Customer Satisfaction and Word of Mouth

TLDR

The relationship between customer satisfaction and word of mouth is debated, with theory and evidence supporting both higher and lower engagement for dissatisfied customers. The authors aimed to clarify this relationship by developing a utility‑based model linking satisfaction to word of mouth. They constructed a utility‑based model that predicts word‑of‑mouth behavior as a function of customer satisfaction. The model fits data from the U.S.

Abstract

Do dissatisfied customers engage in more or less word of mouth than satisfied customers? There is theoretical and empirical support for both possibilities. To better understand this issue, the authors developed a utility-based model of the relationship between customer satisfaction and word of mouth. The hypothesized functional form-an asymmetric U-shape-cannot be rejected based on data from the United States and Sweden. In addition, the estimation results based on the two samples are similar, suggesting that the proposed relationship is generalizable. The findings also indicate that although dissatisfied customers do engage in greater word of mouth than satisfied ones, common suppositions concerning the size of this difference appear to be exaggerated.