A Longitudinal Investigation of the Impact of Customization-Related Service Attributes on Customer Satisfaction and Profitability

Abstract

In this era of increasing competition and financial crunch, service organizations are facing great pressure of cutting operating cost. Downsizing service employees is a widely used coping strategy. At service attribute level, a direct effect of downsizing is the reduced performance of the service attributes that are dependent on service personnel. However it is unknown whether this is a sustainable strategy, as current literature provides competing explanations about the effects of service attributes on customer satisfaction and no work has been done to directly investigate the effect on profitability. Using 24 quarters of archival customer satisfaction data and financial data from 25 SBUs in a large healthcare organization, this study aims to empirically examine the long-term impact of service attributes on customer satisfaction and profitability. Our initial findings indicate that although under-investing does bring immediate cost benefits, it generated mixed impact on a SBU's long term customer satisfaction and profitability.