Retrospective: why do customers switch? The dynamics of satisfaction versus loyalty

Abstract

Purpose This paper aims to revisit the 1998 paper (“Why do customers switch […]”) published in this journal with the goal of documenting research progress since then and identifying gaps still present in the knowledge base on the relevant key issues. Design/methodology/approach The method is literature review, theoretical scrutiny and critical reflections on the findings of the research studies over the past two decades that deal with customer satisfaction, loyalty and switching behaviors, with particular emphasis on service businesses. Findings The core issue of why satisfaction may not explain loyalty has been examined by positing other co-predictors and moderators of loyalty such as relationship quality, price value, trust, image, etc. These predictors have been found significant, implying that satisfaction is not the only driver of customer loyalty. Additionally, other drivers of switching and staying behavior have been established such as attraction of the alternatives and switching costs, respectively. This paper points out, however, that the gains of the new research literature are attenuated due to assumption of linearity in the loyalty effects of satisfaction and due to a lack of separate analyses of customer segments who defy the satisfaction–loyalty logic. Research limitations/implications The relevant literature is so vast that any account of it within the scope of this paper had to be by design delimited. The paper not only sampled the literature selectively but also summarized the principal findings of the selected papers over-simplistically. Interested readers must get a firsthand read of the reviewed literature. Practical implications The spotlight on the nonlinearity implies that practitioners should analyze customer data separately for customer segments that experience low, moderate and high satisfaction, and also separately for segments that show the expected positive satisfaction–loyalty relationship versus those who would defect despite being satisfied. Originality/value Against the backdrop where most academic as well as industry research had presumed a positive loyalty effect of satisfaction, the 1998 paper drew attention to segments of consumers who exhibited the contrarian loyalty behavior. The present paper shines a light on that topic with even sharper focus, highlighting six unaddressed issues that must frame future research.