Long-term impact of increasing customer satisfaction on bank revenue

Carin Segerlind (), Kent Eriksson () and Cecilia Hermansson ()
Additional contact information
Carin Segerlind: Swedbank
Kent Eriksson: Department of Real Estate and Construction Management, Royal Institute of Technology, Postal: Teknikringen 10B, 100 44 Stockholm, Sweden
Cecilia Hermansson: Department of Real Estate and Construction Management, Royal Institute of Technology, Postal: Teknikringen 10B, 100 44 Stockholm, Sweden

No 24/9, Working Paper Series from Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance

Abstract: This paper examines the relationship between customer satisfaction and changes in individual-level bank revenue, using data from 19,060 Swedish bank customers combining subjective surveys and objective bank records. It also investigates whether the effect of satisfaction on revenue change involves a time lag, and whether this lag differs across customer satisfaction levels. The study finds that higher satisfaction is associated with greater revenue changes over time, with more pronounced effects for customers in the medium-high and highest satisfaction group, while the difference between the lowest customer satisfaction group and the medium-low group is not statistically significant. The research does not support the hypothesis of diminishing returns when moving from the medium-high to the highest satisfaction, although weak indications suggest further investigation. These findings highlight the long-term impact of customer satisfaction on bank revenue and emphasize the importance of targeting customers with lower to medium-low satisfaction to improve overall earnings.

Keywords: bank customer satisfaction; bank revenue; individual level; time lags bank customer satisfaction; bank revenue; individual level; time lags (search for similar items in EconPapers)
JEL-codes: D14 D22 G21 M31 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2024-10-29
New Economics Papers: this item is included in nep-ban
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