Customer Satisfaction Predicts More About Company Performance Than Any Other Known Measure

Based on research by Vikas Mittal (Rice Business), Sonam Singh (University of South Florida) and Ashwin Malshe (UT – San Antonio)

Key takeaways:

• Among all known measures — brand equity, net promoter, customer experience, service quality or referrals — customer satisfaction is the only known metric that predicts 12 different outcomes.
• Many CEOs have consistently grown sales, margins and stock price by improving customer satisfaction. 
• Executives should systematically measure customer satisfaction to identify strategy drivers and create their strategic plan. 

When the president and CEO of Houston-based ITI Manufacturing dug into the factors driving customer value at his company, he found neither cutting prices nor refining his sales process — the approaches his marketing team and brand advisor advocated — made a real impact. Tracing back to specific attributes in each strategic area showed that providing weekly customer updates and resolving issues to customers’ satisfaction had the highest lift in customer satisfaction.

CEO Joshua Robinson, Rice MBA ’21, fully committed to excelling on those two drivers. Within two quarters, all of ITI’s customers got weekly updates and every issue was completely resolved with fidelity. The results: Four years later, ITI’s stock had climbed by 115%, three times faster than the S&P 500, after tracking virtually parallel with the index in years prior.

ITI’s success story is not an isolated one. A new paper co-authored by Rice Business Professor Vikas Mittal, “Customer satisfaction: A multi-level framework,” shows the power of customer satisfaction at scale. In a study of more than 285 million ratings across 1,126 brands, researchers link customer satisfaction to 12 financial and non-financial outcomes, including sales, profit margin, purchase intent, cash flow and stock returns. 

“Many of today’s CEOs and senior executives are using gut feelings, intuition and intuitive leaps to come up with their business strategy,” Mittal says. “Their strategy may be the latest industry trend, or what a competitor is doing, or what they learned from a conference or AI. But that leads to strategy clutter. Focusing on customer satisfaction is a way to directly link strategy to customer outcomes, and a way to prioritize. It tells you what actually matters for strategy and what doesn’t.”

Research evidence: Better returns with happier customers

The authors provide strong evidence for their claim.

First, they summarize three separate research reviews that together cover more than 250 studies on customer satisfaction conducted over the past 50 years. The summary clearly showed that companies with more satisfied customers saw higher customer retention, more positive word of mouth, stronger sales and profit, higher cash flow, lower stock volatility and better stock returns.

Second, they combined customer satisfaction ratings from YouGov January 2007 to June 2023, and firm financial information from Compustat and the Center for Research in Security Prices. 

The data included a sample of 17,001 firm-year-quarter observations based on customer satisfaction scores from more than 285 million ratings across 1,126 brands from 458 publicly listed firms — the most comprehensive and largest set of data on customer satisfaction and its outcomes to date.

They showed the pattern held up. Companies with higher satisfaction had customers who were more likely to recommend them and purchase again. They also had higher sales, larger profit margins, better returns on assets, stronger cash flow, better enterprise value and higher stock returns in addition to less volatile cash flow and stock prices. 

Companies with more satisfied customers saw higher customer retention, more positive word of mouth, stronger sales and profit, higher cash flow, lower stock volatility and better stock returns.

Applying these findings to iconic companies, they estimated that a one percentage point increase in customer satisfaction would yield an additional $17.8 billion in Apple’s market value and $7.26 billion in additional sales for Walmart.

“There’s only one metric that can predict so many outcomes for an organization,” Mittal says. “Customer satisfaction is the best measure of customer value, and it’s something that more companies should be using as the basis of their strategic planning process.”

A systematic strategy, rooted in science and logic

The lesson for CEOs and other executive leaders is to not base their strategy on guesswork. Instead, organizations should identify the specific levers that matter most for satisfaction, and then invest in excelling on those.

The framework isn’t limited to for-profit companies, Mittal says. It applies to places like schools and non-profits, too. “We recently worked with two small school districts in Greater Houston to apply this framework. Both increased student retention, academic outcomes, and parent engagement. Every organization has customers, and every one of them benefits from maximizing the value it creates for them.” 

Regulators and policymakers have a stake as well. Regulators could use satisfaction trends to weigh the costs and benefits of proposed mergers and help forecast consumer spending as part of broader economic policy. The same data, Mittal argues, could extend even further, to how companies treat their most vulnerable customers, or how responsibly they operate.

But the core argument, he says, centers on the companies themselves. “Customer satisfaction has to be the strategic basis for all companies,” says Mittal. “Sure, try to be innovative, use AI, you may need to do that. But those things themselves can’t be the strategy unless they’re creating value for the customer.”

Written by Deborah Lynn Blumberg

“Customer Satisfaction: A Multi-Level Framework.” Journal of the Academy of Marketing Science (2026).