Jenny van Doorn & Peter C. Verhoef
Executive summary
In business markets, the link between satisfaction and loyalty often appears weak or even absent because mature, ongoing customer–supplier relationships tend to be characterized by inertia that causes parties to conduct “business as usual.” However, in some circumstances, long-term relationships can destabilize, especially when negative critical incidents (CIs) occur. In this research, the authors develop a comprehensive dynamic model of customer loyalty to account for the impact of negative CIs on both the nature and the magnitude of the relationships among service satisfaction, price satisfaction, and customer share. They propose that negative CIs not only directly affect customer satisfaction and loyalty but also play a moderating role in the customer relationship, such that they intensify relationships between current satisfaction and loyalty and thus move the relationship away from business as usual to a more active state.
On the basis of three years of data of an annual satisfaction survey among customers of a European professional logistics service provider, the authors find that for customers who experienced CIs, a stronger updating process of service satisfaction evaluations takes place, such that current attribute evaluations are weighted more heavily. The negative effects of CIs are mitigated when past service satisfaction is high because carryover effects of past service satisfaction occur for high satisfaction ratings only. This finding implies that satisfied customers are more forgiving than less satisfied customers. Service satisfaction of customers who did not experience CIs forms in a more cumulative way, such that past service satisfaction is the most important determinant. For price satisfaction, similar effects are found.
Past customer share positively affects current customer share as a result of inertia. Customer share of customers who did not experience a CI is determined almost exclusively by the past customer share. If and only if CIs occur, customer share is significantly affected by service and price satisfaction.
To gain a full understanding of the impact of CIs, the authors show the effects on service satisfaction, price satisfaction, and customer share and differentiate between customers with high and those with low values on the respective constructs. The most remarkable result is that for satisfied customers with a high past customer share, a CI might intensify the relationship because these customers have a higher customer share when a CI occurs than in absence of a CI. The authors ascribe this counterintuitive result to the updating process that CIs trigger. During the updating process, the customer takes satisfaction into account, and if these evaluations are favorable, they positively affect customer share. However, the pitfall of this argument lies in the necessary condition that both service and price satisfaction be high, even though a CI has occurred. Thus, a service provider should be aware of the potentially relationship-reviving effect of CIs.
Biography
Jenny van Doorn is Assistant Professor of Marketing at the Faculty of Business and Economics at the University of Groningen, the Netherlands. In 2004, she completed her PhD on the dynamics of relationship satisfaction in industrial relationships at the University of Muenster, Germany. Jenny’s research interests are customer satisfaction and customer retention, panel data analysis, and business-to-business marketing. Her work has appeared in Journal of Advertising Research and Journal of Consumer Policy.
Peter C. Verhoef is Professor of Marketing in the Department of Marketing, Faculty of Economics and Business, at the University of Groningen, the Netherlands. He obtained his PhD in 2001 from the School of Economics at Erasmus University Rotterdam, the Netherlands. His research interests focus on customer management, customer loyalty, multichannel issues, category management, and buying behavior of organic products. He has extensively published on these topics. His publications have appeared in journals, such as Journal of Marketing, Journal of Marketing Research, Marketing Science, International Journal of Research in Marketing, Marketing Letters, Journal of Consumer Psychology, Journal of the Academy of Marketing Science, and Journal of Retailing. His work has been awarded with the Donald R. Lehmann award for the best dissertation based article in Journal of Marketing and Journal of Marketing Research in 2003. He is currently an editorial board member of Journal of Marketing, Marketing Science, Journal of Retailing, Journal of Service Research, Journal of Interactive Marketing, and the International Commerce Review. He functions as an area editor for International Journal of Research in Marketing. He has extensive teaching experience at the undergraduate, graduate, and doctoral levels. He is also involved in teaching executive-level courses on customer management and is the director and founder of the Customer Insights Center, University of Groningen.
Journal of Marketing, Vol. 72, No. 4, July 2008
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