CUSTOMER SATISFACTION AND LOYALTY

Customer Satisfaction and Loyalty

Customer Satisfaction and Loyalty

Literature Review

It is commonly known that there is a positive relationship between customer loyalty and profitability. Over the last decade, a considerable amount of research has investigated the relation between customer satisfaction and loyalty (Oliver, 1999; Yi, 1990). Prior research has suggested that customer loyalty is largely influenced by attitudes toward brands and emphasizes the effective management of brand attitudes (Chaudhuri & Holbrook, 2001; Fournier & Yao, 1997; Keller, 2003). However, the questions of how and when brand attitudes affect the customer satisfaction-loyalty relation remain unanswered.

Fazio and Zanna (1978,1981) suggested that the effects of direct experiences on behavioral intentions are stronger than are those of indirect experiences. In an empirical study, they found that evaluations based on direct experience were indeed more accessible from memory than those based on indirect experience. One of the possible evaluations based on direct experience is customer satisfaction. If Fazio and Zanna's (1978, 1981) theory holds true, customer satisfaction should influence brand loyalty more strongly than brand attitudes that are formed by indirect experiences (e.g., advertising and corporate image).

However, Berger and Mitchell (1989) found that indirect experiences, such as advertising, are just as influential as direct experiences in changing the accessibility of attitudes. Furthermore, the effect of these experiences depends on the extent to which messages and stimuli are elaborated (Priester, Nayakankuppam, Flemming, & Godek, 2004). In our research, we examined how involvement moderates the effect of brand attitudes in the customer satisfaction-loyalty relation. Our results differ from an earlier study by Maheswaran, Mackie, and Chaiken (1992) in which brand favorableness and situational involvement were experimentally manipulated. That is, we investigated customer-loyalty relations at more enduring levels of product involvement that participants experience in situations outside the laboratory. We found that the direct effects of customer satisfaction on brand loyalty are stronger when product involvement is low, whereas its indirect effects, through its mediating impact on brand attitudes, are stronger when product involvement is high.

Theoretical Framework

Framework for loyalty research

One purpose of this study was to provide a framework for other hotels to replicate this research process for their own marketing research. The hotel should use its database to select members for focus groups and the sample for a survey based on desired characteristics. Use focus groups to gain insight into the issues. Use survey research on a continuing basis, as managers cannot make any conclusive decision based on this one-time result. Use internal benchmarks to set new goals.

Internal benchmarking

It is a vivid fact the that establishing loyal customers is critical for the hotel industry. Nevertheless, how can hotel managers build customer loyalty? Two measurements were suggested by this study: the first measurement was the benchmark scores for the features which would increase customer loyalty; the second one was the gap between expected service and perceived service.

Many studies have been conducted on customer satisfaction (Oliver, 1980, 1997, 1999; Yi, 1990). Researchers have attempted to identify the antecedents of customer satisfaction by applying an expectation-disconfirmation model (Yi, ...