describe customers' satisfaction with products and services presume that customers have well-formed performance expectations. The present study uses data from the Swedish Customer Satisfaction Barometer to show that these models fail to describe customer satisfaction with bank loans, a complex, heterogeneous, and infreq...

Is superiority in quality compatible with superiority in productivity, or do the two conflict? One stream of research argues that they are compatible, another argues that there are inherent trade-offs, while still another finds little or no relationship. This study seeks to reconcile the apparent contradictions. Building on Juran's (1989) recogniti...

As more nations add customer satisfaction—as a measure of quality of economic output—to what they presently collect about the economy, it becomes increasingly important to understand the role of customer satisfaction and its relationship to other economic measures. In an attempt to contribute to such an understanding, this paper presents two empiri...

This article develops and tests alternative models of market-level expectations, perceived product performance, and customer satisfaction. Market performance expectations are argued to be largely rational in nature yet adaptive to changing market conditions. Customer satisfaction is conceptualized as a cumulative construct that is effected by marke...

Are there economic benefits to improving customer satisfaction? Many firms that are frustrated in their efforts to improve quality and customer satisfaction are beginning to question the link between customer satisfaction and economic returns. The authors investigate the nature and strength of this link. They discuss how expectations, quality, and...

Are there economic benefits to improving customer satisfaction? Many firms that are frustrated in their efforts to improve quality and customer satisfaction are beginning to question the link between customer satisfaction and economic returns. The authors investigate the nature and strength of this link. They discuss how expectations, quality, and...

The paper uses the differentiation of offerings as a basis for explaining differences in aggregate, industry level customer satisfaction in the annual Swedish Customer Satisfaction Barometer. The results reveal that differentiated industries have higher aggregate levels of perceived performance and subsequent customer satisfaction, and that a large...

Are market pioneers more successful because they started with superior skills and resources? The absolute pioneer advantage hypothesis is that because market pioneering is desirable, firms with superior skills and resources naturally choose to pioneer new markets. The comparative advantage hypothesis is that market evolution changes success require...

Most research on product positioning supports the idea of differentiation. Product standardization (i.e., minimum differentiation) occurs only under very limiting assumptions. Yet, similar products are often observed in the marketplace. We attempt to restore the case for standardization by using more realistic assumptions than in previous work. We...

This paper examines the attributes that consumers use when making product similarity judgments and their effect on similarity scaling. Previous research suggests that concrete brands are judged using dichotomous features while more abstract product categories are judged using continuous dimensions. This, in turn, suggests that the appropriateness o...

Although methods for latent variable modeling that allow a joint analysis of measurement and theory have become popular, they are not without difficulties. As these difficulties have become more apparent, several researchers have recently called for a “two-step approach” to latent variable modeling in which measurement is evaluated separately from...

Many individual companies and some industries monitor customer satisfaction on a continual basis, but Sweden is the first country to do so on a national level. The annual Customer Satisfaction Barometer (CSB) measures customer satisfaction in more than 30 industries and for more than 100 corporations. The new index is intended to be complementary t...

Many individual companies and some industries monitor customer satisfaction on a continual basis, but Sweden is the first country to do so on a national level. The annual Customer Satisfaction Barometer (CSB) measures customer satisfaction in more than 30 industries and for more than 100 corporations. The new index is intended to be complementary t...

This paper discusses the issues in estimating the effects of marketing variables with linear models. When the variables are not directly observable, it is well known that direct regression yields biased estimates. Several researchers have recently suggested reverse regression as an alternative procedure. However, it is shown that the reverse regres...

A framework is presented which integrates economic and psychological perspectives in order to compare customer satisfaction across individuals and product categories. The framework lays the foundation for the development of a national index for customer satisfaction that is now in place in Sweden. An important property of any such index is that it...

This article addresses management process issues for forming cooperative ventures with an increased likelihood of subsequent success. Based on Roos (1989) the cooperative venture formation process is conceptualized in terms of three theoretical constructs: the extent of sufficient “internal push” for the project, the breadth and depth of “analytica...

Confirmatory multidimensional scaling (CMDS) is presented as a spatial technique for structural modeling based on ordinal assumptions, and as an alternative to metric techniques such as LISREL. The article links both techniques to the multitrait-multimethod matrix and presents a system for deriving measures of symmetric construct relationships, mea...

Redundancy analysis was proposed as an alternative to canonical correlation (van den Wollen-berg, 1977). The following paper examines the conditions under which canonical correlation and redundancy analysis produce identical solutions. It is shown that identical results are possible when all nonzero eigenvalues of the correlation matrix of the crit...

We empirically test existing theories on the provision of public goods, in particular air quality, using data on sulfur dioxide (SO2) concentrations from the Global Environment Monitoring Projects for 107 cities in 42 countries from 1971 to 1996. The results are as follows: First, we provide additional support for the claim that the degree of democ...

A model of customer complaint management is developed in terms of defensive marketing strategy. Based on an explicit microfoundation, firms' incentives to manage complaints are analyzed. In the context of a monopoly and homogeneous oligopoly, we discuss the optimal levels of customer compensation and effort and characterize industries where complai...

Stewart and Love proposed redundancy as an index for measuring the amount of shared variance between two sets of variables. van den Wollenberg presented a method for maximizing redundancy. Johansson extended the approach to include derivation of optimal Y-variates, given the X-variates. This paper shows that redundancy maximization with Johansson's...

The relationship between advertising and product quality has been a controversial topic in the literature because of conflicting empirical evidence and divergent theories about advertising's effects. The authors present an integrative theory based on consumer response to advertising and the costs of producing quality products. The theory posits tha...

