Scandinavian Working Papers in Economics
Working Paper Series,
Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance
No 24/5: Higher bank customer satisfaction increases a bank’s revenue from the customer and the effect persists over several years: A study at the level of individual customer relationships
Kent Eriksson () and Carin Segerlind ()
Additional contact information
Kent Eriksson: Department of Real Estate and Construction Management, Royal Institute of Technology, Postal: Teknikringen 10B, 100 44 Stockholm, Sweden
Carin Segerlind: Department of Real Estate and Construction Management, Royal Institute of Technology, Postal: Teknikringen 10B, 100 44 Stockholm, Sweden
Abstract: This paper aims to investigate whether the effect of customer satisfaction on changes in bank customer revenue exhibits a time lag, and if this time lag effect differs among customer groups with varying levels of customer satisfaction. The empirical analysis is based on a dataset comprising combined survey and bank record data of 19,060 weighted customers from a bank in Sweden over a four-year period. The data is analyzed using ordinary least squares (OLS). The authors find that at the individual level, customer satisfaction leads to changes in customer revenue, and this effect persists over several years. The results are demonstrated when breaking down the results for customers with different levels of satisfaction. Additionally, the results reveal a non-linear effect, which yields differences in both short- and long-term impacts on changes in customer revenue between higher levels of customer satisfaction and those with lower satisfaction levels. The conclusion drawn is that to gain a comprehensive understanding of the impact of customer satisfaction on revenue change, it is necessary for the analysis to consider customers' varying satisfaction levels. This paper underscores the economic importance of identifying customers with lower levels of satisfaction and the significance of implementing efforts to increase their satisfaction levels.
Keywords: Bank; Customer satisfaction; Customer revenue; Individual level; Longitudinal
Language: English
19 pages, First version: June 14, 2024. Revised: June 18, 2024.
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