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Are your satisfied customers loyal?

by Skogland, Iselin^Siguaw, Judy A. Cornell Hotel & Restaurant Administration Quarterly August, 2004 Customer Loyalty and Satisfaction The value of repeat business has long been established as being considerable, partly because of the cost of acquiring new customers and partly because loyal customers are thought to have less price resistance. Consequently, service companies worldwide spend billions every year on customer-loyalty programs and other preferred guest programs aimed at getting their guests to come back. This study, which compared guests' switching behavior at two comparable big-city hotels, indicates that hospitality companies may want to reconsider that investment. Contrary to conventional thinking, the results indicate that satisfaction has only a limited relationship with either involvement or loyalty. In other words, satisfaction is not the chief means to encourage guests to return to a hotel. Worse, the study found that business travelers, who constitute a chief target of most loyalty programs, were inclined to switch from one hotel to another, even when they had been satisfied with their most recent stays. On the other hand, the results indicate that a strong relationship exists between involvement and loyalty. Thus, hoteliers may find it worth their while to redirect the money spent on loyalty programs to applications that involve the guest emotionally with the hotel. Chief among the emotionally engaging attributes, the study found, is the hotel's employees. ********** The firmly held doctrine that guest satisfaction means repeat business is called into question by the results of this study of 364 guests of two similar big-city hotels. Analysis showed only a weak connection between satisfaction and loyalty (which is a precursor to repeat purchases). Examining such factors as purpose of travel and demographics, the study revealed another finding that may give hoteliers pause--especially considering the industry's huge expenditures on frequent-guest programs. Business travelers were among the least loyal of the guests responding to this survey. The chief factors that engaged guests' loyalty were hotel design and amenities. Moreover, the factor that caused guests to be most involved in the purchase decision (and therefore more interested in the hotel) was its employees. The implication is that hoteliers might consider redirecting some of their frequent-guest expenditures toward strengthening human resources and toward improving the guests' experience through design and amenities. Keywords: customer loyalty; customer satisfaction; customer involvement Customer-defection rates are high for businesses today. U.S. corporations routinely lose half their customers over a span of five years resulting in 25 to 50 percent reduction in corporate performance. (1) At the same time, researchers have noted the importance of customer retention, citing evidence to indicate that over time, a returning customer becomes decreasingly costly to serve because of learning effects and reduced service costs, while that customer simultaneously purchases more, pays higher prices, and willingly offers word-of-mouth recommendations to others. (2) To capture the benefits of having loyal customers, many companies--particularly hospitality firms--have invested millions of dollars in customer-retention programs. For instance, Marriott spent $54 million in 1996 on its Honored Guest program, while Hyatt invested $25 million in its loyalty program that same year. (3) Nevertheless, customer-loyalty programs are now being heavily scrutinized to determine whether they are doing what they were intended to do: namely, increase customer loyalty and build profits. Research on customer loyalty has primarily focused on customer satisfaction and involvement. (4) However, findings on the linkage between repeat-purchase behavior and satisfaction have been equivocal. A number of studies have reported significant links, while others have noted that satisfaction explains little in regards to repeat purchases. (5) Furthermore, the antecedent effects of involvement on loyalty have received relatively limited attention. Studies that have examined the involvement--loyalty relationship have offered the following, sometimes conflicting, findings: * involvement has an indirect effect on loyalty as mediated by the investment of time and investment in the relationship; (6) * the relationship between satisfaction and loyalty is moderated by high involvement levels; (7) * involvement is a determinant of loyalty; (8) and * the involvement--loyalty linkage is not that strong and depends solely on the level of involvement. (9) Consequently, our knowledge of customer loyalty and its determinants is replete with ambiguities. In view of that situation, the main objectives of this study are threefold: (1) to examine the degree to which satisfaction influences loyalty, (2) to investigate how satisfaction may influence involvement, and (3) to understand how involvement may directly affect loyalty. In this article, we first provide a brief review of our constructs of interest. Next, the research methodology used for this study is presented, followed by a discussion of our findings. Finally, the article concludes with managerial implications. Theoretical Foundations and Research Focus For decades, academics and professionals have preached that loyalty is a key to a successful business. Loyal customers have been found to purchase more and facilitate additional business from new customers by generating positive word of mouth. (10) Indeed, Ganesh, Arnold, and Reynolds state, "Loyal customers are logically at the heart of a company's most valuable customer group." (11)