The relationship between advertising and product quality has been a controversial topic in the literature because of conflicting empirical evidence and divergent theories about advertising's effects. The authors present an integrative theory based on consumer response to advertising and the costs of producing quality products. The theory posits tha...

On the basis of Hirschman's exit-voice theory, an economic model of defensive marketing strategy is developed for complaint management. Though many firms strive to reduce the number of customer complaints about their products, this objective is found to be questionable. Instead, analysis suggests complaints from dissatisfied customers should be max...

A general relationship is proposed wherein more abstract attributes are likely to resemble continuous dimensions while more concrete attributes are likely to resemble dichotomous features. While some methodologies assume dimensional representations, others assume feature-based representations. This suggests that dimensional methods may better captu...

In the past, advertising researchers have built up, in an exploratory fashion, multi-item profiles for measuring consumer response to advertising. Two of the most commonly used profiles, Wells’ reaction profile and Leavitt's commercial profile, were developed this way. However, very little is known about the reliability, validity, or predictive pow...

An economic theory of habit formation through consumption learning is developed to explain order differences in relative sales promotion expenditures among brands. The theory applies to consumer brands in equilibrium markets, where consumer information from sources other than advertising, sales promotion, and previous consumption experience is negl...

In a broad cross section of consumer goods businesses, market pioneers generally have substantially higher market shares than late entrants. In fact, the empirical association between order of entry and market share is almost as strong as the association between market share and return on investment. The authors examine theoretical sources behind t...

In a broad cross section of consumer goods businesses, market pioneers generally have substantially higher market shares than late entrants. In fact, the empirical association between order of entry and market share is almost as strong as the association between market share and return on investment. The authors examine theoretical sources behind t...

Little is known about how organizations respond to consumer complaints. This paper suggests a process whereby increasing consumer complaint proportions leads to organizational suppression of the unit receiving the complaints, which subsequently contributes to a further increase in complaints due to inaction by marketing management. This vicious cir...

Little is known about how organizations respond to consumer complaints. This paper suggests a process whereby increasing consumer complaint proportions leads to organizational suppression of the unit receiving the complaints, which subsequently contributes to a further increase in complaints due to inaction by marketing management. This vicious cir...

Although simulations can be useful for illustrative purposes or for exploring the effects of sample size and population variance on model statistics, the analysis of nonstatistical issues in structural equations should not rely on simulations. Acito and Anderson's results can be derived analytically, without simulations. Moreover, because of differ...

Although simulations can be useful for illustrative purposes or for exploring the effects of sample size and population variance on model statistics, the analysis of nonstatistical issues in structural equations should not rely on simulations. Acito and Anderson's results can be derived analytically, without simulations. Moreover, because of differ...

This study brings together the fields of industrial organization and consumer research in an attempt to account for variations in consumer dissatisfaction among product categories. A major portion of these variations is empirically accounted for by distributional and cost/size factors. The theoretical explanations behind the empirical associations...

In marketing applications of structural equation models with unobservable variables, researchers have relied almost exclusively on LISREL for parameter estimation. Apparently they have been little concerned about the frequent inability of marketing data to meet the requirements for maximum likelihood estimation or the common occurrence of improper...

In marketing applications of structural equation models with unobservable variables, researchers have relied almost exclusively on LISREL for parameter estimation. Apparently they have been little concerned about the frequent inability of marketing data to meet the requirements for maximum likelihood estimation or the common occurrence of improper...

Canonical correlation analysis is commonly considered to be a general model for most parametric bivariate and multivariate statistical methods. Because of its capability for handling multiple criteria and multiple predictors simultaneously, canonical correlation analysis has a great deal of appeal and has also enjoyed increasing application in the...

Several issues relating to goodness of fit in structural equations are examined. The convergence and differentiation criteria, as applied by Bagozzi, are shown not to stand up under mathematical or statistical analysis. The authors argue that the choice of interpretative statistic must be based on the research objective. They demonstrate that when...

Several issues relating to goodness of fit in structural equations are examined. The convergence and differentiation criteria, as applied by Bagozzi, are shown not to stand up under mathematical or statistical analysis. The authors argue that the choice of interpretative statistic must be based on the research objective. They demonstrate that when...

The statistical tests used in the analysis of structural equation models with unobservable variables and measurement error are examined. A drawback of the commonly applied chi square test, in addition to the known problems related to sample size and power, is that it may indicate an increasing correspondence between the hypothesized model and the o...

Durable goods buyers' prepurchase information search activities were studied to determine whether distinctive patterns of information source usage could be identified. A method based on canonical analysis of retail, neutral, and personal source usage measures in conjunction with selected explanatory variables proved useful in distinguishing four di...

Durable goods buyers’ prepurchase information search activities were studied to determine whether distinctive patterns of information source usage could be identified. A method based on canonical analysis of retail, neutral, and personal source usage measures in conjunction with selected explanatory variables proved useful in distinguishing four di...

Although much progress has been made In clarifying the properties of canonical correlation analysis in order to enhance its applicability, there are several remaining problems. Canonical variates do not always represent the observed variables even though the canonical correlation is high. In addition, canonical solutions are often difficult to inte...

http://deepblue.lib.umich.edu/bitstream/2027.42/35620/2/b137719x.0001.001.pdf http://deepblue.lib.umich.edu/bitstream/2027.42/35620/1/b137719x.0001.001.txt

Thesis (Ph. D.)--University of Michigan, 1999. Includes bibliographical references (leaves 150-162). Co-chairs: Eugene W. Anderson, Claes G. Fornell.