A model of customer loyalty : an empirical investigation of the relationship between value, satisfaction and commitment
Customer loyalty has been recognised as a potent defensive weapon in the marketing literature (Reichheld, 1996a). However, the relationship between customer perceptions of value, customer satisfaction and customer commitment in the development of customer loyalty remains unclear. In addition, many studies in this field have been primarily theoretical in nature despite the managerial utility of examining the effect of individual performance attributes (Patterson and Spreng, 1997). The objective of this study is therefore to develop and empirically test an integrated post-consumption model of customer loyalty. The proposed model is built on the components of customer commitment, customer satisfaction and customer perceived value, and includes the hypothesised antecedents of these components (product quality, service quality, relationship quality, extra benefits, problem resolution and customer costs). All components were examined via structural equation modeling (Bagozzi, 1982). Beca use it was desired that the results of the study also be operationally relevant, the factors that significantly impact customer commitment were examined at the individual attribute level. In this way, areas of potential opportunity for enhancement of the hotel industry's offering to the meeting market were identified. Finally, the outcomes of customer commitment were investigated. The model was tested in the meeting market segment of upscale (4 and 5 star) hotels. Both qualitative and quantitative methodologies were employed. The qualitative data was in the form of in-depth semi-structured field interviews with eight top-level meeting planners from the UK and USA. The quantitative data was in the form of self-administered mail-in questionnaires. The questionnaire sample included 206 meeting planners from the USA and the UK who use upscale hotels for their meetings. The study found that both customer satisfaction and perceived value influence customer commitment directly. In addition, perceived value affects commitment indirectly through satisfaction. The results of the research also indicate that in the meeting market of upscale hotels, (1) relationship quality and problem resolution are significant antecedents of customer satisfaction, (2) product quality and relationship quality are significant antecedents of perceived value, and (3) customer costs have a negative impact on perceived value but a positive impact on customer satisfaction. At the attribute level, the results indicate that the greatest area of opportunity for hotels to increase the level of meeting planner commitment to booking meetings at their hotel is in fully meeting the agreements that it makes with the meeting planner, with particular care being given to the related issues of staff reliability, low turnover of top executives, attention to detail and the accurate recording of meeting requirements. The results of the present study also confirm that committed customers (1) are proactive in their purchase behaviour; (2) are not actively pursuing alternatives; (3) speak positively to others; that (4) their behaviour is voluntary; and that (5) they intend to continue doing business with the company. Furthermore, although usually only about 5% of customers who encounter problems will let a company know (Hart et al, 1990), the results of the present study indicate that committed meeting planners communicate with the hotel they are committed to when they encounter problems, thus providing the hotel with invaluable information.