Customer satisfaction and financial performance-linear or non-linear relationship: a case study of Marriot International

While there has been a great deal of marketing research focusing on the impact of customer satisfaction on financial performance, limited attention is directed to examine the possible quadratic relationship between these variables. This paper aims to fill this gap. Utilizing the time series data of Marriott International from 1997 to 2016 and the appropriate time series econometric techniques that deal with small sample size, this study shows a U-shaped relationship linking customer satisfaction and firm’s financial performance. This finding is important as it suggests the inappropriateness to assume implicitly a linear association between customer satisfaction and financial performance. A practical implication to the marketing practitioners is that satisfaction level needs to be enhanced beyond a threshold can the positive impact on financial performance be observed in the longer term.