Measuring Customer Satisfaction and Customer Loyalty

Abstract

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.