The Value of High-Frequency Service Data: An Empirical Analysis

Abstract

Firms in multiple industries collect customer satisfaction data to measure service performance. Increasingly, however, many firms are now able to collect objective service performance data as well. This raises the question of whether measuring customer satisfaction is valuable to firms when objective service performance data are available. The authors answer this question via the use of unique data consisting of individual-level cross-sectional and time-series measures of objective service performance, customer satisfaction and repurchase behavior. The data come from two different - quick service restaurant and auto rental - service industries. The authors find that satisfaction ratings reflect objective service performance. Interestingly, despite its weak direct effect, the authors find a strong indirect effect of objective service performance on interpurchase time, operating through customer satisfaction. Unlike past research, these results are obtained after controlling for within-customer selection (of service encounters). Overall, the results suggest that customer satisfaction ratings are valuable.