Customer and Employee Satisfaction Effects on Cross-buying
(A2019-3940)

AUTHORS

Albert Valenti, IESE Business School; Gokhan Yildirim, Imperial College London; Shuba Srinivasan, Boston University, Questrom School of Business

KEYWORDS

customer satisfaction; employee satisfaction; panel models

ABSTRACT

In the retail industry, where customers interact with employees during the purchase process, the satisfaction of both stakeholders plays an important role in determining customer spending. The service-profit chain framework states that employee satisfaction (ES) influences customer spending through customer satisfaction (CS), leading one to expect that CS and ES do not have simultaneous effects. However, whether CS and ES have simultaneous effects remains an open question. We jointly model the effects of CS and ES on cross-buying probability, controlling for customer heterogeneity and time effects, and accounting for nonlinearity and asymmetries. Our results based on an empirical analysis with data from a leading car rental company have novel implications for theory and practice. CS and ES have simultaneous effects on cross-buying. However, the relationship is concave non-monotonic. For low satisfaction levels, an increase in satisfaction leads to higher cross-buying; while for high satisfaction, an increase leads to lower cross-buying.

REFERENCES

I thank the Wharton Customer Analytics Initiative for granting the data used in the paper