Executive Summary
Contemporary marketing is converging on the principle that understanding and hopefully winning consumer loyalty is critical for a firm’s long-term survival, innovativeness, and bottom-line returns. Despite this emerging consensus, the discipline remains divided on the nature of key loyalty determinants and the mechanisms by which they operate. Some extol the virtues of fully satisfying consumers by exceeding their expectations and infusing each exchange with delight and positive emotion. Others question whether simply delighting the consumer is sufficient for building long-term loyalty. Rather, they contend that a total trust strategy is the ultimate test of consumer loyalty. Still others chide the discipline for falling prey to faddish trends in search for shortcuts to consumer loyalty. They challenge marketers to consider that it is value that drives loyalty, and they claim that factors such as satisfaction are necessary but not sufficient to win customer loyalty. Notably, these debates and divides appear to increase in intensity and stridency as consumer loyalty continues to remain elusive and unpredictable.
This study takes an initial step toward bridging these divides by making three contributions. First, the authors develop and test a model that examines simultaneously the effects of multiple determinants, including satisfaction, trust, and value, on loyalty intentions. Few studies to date have examined these competing determinants within a single, simultaneous model. Second, the authors do not rely on simple, linear conceptualizations to model the effect of individual determinants of loyalty intentions. Rather, they conceptualize a complex mechanism that involves curvilinear effects. These curvilinear hypotheses are based on need, motivation, and social exchange theories. Third, the authors situate the study within ongoing relational exchanges in which consumers have established some level of relationship with service providers on the basis of an experience stream of prior episodes. They do so to recognize that compared to transactional exchanges, relational exchanges involve disparate substantive mechanisms and conceptual considerations.
To test the curvilinear hypotheses, the authors use data from 246 clothing shoppers who had made at least a $50 purchase during one visit and at least two visits over the past six months, and they use 113 airline travelers who had a frequent flyer account and made at least one nonbusiness trip during the past six months. They drew the measures of all constructs from previous research. Because of the cross-sectional nature of the data, special care was taken to account for potential common method and acquiescence bias. To identify consistent patterns of results across the two service contexts, the authors used a multigroup structural equation modelling approach with controls for measurement error and included appropriate quadratic and interaction terms.
Although managerial practice has tended to emphasize singular factors and simple mechanisms, the results of this study confirm that searches guided by simplicity and singularity are probably unproductive. The empirical processes conform to a worldview that is complex and curvilinear. Ensuring satisfaction in individual transactions and positive relational value appear consistently as hygiene factors in loyalty mechanisms. Without fulfillment of these essential lower-order exchange needs, managers are unlikely to maintain the loyalty of the consumer base. Beyond this essential fulfilment, it appears more rewarding to invest efforts in the enhancement of trust mechanisms that enable fulfillment of higher-order, motivator needs in relational exchanges. Further complexities emerge because of the interrelationships among the loyalty determinants. Satisfaction affects trust and value judgments, and trust plays a direct role in shaping consumers’ value evaluations. Within these complexities, the hygiene role of satisfaction and value and the motivator role of trust remain consistently compelling.
Managers are likely to feel the urge to sort through the results to address the following bottom-line question: “Which loyalty determinant is most important?” The authors’ response is that they all are. Balancing investments in loyalty determinants to match the target segment and relational context are crucial and deserve careful analysis. Although this analysis is necessary for each market situation, some broad guidelines flow from the work. Consider a manager facing two target segments—one that is generally loyal to the product/service offered and a second that occasionally uses the product or service offered but does not evidence strong loyalty. Given the first situation, the results suggest that managers invest in trust-building factors for the first segment while holding their current investments in satisfaction and value. For the second segment, managers should fine-tune their satisfaction and value investments without necessarily investing additional resources in trust-building activities. Thoughtful, rigorous analysis and careful tracking of consumer loyalty mechanisms can oil the engine of relationship marketing. Here, theory and method do not stand apart; they blend together to reveal clear and compelling, albeit complex and curvilinear, insights.
Biography
Clara Agustin is Assistant Professor of Marketing, Area of Management and Organization Studies, Department of Business and Economics, Universitat Pompeu Fabra, Spain. Her research focuses on the dynamics of customer–firm interactions in consumer and business markets, including such areas as customer relationship marketing and marketing channels. She is completing her doctoral degree in management studies at the Nijmegen School of Management, Radboud University of Nijmegen, the Netherlands, and holds a masters degree in psychology from the University of Valencia, Spain.
Jagdip Singh is Professor of Marketing, Marketing and Policy Science Department, Weatherhead School of Management, Case Western Reserve University in Cleveland, Ohio, where he teaches graduate courses in marketing research and doctoral courses in research methodology and measurement. Singh has received the Case Western Reserve University’s John S. Diekhoff award for excellence in graduate teaching and the Weatherhead School of Management’s Research Recognition Award for outstanding contributions to research. In addition, Singh has received the excellence in reviewing award from Journal of Marketing, Journal of the Academy of Marketing Science, and Journal of Personal Selling and Sales Management. Singh’s research focuses on issues of effective interfaces between organizations and consumers, with special emphasis on service industries. His current research work involves understanding the organizational and individual factors that promote effective performance and satisfaction at organizational front lines and the dynamics of building or depleting consumer trust and loyalty. Singh has published in journals such as Journal of Marketing, Journal of Marketing Research, Academy of Management Journal, Management Science, Journal of the American Medical Association, Psychological Assessment, Journal of the Academy of Marketing Science, and Journal of Retailing.
J Marketing Research, Volume 42, Number 1, February 2005
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