Exploring the myth of customer relationship management

Abstract

PurposeThe paper aims to explore the relationship between customer satisfaction and branch profitability within the UK retail‐banking sector.Design/methodology/approachA survey is conducted within one UK bank, providing access to national customer survey data, and access to branch managers and branch performance data.FindingsThe findings provide further evidence to debunk the myth perpetuated in the literature of the 1990s, that customer satisfaction has a positive impact on corporate profitability. The findings, though remarkably consistent, are based on a relatively small sample of bank branches over a relatively narrow time frame, and consequently may not necessarily be applicable to other banking groups, or other countries.Practical implicationsThe findings have important practical implications for bank expenditures on customer satisfaction and loyalty programmes, since they suggest that current levels of investment may not be justified by the benefits accruing.Originality/valueThe paper provides further evidence of the absence of an important supposed relationship, in an area of the literature subject to contentious and conflicting research findings.