How does the Time Variation of Customer Satisfaction Affect Korean Retail Firms’ Performance?

The purpose of this study is to examine how the time variations of customer satisfaction influence retail firms’ performance. The study employs yearly time series customer satisfaction data of Korean retail firms obtained from the National Customer Satisfaction Index (NCSI) for the 2011~2016 period. Our data includes a total of 90 observations of 15 retail firms in 6 different sector (large discount store, department store, open market, filling station, TV home shopping). We obtained the firm performance data from the KIS Value database. The variables for financial performance include sales and net profit. The results show that customer satisfaction has dynamic effects on retail firms’ performance. More specifically, the time variation of customer satisfaction has the moderating effect on the relationship between customer satisfaction and financial performance as well as direct effects on the firms’ financial performance. Customer satisfaction has the current effect lasting over time on firm performance and changes of customer satisfaction in positive direction also impact on firm performance. Retail firms need to not only focus on improving customer satisfaction in the current term, but make efforts to continuously enhance customer satisfaction in the long term.