Stock Returns on Customer Satisfaction Do Beat the Market

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Stock Returns on Customer Satisfaction Do Beat the Market

By Claes Fornell, Forrest V. Morgeson III, & G. Tomas M. Hult
© 2016, American Marketing Association | ISSN: 1547-7185

Using 15 years of audited returns regulated by the U.S. Securities and Exchange Commission (SEC), this study finds finds evidence that stock returns on customer satisfaction do beat the market, with the cumulative returns at 518% (2000–2014) compared with a 31% increase for S&P 500 firms.
Tomas Hult of the Michigan Business Network interviews Claes Fornell discuss why stock returns on customer satisfaction beat the market based on recent research they published in the Journal of Marketing.

A debate about whether firms with superior customer satisfaction also earn superior stock returns has been persistent. While most studies have examined customer satisfaction using similar data sets and find positive stock returns, conclusions differ with respect to the abnormal returns and whether there is evidence of mispricing. The differences in the findings from these studies confound efforts to express to firms the real value of customer satisfaction – and by extension, the true value of marketing activities in general.


Examining data from the American Customer Satisfaction Index (ACSI), along with both actual stock portfolio returns from a fund trading exclusively on satisfaction information and back-tested returns in Great Britain, we conduct multiple tests to determine the validity of the satisfaction–stock mispricing relationship and to estimate the size of its effect.


The cumulative satisfaction portfolio returns were 518% over the 15 years studied, compared with a 31% increase for the S&P 500 ​over the same period. Similar results, using back-tested instead of audited real returns, were found in the United Kingdom. We also find that the effect of customer satisfaction on stock price is, at least in part, channeled via earnings surprises. Consistent with theory, customer satisfaction also has an effect on earnings themselves.


As suggested by the sheer size of the abnormal returns, the reward for having satisfied customers is much greater than is generally known, generating abnormal stock returns of about 10% per annum. Given this, why are many firms not focusing adequate attention to improving the satisfaction of their customers? The explanation for this phenomenon is likely to be found in inadequate satisfaction data collection and analysis derived from a general misunderstanding of just how valuable satisfied customers are to the firm.​

Claes Fornell, Forrest V. Morgeson III, and G. Tomas M. Hult (2016), “Stock Returns on Customer Satisfaction Do Beat the Market: Gauging the Effect of a Marketing Intangible,” Journal of Marketing, 80 (5), 92-107. doi:

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