The quest for delightful experiences and profitable enterprises: how customer delight impacts financial performance

Abstract

Purpose

The present research sought to analyze the effects of customer delight on both internal and external financial structures of publicly traded, service firms.

Design/methodology/approach

Primary (i.e. survey) and secondary (i.e. financial records) data sources were gathered. A total of 685 participants responded to one questionnaire focusing on hotels and another one focused on restaurants, both of which measured levels of customer delight and satisfaction. Financial data were gathered from Center for Research in Security Prices, CRSP/COMPUSTAT.

Findings

Results of MANOVA revealed that there was a significant difference in the net profit margin (NPM) based on customer delight. Canonical correlation results exposed a significant correlation between satisfaction and delight combined and the financial performance measures (net profit margin, cash flow margin, return on assets and b-beta) combined.

Practical implications

By delighting their customers, managers will achieve higher profit margins. However, these are not likely to result in improved cash flow margin or return on assets. The effects of COVID-19 can alter yearly returns; thus, longitudinal research is needed to continue testing for the effects on delight on financial performance.

Originality/value

The relationship between delight and financial measures had not been previously determined (notwithstanding a few studies using substitute measures for financial performance). The present study uses actual data from the financial filings to empirically test their relationship to customer delight.

Citation

Torres, E., Kizildag, M. and Lee, J. (2024), "The quest for delightful experiences and profitable enterprises: how customer delight impacts financial performance", Journal of Service Theory and Practice, Vol. 34 No. 5, pp. 738-764. https://doi.org/10.1108/JSTP-04-2023-0112