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Satisfaction with a product or service offered has been identified as a key determinant for loyalty and, perhaps more important, a firm's profitability. Prior research has shown that satisfied customers exhibit reduced price sensitivity and increase the customer base through positive word of mouth. (12) Also, research intuitively indicates that customer satisfaction increases the likelihood of repeat business. (13) The degree to which the customer is involved in the purchase decision should also have a strong effect on the propensity to switch service providers. Two types of involvement--purchase involvement and ego involvement--have been found to play an antecedent role in switching behavior. (14) Theoretical Foundations for Customer Satisfaction For the purposes of this study, satisfaction is defined as "an overall evaluation of performance based on all prior experiences with a firm." (15) The following two well-known theoretical bases serve as the underpinnings for examining customer satisfaction in this article: the confirmation-disconfirmation paradigm and comparison-level theory. (16) Confirmation-disconfirmation theory. Customer satisfaction is defined as a post-purchase evaluative judgment concerning a specific buying decision. (17) According to the confirmation-disconfirmation paradigm, customers assess their levels of satisfaction by comparing their actual experiences with their previous experiences, expectations, and perceptions of the product's performance. (18) The theory postulates that three outcomes of this evaluation are possible: (1) confirmation occurs when the actual performance matches the standard, leading to a neutral feeling; (2) positive disconfirmation occurs when the performance is better than the standard, which then leads to satisfaction; and (3) negative disconfirmation occurs when the performance is worse than the standard, which then leads to dissatisfaction. Comparison-level theory. This theory proposes that consumers use comparison levels for the relationship under consideration and also use comparison levels for alternative relationships to determine satisfaction with and propensity to remain in a relationship. (19) The comparison level is "the standard against which a member evaluates the 'attractiveness' of the relationship." (20) These consumer standards reflect what the brand should achieve not just what it will achieve. (21) Previous research has found a positive relationship between prior experiences and current levels of expectations. (22) Dimensions of customer satisfaction. Although an investigation of overall satisfaction with services provides relevant insight regarding loyalty, even greater knowledge can be obtained by distilling satisfaction into its various dimensions, especially in an industry where switching behavior and customer loyalty are paramount. (23) Indeed, some dimensions of satisfaction may be more important antecedents of repeat-purchase behavior and loyalty than others are. Common dimensions of satisfaction with a service include service quality, product quality, price, and location. Theory suggests that the "people factor" (i.e., service quality), in terms of tangibility, reliability, responsiveness, assurance, and empathy, (24) may be the most salient in determining overall satisfaction and repeated purchasing in service industries. (25) The argument for the importance of the people factor is further supported by the services-marketing literature, which, noting the intangibility of services, advances service encounters as predominantly interpersonal interactions. (26) Consequently, as with other social relationships, the bond between the hotel representative and the guest will be more heavily weighed if the guest makes a satisfaction judgment than if the guest makes no such judgment. Thus, in this study, we examine not only the effects of overall satisfaction but also the effects on involvement and loyalty of both satisfaction with the people factor and satisfaction with hotel ambience. Theoretical Foundations for Involvement Involvement, as related to this research, comprises both purchase and ego involvement. Purchase involvement is defined as "the level of concern for or interest in the purchase process that is triggered by the need to consider a particular purchase." (27) Thus, purchase involvement consists of the time, effort, and costs invested in making a purchase, including any internal and external research that may precede the transaction. (28) Specifically, in this study, we look at purchase involvement as it relates to price comparison and risk reduction. Service failures are exceedingly memorable and readily recalled (29) because they are "highly salient ... distinctive, atypical, and emotionally charged." (30) As a result, these negative experiences modify future expectations and both broaden and deepen the criteria used in the search for better alternatives (31) as a mechanism for reducing the risk of making a poor purchase decision in the future. (32) In turn, these additional cognitions heighten the level of purchase involvement. (33) Consequently, low levels of satisfaction may result in high levels of purchase involvement (so that one may ensure that a purchasing error does not reoccur), and high levels of purchase involvement may result in low levels of loyalty, as the consumer focuses on better alternatives. This conjecture is consistent with prior studies, which noted that high involvement resulted in brand commitment when the consumer was satisfied with product performance. (34) Ego involvement occurs when relatively enduring importance is placed on a product or product class as it relates to the consumer's self-image, values, and status. (35) In this study, ego involvement is examined in terms of self-image and the need for recognition. Satisfactory experiences