Abstract
Does improving employee happiness affect customer outcomes? The current study attempts to answer this question by examining the impact of employee satisfaction trajectories (i.e., systematic changes in employee satisfaction) on customer outcomes. After accounting for employees’ initial satisfaction levels, the analyses demonstrate the importance of employee satisfaction trajectories for customer satisfaction and repatronage intentions, as well as identify customer-employee contact as a necessary conduit for their effect. From a macro perspective, employee satisfaction trajectories strongly impact customer satisfaction for companies with significant employee–customer interaction, but not for companies without such interaction. From a micro perspective, employee satisfaction trajectories influence customer repatronage intentions for frequent customers, but not for infrequent customers. These effects are robust to controlling for previous customer evaluations and recent employee evaluations. Overall, these findings extend the dominant view of examining static, employee satisfaction levels and offer important implications for the management of the organizational frontline.
Similar content being viewed by others
Notes
The use of 2014 ACSI scores rather than the 2015 scores results in no differences in hypothesis testing though the coefficients for employee satisfaction trajectory and level on customer satisfaction are smaller for the 2014 ACSI scores as compared to the 2015 scores.
We still find support for the hypothesis when restricting the sample to only the companies with complete data (n = 262), but the results are slightly weaker than those reported in the primary analysis (β4 = 6.88, t = 2.64, p < .01; β5 = 33.12, t = 2.79, p < .01).
We compared the survey-based measure of company size to one based on the number of employees for publicly traded companies. The correlation was strong (r = .39) considering modern analyses of correlational effect sizes (Bosco et al. 2015). Furthermore, an analysis using the employee-based measure found similar results and still supported the hypotheses despite a smaller sample size (n = 202).
We also tested the single recommendation item given it is most representative of employee satisfaction as a robustness check. We found the coefficients related to hypothesis testing strengthened when only this item was used.
A similar way to test the unique effect of high contact is to create a three-way interaction between employee satisfaction trajectory, contact, and a dummy variable that has zeros for values of contact below the mean and a one for values above the mean. Doing this revealed that the three-way interaction was positive and significant (γ = 2.68., t = 2.78, p = .01). The two-way interaction between contact and trajectory was insignificant (γ = −0.82., t = −1.26, p = .21). Yet another way to test H3b using the continuous patronage variable is by a curvilinear moderation through a quadratic interaction in which a squared form of the moderator is used in addition to the non-squared form. Doing this further supports the necessity of high contact for employee satisfaction trajectory as the quadratic interaction was significant and positive (γ = 0.27, t = 2.20, p = .03) whereas the linear interaction was negative (γ = −0.18., t = −1.21, p = .23).
A robustness check using the future revenue variable by itself and controlling for total customers did not result in changes to the direction and significance of the estimated coefficients. This analysis required a natural logarithmic transformation of the revenue and customer variables to offset their skew.
References
Anderson, E. W., Fornell, C., & Lehmann, D. R. (1994). Customer satisfaction, market share, and profitability: Findings from Sweden. Journal of Marketing, 58(3), 53–66.
Anderson, E. W., Fornell, C., & Rust, R. T. (1997). Customer satisfaction, productivity, and profitability: Differences between goods and services. Marketing Science, 16(2), 129–145.
Asparouhov, T., Hamaker, E. L., & Muthén, B. (2018). Dynamic structural equation models. Structural Equation Modeling: A Multidisciplinary Journal, 25(3), 359–388.
Babin, B. J., Griffin, M., & Babin, L. (1994). The effect of motivation to process on consumers' satisfaction reactions. In C. T. Allen & D. R. John (Eds.), Na - advances in consumer research (pp. 406–411). Provo: Association for Consumer Research.
Bandura, A. (1971). Social learning theory. New York: General Learning Press.
Beer, M. (1964). Organizational size and job satisfaction. Academy of Management Journal, 7(1), 34–44.
Bentein, K., Vandenberghe, C., Vandenberg, R., & Stinglhamber, F. (2005). The role of change in the relationship between commitment and turnover: A latent growth modeling approach. Journal of Applied Psychology, 90(3), 468–482.
Bhattacharya, C. B., & Sen, S. (2003). Consumer--company identification: A framework for understanding consumers' relationships with companies. Journal of Marketing, 67(2), 76–88.
