TY - JOUR

T1 - Customer perception measures driving financial performance

T2 - theoretical and empirical work for a large decentralized banking group

AU - Eklof, Jan

AU - Hellstrom, Katerina

AU - Malova, Aleksandra

AU - Parmler, Johan

AU - Podkorytova, Olga

PY - 2017

Y1 - 2017

N2 - Purpose: The purpose of this paper is to assess the usefulness and efficiency of customer-based measures such as customer satisfaction (CSI) and perceived loyalty for monitoring and enhancing the financial performance in corporations. Design/methodology/approach: General financial data for the empirical modeling is compiled from national and international databases (Alla Bolag, IMF/IFS, Bloomberg, Eurostat, etc.) and company-specific data from the studied corporation. Customer perception data (like CSI and loyalty) are taken from the Extended Performance Satisfaction Index-initiative database (annual observations for the period 2001-2014 and quarterly for 2008-2014). A hierarchy of structural models is devised on a combined time-series and cross-section (panel and multi-level) approach. The results are based on models estimated by Arellano–Bond procedures (Arellano and Bond, 1991). Findings: The core findings are two. First, there is a strong positive relationship between customer-based measures and financial performance. Second, it is effective to regularly monitor CSI as a forward- looking indicator for understanding future financial performance. Practical implications: Customer-based measures are highly useful as leading indicators of companies’ future performance and should be incorporated even more into corporate decisions. Originality/value: According to this survey of contemporary research, very little is academically documented for the full-circle from corporate to branch level. Thus, the prevailing study should be of potential value for companies in general.

AB - Purpose: The purpose of this paper is to assess the usefulness and efficiency of customer-based measures such as customer satisfaction (CSI) and perceived loyalty for monitoring and enhancing the financial performance in corporations. Design/methodology/approach: General financial data for the empirical modeling is compiled from national and international databases (Alla Bolag, IMF/IFS, Bloomberg, Eurostat, etc.) and company-specific data from the studied corporation. Customer perception data (like CSI and loyalty) are taken from the Extended Performance Satisfaction Index-initiative database (annual observations for the period 2001-2014 and quarterly for 2008-2014). A hierarchy of structural models is devised on a combined time-series and cross-section (panel and multi-level) approach. The results are based on models estimated by Arellano–Bond procedures (Arellano and Bond, 1991). Findings: The core findings are two. First, there is a strong positive relationship between customer-based measures and financial performance. Second, it is effective to regularly monitor CSI as a forward- looking indicator for understanding future financial performance. Practical implications: Customer-based measures are highly useful as leading indicators of companies’ future performance and should be incorporated even more into corporate decisions. Originality/value: According to this survey of contemporary research, very little is academically documented for the full-circle from corporate to branch level. Thus, the prevailing study should be of potential value for companies in general.

KW - Customer satisfaction

KW - Decentralized management

KW - Non-financial performance monitoring

KW - Service metrics

UR - http://www.scopus.com/inward/record.url?scp=85028774818&partnerID=8YFLogxK

UR - http://10.1108/MBE-12-2016-0059 https://doi.org/10.1108

U2 - 10.1108/MBE-12-2016-0059

DO - 10.1108/MBE-12-2016-0059

M3 - Article

AN - SCOPUS:85028774818

VL - 21

SP - 239

EP - 249

JO - Measuring Business Excellence

JF - Measuring Business Excellence

SN - 1368-3047

IS - 3

ER -