may heighten the customer's ego involvement, but on the other hand, levels of ego involvement for the product or product class should decline when the customer experiences an unsatisfactory service relationship. (36) That is, the customer will mentally reduce the degree to which the unsatisfactory service influences his or her self-image, values, or status. (37) Following this line of thought, satisfaction should increase ego involvement. Furthermore, since ego involvement incorporates the need for recognition, when ego involvement is high, loyalty should also be high because repeat visits would typically have to occur for the guest to be recognized and treated in a special fashion. Theoretical Foundations for Customer Loyalty Loyalty has been defined as "a deeply held commitment to re-buy or repatronize a preferred product or service consistently in the future, thereby causing repetitive same-brand-set purchasing, despite situational influences' and marketing efforts' having the potential to cause switching behaviour." (38) Customer loyalty consists of both an attitudinal commitment to the relationship, such as price insensitivity, and other, more-overt loyalty behavior, such as positive word of mouth and repeat patronage. (39) Comparison-level theory and the patronage literature provide the theoretical underpinnings for the loyalty construct. As discussed previously, the standard by which someone determines his or her satisfaction with a service and, hence, whether that person should switch or remain in that relationship is founded on comparison-level theory. The manner in which a service experience is assessed is based largely on the next-best alternative relationship. As soon as the current level of outcomes drops below the perceived comparison level for alternatives, the customer is motivated to leave the relationship. (40) Thus, guests who are satisfied with a service when compared with available alternatives should report greater loyalty to that service than dissatisfied guests. The reverse is also true when guests are dissatisfied. Research Method For this examination of satisfaction, involvement, and loyalty, we contacted two hotels located in a major midwestern city in the United States. Both

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hotels are three-star properties located in the city's core business district and are similar in terms of their target markets and business mix. Both hotels are affiliated with major but different hotel chains. However, one hotel is not openly flagged with the chain name and is likely perceived by the average consumer as being an independent hotel. Both properties are housed in relatively old buildings that have been converted into hotels, and one of the hotels is listed as a historic hotel. The historic hotel (hotel A) is positioned as a boutique hotel, while the other hotel (hotel B) is a standard, franchised property. The historic hotel has a restaurant and bar within the hotel; the other property does not have its own restaurant but is adjoined by a national coffeehouse and a well-known, full-service restaurant. Room rates range from $149 to $259 for the historic hotel and $109 to $275 for the other property. The two hotels are also managed by the same company, making them relatively comparable in terms of management. Our data also indicated that guests perceived the two hotels to be competitive, and one is the likely target for the other in terms of switching hotels. A two-page survey was designed to collect information concerning (1) the use of the hotel (e.g., frequency of stays, length of relationship, factors considered in making a reservation, type of traveler, and competitors used and why), (2) overall satisfaction with the hotel, (3) satisfaction with the individual service and tangible characteristics of the hotel, (4) purchase and ego involvement associated with the decision to stay at the hotel, (5) level of loyalty toward the hotel, and (6) demographic factors. Copies of the questionnaire were mailed to 1,000 former guests of hotel A and 700 former guests of hotel B. Participants in the study were guests who had stayed at one of the properties some time during the previous twelve months; these guests' names were randomly selected from the hotels' databases by the hotels' managers. The self-administered surveys were accompanied by cover letters on university letterhead explaining the study, disclosing liability, and offering an incentive to encourage response. The incentive consisted of a prize offered by each hotel with the winners to be determined by a drawing. Usable responses were received from 364 guests. Fourteen other surveys were returned incomplete, and 134 questionnaires were returned to the authors because of unknown addresses or names, resulting in an effective response rate of 24.1 percent. To assess nonresponse bias, an analysis of early and late responses was undertaken. (41) This analysis revealed no significant difference between early and late respondents on any of the constructs of interest in this study. Measures of Constructs Thirteen items were used to measure respondents' satisfaction with the various aspects of the services and facilities of the hotel at which they stayed. The items used in this scale were primarily extracted from those developed by Rust and Zahorik and by Ganesh, Arnold, and Reynolds. (42) In addition, we sought a global measure of satisfaction by asking the respondents to rate the following question: "Overall, how satisfied are you with the hotel?" Responses were based on a 5-point Likert-type scale ranging from very dissatisfied to very satisfied. See the sidebar on pages 226-227 for the complete listing of all scale items. To measure involvement, we added questions on ambience, convenience, and timeliness and adapted the items previously