conclusionsIn this study, we examine the effects of measurementtiming on the information content of customer satisfactionmeasures using data from over 200 homebuilding projectsin one corporation for the period 2002–2004. We com-pared the information content of measures collected bytwo different consulting firms: NF which measures cus-tomer satisfaction in the year following the home purchaseand BF which measures it at three fixed intervals (30 days,5 months and 11 months) after purchase.We have four main findings. First, customer satisfactionlevels vary over the consumption period. Specifically, wefind that customer satisfaction levels vary over a home-buyer’s consumption period. Homebuyers tend to be mostsatisfied 30 days after closing and least satisfied 11 monthsafter closing. Specifically, the overall level of customer sat-isfaction is 5.55 (out of 6) 30 days after closing, but dropsto 5.06 (out of 6) 11 months after closing.Second, various BF customer satisfaction measures areleading indicators of future financial performance, as mea-sured by higher revenues and profits, and lower warrantycosts, but the NF customer satisfaction measure is not.Additional analysis indicates that the relatively higher pre-dictive ability of the BF customer satisfaction measures ismainly due to the more precise timing of the BF satisfactionsurveys compared to the NF satisfaction surveys, ratherthan differences in the content of the measures.Third, ever higher customer satisfaction is not neces-sarily desirable. The point of diminishing returns variesacross customer satisfaction measures obtained at differ-ent points in the consumption period. Specifically, the pointof diminishing returns starts at about the 95% level for theBF 30-day satisfaction measure, the 90% level for the BF 5-month satisfaction measure, and the 80% level for the BF11-month satisfaction measure.Fourth, the managers’ reactions to our suggestionto discontinue the use of the consulting firm whosemeasures did not provide significant predictive valueprovide an illustrative example of the multiple uses ofperformance measures. In this company, the NF measuresserved primarily a marketing purpose. The fact that theydid not have much predictive power was not a major con-cern.The findings of our study contribute to a better under-standing of one probable cause of the mixed evidenceon the link between nonfinancial performance measuresand future financial performance. Evidence from our studyhighlights the importance of incorporating measurementtiming in future research on satisfaction-performance link-ages, particularly for goods and services consumed over anextended period of time. In so doing, we also contribute toa stream of studies that identify ways to make nonfinan-cial performance measures more informative for decisionmaking and control (Dikolli and Sedatole, 2007; Sedatole,2003). We provide evidence that the levels of customer sat-isfaction decrease with the consumer’s distance from theconsumption event. We deepen our understanding of thisphenomenon by showing that when differing aspects ofcustomer satisfaction are measured at more relevant timesduring the consumption cycle, they are more predictive offuture performance. These results indicate that for goodswhose consumption spans a longer period of time, we canbetter understand customer satisfaction and what it meansto the firm if firms disaggregate satisfaction into types ofsatisfaction across the consumption cycle.As firms are increasingly adopting a consumption sys-tem perspective to direct organizational efforts on bothproducts and services with a long-term orientation (Mittalet al., 1999), our study has important implications for thedesign of performance measurement and incentive sys-tems for these firms. Since customer satisfaction ratingsvary over the entire consumption cycle, firms in industriesthat provide goods or services that are consumed over mul-tiple periods should include both short-term and long-termcustomer satisfaction measures into the compensationcontracts for managers in order to prevent managers fromgaming the system by allocating efforts to the short-termsatisfaction measures at the expense of long-term sat-isfaction measures. Future research should explore thetrade-offs managers face between the timeliness and infor-mativeness of non-financial performance indicators suchas customer satisfaction.In addition, our results suggest that aggregate customersatisfaction measures such as ACSI may be less useful fordurable goods than for nondurable goods. Our results sug-gest that managers need to be more sophisticated in theirmeasurement of customer satisfaction for goods or ser-vices that are consumed over multiple periods. Specifically,managers should design measurement systems to capturecustomer satisfaction over the entire consumption experi-ence rather than a single cross-section of it.Finally, our evidence on the varying points of dimin-ishing returns to improvements in customer sat.