Bitner, M. J. (1995). Building service relationships: It’s all about promises. Journal of the Academy of Marketing Science, 23(4), 246–251.
Bollen, K. A., & Curran, P. J. (2006). Latent curve models: A structural equation perspective. Hoboken: John Wiley & Sons, Inc.
Bosco, F. A., Aguinis, H., Singh, K., Field, J. G., & Pierce, C. A. (2015). Correlational effect size benchmarks. Journal of Applied Psychology, 100(2), 431–449.
Brown, S. P., & Lam, S. K. (2008). A meta-analysis of relationships linking employee satisfaction to customer responses. Journal of Retailing, 84(3), 243–255.
Celsi, R. L., & Olson, J. C. (1988). The role of involvement in attention and comprehension processes. Journal of Consumer Research, 15(2), 210–224.
Certo, S. T., Withers, M. C., & Semadeni, M. (2016). A tale of two effects: Using longitudinal data to compare within- and between-firm effects. Strategic Management Journal, 38(7), 1536–1556.
Chen, G., Ployhart, R., Thomas, H. C., Anderson, N., & Bliese, P. (2011). A power of momentum: A new model of dynamic relationships between job satisfaction and turnover intentions. Academy of Management Journal, 54(1), 159–181.
Croon, M. A., & Van Veldhoven, M. J. P. M. (2007). Predicting group-level outcome variables from variables measured at the individual level: A latent variable multilevel model. Psychological Methods, 12(1), 45–57.
Dietz, J., Pugh, S. D., & Wiley, J. W. (2004). Service climate effects on customer attitudes: An examination of boundary conditions. Academy of Management Journal, 47(1), 81–92.
Echambadi, R., Campbell, B., & Agarwal, R. (2006). Encouraging best practice in quantitative management research: An incomplete list of opportunities. Journal of Management Studies, 43(8), 1801–1820.
Evanschitzky, H., Wangenheim, F. V., & Wünderlich, N. V. (2012). Perils of managing the service profit chain: The role of time lags and feedback loops. Journal of Retailing, 88(3), 356–366.
Giebelhausen, M., Robinson, S. G., Sirianni, N. J., & Brady, M. K. (2014). Touch vs. tech: When technology functions as a barrier or a benefit to service encounters. Journal of Marketing, 78(4), 113–124.
Govind, R., Chatterjee, R., & Mittal, V. (2018). Segmentation of spatially dependent geographical units: Model and application. Management Science, 64(4), 1941–1956.
Groth, M., Hennig-Thurau, T., & Walsh, G. (2009). Customer reactions to emotional labor: The roles of employee acting strategies and customer detection accuracy. Academy of Management Journal, 52(5), 958–974.
Habel, J., & Klarmann, M. (2015). Customer reactions to downsizing: When and how is satisfaction affected? Journal of the Academy of Marketing Science, 43(6), 768–789.
Harmeling, C. M., Palmatier, R. W., Houston, M. B., Arnold, M. J., & Samaha, S. A. (2015). Transformational relationship events. Journal of Marketing, 79(5), 39–62.
Harter, J. K., Schmidt, F. L., & Hayes, T. L. (2002). Business-unit-level relationship between employee satisfaction, employee engagement, and business outcomes: A meta-analysis. Journal of Applied Psychology, 87(2), 268–279.
Heskett, J., Sasser, W. E., & Schlesinger, L. A. (1997). The service profit chain: How leading companies link profit and growth to loyalty, satisfaction and value. New York: Free Press.
Hobfoll, S. E. (1989). Conservation of resources: A new attempt at conceptualizing stress. American Psychologist, 44(3), 513–524.
Hogreve, J., Iseke, A., Derfuss, K., & Eller, T. (2017). The service–profit chain: A meta-analytic test of a comprehensive theoretical framework. Journal of Marketing, 81(3), 41–61.
Hollmann, T., Jarvis, C. B., & Bitner, M. J. (2015). Reaching the breaking point: A dynamic process theory of business-to-business customer defection. Journal of the Academy of Marketing Science, 43(2), 257–278.
Homburg, C., & Stock, R. (2004). The link between salespeople’s job satisfaction and customer satisfaction in a business-to-business context: A dyadic analysis. Journal of the Academy of Marketing Science, 32(2), 144–158.
