The Battle for Customer Loyalty: An Examination of Customer Loyalty in the Goods and Services Domain

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Quality Management Journal




This research fills a gap in both quality management and marketing literatures by examining how customer co-production, experiential, and situational variables in a nonpersonal setting influence loyalty decisions toward products and services. Through an empirical study, an interpersonal relationship theory from social psychology, known as the investment model (IM), is used to develop a better understanding regarding the drivers of why customers stay loyal with product and service firms. Self-reported data from a sample of 221 college students who own an automobile or live in an apartment were collected to test the authors' hypotheses. The results indicate that customer satisfaction and the amount of investment made by a customer positively influence their loyalty toward a firm's offering, while the quality availability of attractive alternatives negatively impacts loyalty toward the firm's offering. Furthermore, the authors' interpretation of the IM suggests that customer satisfaction increases a customer's loyalty much more in a service offering compared with a product offering. The authors, however, did not find in their service/product offering comparison any difference between investment size, quality of attractive alternatives, and loyalty. These findings provide a much better insight in assessing the applicability of IM in nonpersonal settings, providing information that can help managers invest in resources that trigger customer engagement and enhance loyalty levels.