used by Ganesh, Arnold, and Reynolds (as denoted in the sidebar). The involvement items were intended to capture the effort, self-image, desire for familiarity, and perceived risk dimensions noted in the literature. To capture the multidimensionality of brand loyalty, the questionnaire contained multiple items, including price insensitivity (attitudinal loyalty), repeat-patronage intentions, and the propensity to spread positive word of mouth. Adapting these items to the lodging business, we used seven related items to understand the customer-loyalty construct; these items had been previously compiled by Ganesh, Arnold, and Reynolds. (43) Both the involvement and the loyalty items were assessed on a 5-point Likert-type scale, ranging from strongly disagree to strongly agree. In addition, one item, asking whether participants routinely stay at the same hotel, was included as a measure of actual repeat-purchase behavior. Data Analysis An analysis of the data revealed that the majority of respondents were male (58.2 percent), married (66.9 percent), and well educated (52.8 percent had completed an undergraduate degree). Business travelers constituted 34.1 percent of the respondents, leisure travelers totaled 46 percent, and travelers identifying the purpose of their trips as both business and leisure made up 19.9 percent. For the most part, the respondents had high incomes, with 57.9 percent reporting earnings in excess of $100,000 per year. The ages of study participants ranged from twenty-one to eighty-six, with 25.5 percent indicating they were fifty-five or older. Occupations were diverse, with the most populated job titles consisting of executive (14.3 percent) and marketing (11.4 percent). A regression using contrast effects tested the relationships between satisfaction, involvement, and loyalty. Given prior research that demographic factors, such as education and age, influence customer loyalty and satisfaction, we included five demographic variables--namely, gender, age, education, purpose of travel (business or leisure), and income--as covariates in the regression analysis. (44) The Contrary Customer In examining our results, it is well to remember that hotel companies are investing millions of dollars each year on their loyalty programs--despite questions about the effectiveness of these costly programs. These programs have been designed with the goal of fulfilling guests' needs and desires on the premise that customer satisfaction will ensure guest loyalty. Thus, in this study, satisfied guests were posited to be loyal to the hotel because the guests' comparison levels should have been positively disposed toward the hotel. (45) Surprisingly, however, neither overall satisfaction nor satisfaction with the people factor was a determinant of repeat-purchase behavior, attitudinal loyalty, or word-of-mouth loyalty. As a simple means of illustration, Exhibit 1 provides a cross-tabulation presenting the relationship between overall satisfaction and repeat-purchase behavior. As shown, fewer than half of even the most satisfied guests routinely chose to stay again at the hotel they had just patronized. Thus, although marketers have long advanced the presence of guest satisfaction as instrumental in ensuring repeat business, guest satisfaction does not appear to have the substantive and sweeping effect on guest loyalty that has previously been assumed. Nor did this study support the people factor (i.e., service quality), in terms of tangibility, reliability, responsiveness, assurance, and empathy, as being the most salient in determining repeat purchases. (46) (See Exhibit 2 for the results of the regression analysis.) Several theories may explain the weak linkage between overall satisfaction and loyalty, as well as among satisfaction, the people factor, and loyalty. First, switching costs, such as time, money, and effort, play a role in customer loyalty. (47) Higher perceived switching costs have been found to result in greater customer loyalty and repeat-purchase retentions. (48) However, hotel guests incur few switching costs. That is, lodging customers do not generally encounter procedural, financial, or relational switching costs that serve as incentives to remain loyal to a particular hotel. Second, several studies have indicated that even when enhanced levels of customer satisfaction exist, some consumers may still have a strong predisposition to switch service suppliers or brands. (49) In this study, for example, 38 percent of respondents who reported high levels of satisfaction noted that they routinely switched to competing properties. Third, the literature indicates that customers who switch because of extrinsic motivators (e.g., coupons or discounts) are more likely to demonstrate lower levels of loyalty and repeat-purchase intentions than customers who are intrinsically motivated (e.g., dissatisfied, wanting to try a new brand). (50)

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Satisfaction with hotel ambience did positively affect word-of-mouth loyalty. This finding supports a prior study that underscored the importance of hotel design and amenities as drivers of guest satisfaction. (51) Uninvolved. Overall satisfaction and satisfaction with hotel ambience were unrelated to any dimensions of involvement. This finding is contradictory to the literature, from which we inferred that low levels of satisfaction will result in high levels of purchase involvement. (52) We believe that this unexpected result may be explained by the low-risk and minimal switching costs attached to the hotel stay, factors that would facilitate low involvement. Involvement is typically heightened by emotional and financial risk, neither of which is strongly present in such a transient purchase as a hotel room. Satisfaction with the people factor was positively