Hsee, C. K., & Abelson, R. P. (1991). Velocity relation: Satisfaction as a function of the first derivative of outcome over time. Journal of Personality and Social Psychology, 60(3), 341–347.
Huang, M.-H., & Cheng, Z.-H. (2016). A longitudinal comparison of customer satisfaction and customer-company identification in a service context. Journal of Service Management, 27(5), 730–750.
Huang, M., Li, P., Meschke, F., & Guthrie, J. P. (2015). Family firms, employee satisfaction, and corporate performance. Journal of Corporate Finance, 35, 108–127.
Johnson, J., Tellis, G. J., & Macinnis, D. J. (2005). Losers, winners, and biased trades. Journal of Consumer Research, 32(2), 324–329.
Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47(2), 263–291.
Keiningham, T. L., Aksoy, L., Cooil, B., Peterson, K., & Vavra, T. G. (2006). A longitudinal examination of the asymmetric impact of employee and customer satisfaction on retail sales. Managing Service Quality: An International Journal, 16(5), 442–459.
Kelava, A., Moosbrugger, H., Dimitruk, P., & Schermelleh-Engel, K. (2008). Multicollinearity and missing constraints: A comparison of three approaches for the analysis of latent nonlinear effects. Methodology European Journal of Research Methods for the Behavioral and Social Sciences, 4(2), 51–66.
Killingsworth, M. A., & Gilbert, D. T. (2010). A wandering mind is an unhappy mind. Science, 330(6006), 932–932.
Kinicki, A. J., Mckee-Ryan, F. M., Schriesheim, C. A., & Carson, K. P. (2002). Assessing the construct validity of the job descriptive index: A review and meta-analysis. Journal of Applied Psychology, 87(1), 14–32.
Kowske, B. (2012). Employee engagement: Market review, buyer’s guide and provider profiles. http://www.bersin.com/engagement-market-review. Accessed January 10, 2017.
Lebreton, J. M., & Senter, J. L. (2008). Answers to 20 questions about interrater reliability and interrater agreement. Organizational Research Methods, 11(4), 815–852.
Li, J., Burch, T. C., & Lee, T. W. (2017). Intra-individual variability in job complexity over time: Examining the effect of job complexity trajectory on employee job strain. Journal of Organizational Behavior, 38(5), 671–691.
Li, X. S., Chan, K. W., & Kim, S. (2019). Service with emoticons: How customers interpret employee use of emoticons in online service encounters. Journal of Consumer Research, 45(5), 973–987.
Liu, D., Mitchell, T., Lee, T., Holtom, B., & Hinkin, T. (2012). Employees are out of step with coworkers: Job satisfaction trajectory and dispersion influence individual- and unit-level voluntary turnover. Academy of Management Journal, 55(6), 1130–1380.
Maas, C. J. M., & Hox, J. J. (2005). Sufficient sample sizes for multilevel modeling. Methodology European Journal of Research Methods for the Behavioral and Social Sciences, 1(3), 86–92.
Mani, V., Kesavan, S., & Swaminathan, J. M. (2014). Estimating the impact of understaffing on sales and profitability in retail stores. Production and Operations Management, 24(2), 201–218.
Marinova, D., Singh, S. K., & Singh, J. (2018). Frontline problem-solving effectiveness: A dynamic analysis of verbal and nonverbal cues. Journal of Marketing Research, 55(2), 178–192.
Mayer, D. M., Ehrhart, M. G., & Schneider, B. (2009). Service attribute boundary conditions of the service-climate satisfaction link. Academy of Management Journal, 52(5), 1034–1050.
Melián-González, S., Bulchand-Gidumal, J., & López-Valcárcel, B. G. (2015). New evidence of the relationship between employee satisfaction and firm economic performance. Personnel Review, 44(6), 906–929.
Mende, M., & Van Doorn, J. (2014). Coproduction of transformative services as a pathway to improved consumer well-being: Findings from a longitudinal study on financial counseling. Journal of Service Research, 18(3), 351–368.
Meyers-Levy, J., & Sternthal, B. (1993). A two-factor explanation of assimilation and contrast effects. Journal of Marketing Research, 30(3), 359–368.
