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Although researchers and managers pay increasing attention to customer value, satisfaction, loyalty, and switching costs, not much is known about their interrelationships. Prior research has examined the relationships within subsets of these constructs, mainly in the business-to-consumer (B2C) environment. The authors extend prior research by developing a conceptual framework linking all of these constructs in a business-to-business (B2B) service setting. On the basis of the cognition-affect-behavior model, the authors hypothesize that customer satisfaction mediates the relationship between customer value and customer loyalty, and that customer satisfaction and loyalty have significant reciprocal effects on each other. Furthermore, the potential interaction effect of satisfaction and switching costs, and the quadratic effect of satisfaction, on loyalty are explored. The authors test the hypotheses on data obtained from a courier service provider in a B2B context. The results support most of the hypotheses and, in particular, confirm the mediating role of customer satisfaction.
Keywords: customer value; satisfaction; loyalty
Customer loyalty has a powerful impact on firms' performance and is considered by many companies an important source of competitive advantage (Heskett, Sasser, and Schlesinger 1997; Rust, Zeithaml, and Lemon 2000; Woodruff 1997). The consequences of enhanced customer loyalty in service firms are increased revenue, reduced customer acquisition costs, and lower costs of serving repeat purchasers, leading to greater profitability (Reichheld 1993; Reichheld and Sasser 1990). Customer loyalty has also been shown to be important in the online environment (Shankar, Smith, and Rangaswamy 2003). Indeed, customer loyalty constitutes an underlying objective for strategic market planning (Kotler 1997).
While much research has focused on customer loyalty in business-to-consumer (B2C) contexts, customer loyalty is important in business-to-business (B2B) contexts as well. In organizational buyer-seller relationships, loyal buyers are more likely to focus on long-term benefits and engage in cooperative actions beneficial to both partners in a relationship than disloyal buyers, thus enhancing the competitiveness of both partners and reducing transaction costs (Doney and Cannon 1997; Ganesan 1994; Morgan and Hunt 1994).
To date, however, limited attempts have been made to conceptualize customer loyalty and investigate its antecedents, in particular, in the B2B context (e.g., Bolton 1998; Oliver 1999; Sirdeshmukh, Singh, and Sabol 2002). Potential antecedents include customer satisfaction, switching costs, and customer value. Considerable attention has been given to customer satisfaction as...