Sustained impact of higher customer satisfaction on bank revenue

Abstract

This study examines the relationship between customer satisfaction and individual-level bank revenue growth, drawing on data from 19,060 Swedish retail banking customers that combine survey responses with objective bank records. Furthermore, we investigate whether the impact of satisfaction on revenue growth is sustained over time, specifically one, two three and four years after the measurement of satisfaction, and whether this effect differs across customer satisfaction levels. The results show that higher satisfaction is associated with greater sustained revenue growth, with more pronounced effects for customers in the medium-high and highest satisfaction groups. By contrast, no significant sustained revenue growth is found for customers with low and low-medium satisfaction. The findings do not support the hypothesis of diminishing returns when moving from medium-high to the highest satisfaction levels, although weak indications suggest scope for further exploration. Overall, the findings demonstrate the long-term revenue growth of satisfied customers and emphasize the importance of targeting customers with lower to medium-low satisfaction to enhance overall revenue performance.QC 20251202</p