Morgan, N. A., & Rego, L. L. (2006). The value of different customer satisfaction and loyalty metrics in predicting business performance. Marketing Science, 25(5), 426–439.
Newman, D. A. (2003). Longitudinal modeling with randomly and systematically missing data: A simulation of ad hoc, maximum likelihood, and multiple imputation techniques. Organizational Research Methods, 6(3), 328–362.
Palmatier, R. W., Houston, M. B., Dant, R. P., & Grewal, D. (2013). Relationship velocity: Toward a theory of relationship dynamics. Journal of Marketing, 77(1), 13–30.
Peters, K., & Kashima, Y. (2015). A multimodal theory of affect diffusion. Psychological Bulletin, 141(5), 966–992.
Petty, R. E., Cacioppo, J. T., & Schumann, D. (1983). Central and peripheral routes to advertising effectiveness: The moderating role of involvement. Journal of Consumer Research, 10(2), 135–146.
Pugh, S. D. (2001). Service with a smile: Emotional contagion in the service encounter. Academy of Management Journal, 44(5), 1018–1027.
Raudenbush, S. W., & Bryk, A. S. (2002). Hierarchical linear models. Thousand Oaks: Sage Publications, Inc.
Ryan, A. M., Schmit, M. J., & Johnson, R. (1996). Attitudes and effectiveness: Examining relations at an organizational level. Personnel Psychology, 49(4), 853–882.
Scharitzer, D., & Korunka, C. (2000). New public management: Evaluating the success of total quality management and change management interventions in public services from the employees' and customers' perspectives. Total Quality Management, 11(7), 941–953.
Segrin, C. (2004). Concordance on negative emotion in close relationships: Transmission of emotion or assortative mating? Journal of Social and Clinical Psychology, 23(6), 836–856.
Sirdeshmukh, D., Singh, J., & Sabol, B. (2002). Consumer trust, value, and loyalty in relational exchanges. Journal of Marketing, 66(1), 15–37.
Steenkamp, J.-B. E. M., & Baumgartner, H. (2000). On the use of structural equation models for marketing modeling. International Journal of Research in Marketing, 17(2–3), 195–202.
Van Kleef, G. A. (2009). How emotions regulate social life: The emotions as social information (easi) model. Current Directions in Psychological Science, 18(3), 184–188.
Wangenheim, F. V., Evanschitzky, H., & Wunderlich, M. (2007). Does the employee–customer satisfaction link hold for all employee groups? Journal of Business Research, 60(7), 690–697.
Weber, L. (2016). Job satisfaction hits a 10-year high—But it’s still below 50%. http://www.wsj.com/articles/job-satisfaction-hits-a-10-year-highbut-its-still-below-50-1468940401. Accessed August 23, 2016.
Ye, J., Marinova, D., & Singh, J. (2007). Strategic change implementation and performance loss in the front lines. Journal of Marketing, 71(4), 156–171.
Ye, S., Ng, T. K., & Lam, C. L. (2018). Nostalgia and temporal life satisfaction. Journal of Happiness Studies, 19(6), 1749–1762.
Zablah, A. R., Carlson, B. D., Donavan, D. T., Maxham, J. G., III, & Brown, T. J. (2016). A cross-lagged test of the association between customer satisfaction and employee job satisfaction in a relational context. Journal of Applied Psychology, 101(5), 743–755.
Zhao, X., Lynch, J. J. G., & Chen, Q. (2010). Reconsidering baron and Kenny: Myths and truths about mediation analysis. Journal of Consumer Research, 37(2), 197–206.
Zheng, Z., Pavlou, P. A., & Gu, B. (2014). Latent growth modeling for information systems: Theoretical extensions and practical applications. Information Systems Research, 25(3), 547–568.
Author information
Authors and Affiliations
Corresponding author
Additional information
Publisher’s note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Michael Ahearne served as Area Editor for this article.
Electronic supplementary material
ESM 1
(DOCX 50 kb)
Appendices
Appendix 1
Appendix 2
Appendix 3
Rights and permissions
About this article
Cite this article
Wolter, J.S., Bock, D., Mackey, J. et al. Employee satisfaction trajectories and their effect on customer satisfaction and repatronage intentions. J. of the Acad. Mark. Sci. 47, 815–836 (2019). https://doi.org/10.1007/s11747-019-00655-9
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11747-019-00655-9