An integrated model of service loyalty

Abstract

In today's competitive environment, service marketers put great effort on developing service loyalty in order to maintain competitive edge. If we accept the fact that there is no consensus on the use of customer satisfaction as an important antecedent in the creation of service loyalty, we would find that what constitutes or measures service loyalty is inadequate and not clearly defined. This study primarily aims at developing a measurement tool for service loyalty that incorporates behavioral, attitudinal as well as cognitive attributes, which are identified through literature review and focus group discussion. It also attempts to modify the scale of perceived service quality by incorporating both process-related and outcome-related elements. A structural model of service loyalty highlighting the relationships among perceived service quality, customer satisfaction and service loyalty, in which customer satisfaction is identified as a significant mediator to enhance the impact of perceived service quality on service loyalty, is proposed here. The findings of this study indicate that service loyalty should be composed of three dimensions: behavioral loyalty, attitudinal loyalty and cognitive loyalty, while the behavioral dimension constitutes a major component of service loyalty. The results also indicate that the attitudinal aspect seems to be more emphasized among the loyal customers of process-based services whereas the behavioral and cognitive aspect seems to be more emphasized among the loyal customers of outcome-based services. The present study finds that customers of phone-banking services place an equal emphasis on the process-related elements as well as outcome-related elements in evaluating perceived service quality, like prompt service and the manner of service staff for example. Comparatively, customers of restaurant or dining services place greater emphasis on the outcome-related elements. Furthermore, the positive and significant relationships among perceived service quality, customer satisfaction and service loyalty are illustrated, in which customer satisfaction is identified as a significant mediator between perceived service quality and service loyalty by enhancing the impact of perceived service quality on service loyalty. In addition, the direct impact of perceived service quality is not as strong as its indirect impact on service loyalty, providing further evidence to confirm the role of customer satisfaction as a mediator, which cannot be ignored in building stronger and durable service loyalty. The findings of this study provide insights for future research and management practice on how to cultivate and maintain service loyalty by improving perceived service quality and customer satisfaction. For research implications, this study can give a deep insight of the importance of customer satisfaction on service loyalty development when compared with the direct effect of perceived service quality. Also, the scale of service loyalty developed in this study can be replicated to enhance its validity in future studies. Furthermore, the inclusion of both process-related attributes and outcome-related attributes can provide researchers with more information about which kind of attribute(s) are the most useful in measuring the service quality of a particular service. For managerial implications, the framework proposed here can serve as a general guideline for service providers to segment their "loyal customers" and to develop administrative policies for maintaining service loyalty. In addition, assessment of service loyalty can provide useful information to companies by way of identifying and providing a valid measure for evaluating financial performance. This is the case especially when trends are monitored over a long period of time. Any changes in customer's service loyalty may signal a change in the customer's preferences.