Satisfaction Strength and Customer Loyalty

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. Even as the literature on customer satisfaction burgeons and practitioners make great strides in dissecting databases to know which customers are less or more profitable, anticipation of defection remains an elusive goal. The starkness of this reality is underscored by anecdotal and empirical evidence that suggests that many customers who state that they are satisfied with a service provider subsequently switch to a competitor. For instance, a study for the U.S. Office of Consumer Affairs (TARP 1986) found that in households with service problems, only 54% would maintain brand loyalty if their problems were satisfactorily resolved. Similarly, Reichheld (1996) notes that 65%85% of customers who defect report, prior to defection, that they were satisfied or very satisfied. In turn, a recent meta-analysis of customer satisfaction research finds that satisfaction explains less than 25% of the variance in repeat purchase (Szymanski and Henard 2001; see also Rust et al 1999). In this paper, we focus on understanding which customers are vulnerable to defection despite stating high levels of satisfaction. We are motivated by research that contends that the translation of satisfaction to loyalty depends on other variables. For instance, Lemon, White and Winer (2002) and Rust, Lemon and Zeithaml (2004) maintain that many non-satisfaction elements drive loyalty, and illustrate that relational elements that increase switching costs are a very important factor in whether or not satisfaction has a strong relationship with loyalty. We center on an aspect of the satisfaction judgment itself that has received little attention in the literature – the strength with which the satisfaction judgment is held. Our central thesis is that satisfaction strength is a vital determinant of customer vulnerability because it plays a crucial role in the translation of stated satisfaction into customer loyalty. Examining the strength with which customer sentiments are held is important in the context of ongoing customer relationships as well as following critical events that may serve to destabilize customer relationships (e.g., service failures). Because service variability and service failures can sensitize customers to the potential downside of dealing with a service provider, they increase