Researchers have found that customer satisfaction has a substantial influence on the behavior of institutional investors.
According to a study published in the Journal of the Academy of Marketing Science, institutional investors (such as equity funds) are more likely to increase their ownership in companies that adopt measures to improve their customer satisfaction.
Previous research from the University of Michigan, revealed that customer satisfaction is directly linked to stock market performance.
However, this is the first time that researchers have evaluated the how important customer satisfaction information is to institutional investors.
Professor Jaakko Aspara, stated:
“It’s somewhat surprising to find that transient institutional investors, who we often see as focusing only on quarterly profit forecasts, also react to customer satisfaction, which reflects a firm’s long-term marketing competence.”
The American Customer Satisfaction Index (ACSI) was used as the indicator of customer satisfaction, The ACSI survey included over 200 different companies in the American market.
In uncertain product markets, institutional investors respond to how companies are doing in terms of customer satisfaction.
“For example, the consumer electronics market changes very rapidly. In such markets, institutional investors seem to place an increasing amount of value on customer satisfaction.
The fact that an increase in the ACSI figure for Nokia’s customer satisfaction in May was followed by reports indicating that certain large institutional investors were interested in the company corresponds to our results. The value of Nokia’s shares has also gone up.”
The study concluded that improvements in customer satisfaction can significantly help increase the value of a company.