Satisfaction Strength and Customer Loyalty

Author:

Murali Chandrashekaran
Kristin Rotte
Stephen S. Tax
Rajdeep Grewal
February 2006
Forthcoming: JOURNAL OF MARKETING RESEARCH

ABSTRACT:

Although empirical research indicates that satisfaction is intimately linked to loyalty, anecdotal evidence reveals that many customers who state that they are very satisfied with a service provider nevertheless subsequently defect. In this paper, the authors focus on identifying which customers are vulnerable to defection despite stating high levels of satisfaction. Drawing on the emerging perspective to modeling individual judgments that recognizes that individuals differ in the strength (i.e., conviction, certainty) with which judgments are professed, the authors first decompose a customer’s stated satisfaction into two related but independent facets – satisfaction level and satisfaction strength. The authors then examine the role of satisfaction strength in the translation of satisfaction to loyalty. Results from two studies are reported. In the first study, set in a B2B service context, the authors analyze data obtained from an ongoing customer satisfaction tracking study being conducted by a large service organization in the US. Data from over 25,000 customers are used to calibrate the satisfaction model and examine the effect of satisfaction strength on the translation of satisfaction to loyalty. In the second study, a conceptual replication set in a B2C context, the authors examine decision-making following a failed service encounter and a recovery attempt by the service provider. The authors study the impact of perceptions of service recovery on the level and strength of the stated satisfaction with the service recovery, and then focus on the effect of satisfaction strength in the translation of stated satisfaction to loyalty. The two studies strongly demonstrate that the covert satisfaction strength plays a central role in the translation of satisfaction to loyalty. A key finding that is uncovered, and replicated, in this research is that while satisfaction does indeed translate to loyalty when the satisfaction judgment is strongly-held (i.e., with low uncertainty), the translation is significantly lowered, on average, by almost 60%, when the same stated satisfaction is more weakly-held (i.e., fraught with uncertainty). The studies also indicate that aspects of prior relational experience (length of relationship, volume of business, and favorability of prior experiences) serve to isolate, rather than insulate, a firm’s customers, resulting in even greater vulnerability. Overall, the findings contribute to a better understanding of the process by which satisfaction leads to customer loyalty.

Keywords: Customer Satisfaction, Loyalty, Customer Uncertainty, Defection.

Full Text: Satisfaction Strength and Customer Loyalty

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