Changing Perceptions and Changing Behavior in Customer Relationships Peter C. Verhoef, Philip Hans Franses, Bas Donkers Erasmus Research Institute of Management Report Series Research in Management Bibliographic Data and Classifications

We formulate a theoretical model in which we postulate that if a customers' behavior is perceived as not optimal, customers will adjust this behavior based on their current satisfaction and payment equity. Furthermore, customers will also include new experiences. In our empirical study we particularly investigate customer referrals and the amount of services purchased. Our results show positive effects of current satisfaction and payment equity on referrals, while also changes in satisfaction and payment equity affect customer referrals. With respect to the amount of services purchased, our estimation results reveal a positive significant effect of only changes in satisfaction. Key-words: Dynamic Modeling, Satisfaction, Customer Relationships, Preference Updating