by Shun Yin Lam, Venkatesh Shankar, Krishna Erramilli, and Bvsn Murthy

This article was published in Journal of Academy of Marketing Science, 32 (Summer 2004), 293-311.

Although researchers and managers pay increasing attention to customer value, satisfaction, loyalty and switching costs, not much is known about their interrelationships, in particular, in the business-to-business (B2B) context.  Prior research has examined the relationships within subsets of these constructs, mainly in business-to-consumer (B2C) environment.  We extend prior research by developing a conceptual framework linking all of these constructs in a B2B service setting.  We also advance the notion that customer loyalty is best conceptualized as a two-dimensional construct comprising repeat patronage and word-of-mouth recommendation.  Based on the cognition-affect-behavior model, we hypothesize that customer satisfaction mediates the relationship between customer value and customer loyalty and that customer satisfaction and loyalty have significant reciprocal effects on each other.  We also examine the relative strengths of the drivers of customer loyalty, and explore potential interaction effect of satisfaction and switching costs and the quadratic effect of satisfaction, on loyalty.  We test the hypotheses using structural equation modeling on data obtained from a courier service provider in a B2B context.  The results support most of our hypotheses and in particular, confirm the mediating role of customer satisfaction.  We discuss how the results can help managers enhance customer loyalty.