Customer satisfaction is widely used in evaluating business performance both internally and externally. Internally, customer satisfaction is used to monitor performance, allocate resources, and compensate employees. Externally, customer satisfaction provides information to a wide range of interest groups, including customers, competitors, investors, and public policy makers. However, is it reasonable to directly compare customer satisfaction across industries?
This paper uses the reliability of quality, the degree of competition and differentiation of offerings as a basis for explaining differences in aggregate, industry level customer satisfaction. The results reveal that industries with the greater degree of competition and differentiation simultaneously, product-oriented industries with the higher reliability of quality have higher aggregate levels of customer satisfaction. These findings suggest that it is possible to make meaningful comparisons of customer satisfaction across different industries.
Understanding such systematic differences has implications for firms making decisions concerning more than one category (such as evaluating performances of category managers or deciding where to invest in improving quality), for investors and policy makers evaluating the relative performance of firms and industries, and even for customers comparing "independent" ratings of options from different industries.
