Exploring the Effect of Customer Satisfaction on Organisational Performance –

Prior research has found that the relation between customer satisfaction and performance is equivocal. This study explores explanations for this finding, paying attention to whether increases in customer satisfaction can provide diminishing improvements to organisational performance. The concept of a point at which returns to customer satisfaction begin to diminish is particularly important to estimating the optimal amount that should be spent on trying to increase customer satisfaction. This phenomenon will be investigated by examining the outcomes of a specific service quality initiative at the Melbourne property of a leading luxury hotel chain operating throughout Australia and New Zealand.