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 stu dies examine this link through the use of time-series data. In this study, a longitudinal analysis of satisfaction and performance for a national chai n of fast-food restaurants is conducted. A total of 342,308 consumer respon ses, 3,009 employee responses, and 12 months of restaurant performance meas ures are analyzed. Whereas there is a positive and significant relationship between customer satisfaction and employee satisfaction in any one given t ime period, no significant relationship between customer satisfaction and p erformance, and employee satisfaction and performance, is uncovered in this cross-sectional analysis. However, the analysis of time-series data reveal s that a positive and significant relationship exists between changes in cu stomer satisfaction and changes in the performance of the firm. Therefore, the impact of an increase in customer satisfaction on profits, although, ob scured in the short run by many factors, is significantly positive in the l ong run. (C) 1999 Elsevier Science Inc.