related to price-comparison involvement, self-image involvement, and need for recognition involvement. This finding emphasizes the value of human resources in the lodging industry and substantiates prior studies that have argued for the importance of the people factor in services. (53) Furthermore, this result underscores the role that human resources plays in increasing the guest's ego involvement; that is, the hotel representative's words and actions can play a role in enhancing the guest's self-image and status involvement. Unexpectedly, however, employees' positive actions also appear to encourage price comparisons, indicating that price is still a primary determinant of hotel selection. Only self-image involvement was related to repeat purchase, while only two of four involvement dimensions--need for recognition and self-image--influenced word-of-mouth loyalty. These results could be said to provide support for the research from which we inferred that higher levels of purchase involvement will result in lower levels of loyalty. (54) However, all four of the involvement dimensions--price comparison, self-image, need for recognition, and risk reduction--were positively related to attitudinal loyalty. These findings did support our proposition, which suggests that when ego involvement is high, loyalty will also be high. At the same time, this result contradicts the posited inverse relationship between purchase involvement and loyalty. That is, this study indicates that ego and purchase involvement may diminish guests' propensities to switch service providers, especially when the current level of outcomes exceeds the perceived comparison level for alternatives. Guests who are involved in the purchase decision may more readily identify the benefits their current service providers have to offer over the alternatives and, consequently, may develop a more positive confirmation regarding the hotel. As previously suggested, some demographic factors affected involvement and loyalty. Purpose of travel influenced price-comparison involvement and marginally influenced attitudinal loyalty, while gender affected risk-reduction involvement. Age influenced self-image, need-for-recognition involvement, and attitudinal loyalty. Income positively affected price-comparison involvement. Education positively influenced self-image involvement and word-of-mouth loyalty. Managerial implications The chief implication of this study is that hoteliers should not assume that satisfying their guests will ensure repeat purchases. Instead, this study shows that the connection between satisfaction and loyalty is tenuous, at best. Therefore, we suggest a reconsideration of loyalty programs. If a large core of guests is routinely going to switch to competitive properties, regardless of the best efforts put forth by the hotel, might not the funds that are being expended on loyalty programs for this group be better applied in other ways? For example, hotel design and amenities have been shown to be primary drivers of loyalty. Hoteliers might better serve their own financial interests by diverting many of the millions currently spent on loyalty programs to developing more innovative and comfortable hotel rooms and public spaces that in turn, will create more memorable guest experiences. Human resources focus. Lodging managers should continue to focus on their employees. Well-trained staff members who exude the appropriate attitude toward service are invaluable in keeping guests involved in the purchase decision so that they are actively pursuing information that will showcase the hotel's benefits over those of alternative properties. Viewed sequentially, members of the hotel staff heighten guest involvement, which then produces greater attitudinal loyalty, including less price sensitivity and an intention to be loyal. Finally, although little work has been conducted on the effects of demographics on involvement and satisfaction, the initial findings of the study suggest that hoteliers should not overlook demographic factors. Instead, managers should analyze their own guests to gain an understanding of how these guests differ by gender, age, education, income, and type of travel on the dimensions of involvement and loyalty. For example, in this study, additional post hoc analyses revealed that men were more interested than were women in reducing risk by purchasing a known hotel. This finding may mean that men should be targeted with loyalty programs more strongly than women. Furthermore, the widespread assumption that business travelers are the best guests to attract is challenged by this study's finding that business travelers were the least satisfied, least loyal, and least involved of the guest segments. Thus, it might behoove those in the lodging industry to reconsider their extensive efforts to attract those guests who, on average, are going to be extremely difficult to please and the least likely to return. Endnotes (1.) Jaishankar Ganesh, Mark J. Arnold, and Kristy E. Reynolds, "Understanding the Customer Base of Service Providers: An Examination of the Differences Between Switchers and Stayers." Journal of Marketing, vol. 64 (July 2000), pp. 65-87; and Frederick Reichheld and Thomas Teal, The Loyalty Effect (Boston: Harvard Business School Press, 1996). (2.) Ganesh, Arnold, and Reynolds, "Understanding the Customer Base"; Susan Keaveney, "Customer Switching Behavior in Service Industries: An Exploratory Study" Journal of Marketing, vol. 59 (April 1995), pp. 71-82; Louise O'Brien and Charles Jones, "Do Rewards Really Create Loyalty?" Harvard Business Review, vol. 73 (May-June 1995), pp. 7583; and Frederick Reichheld and David W. Kenny, "The Hidden Advantages of Customer Retention," Journal of Retail Banking, vol. 4, no. 1 (Winter 1990), pp. 19-23. (3.) Stephanie Seacord, "Who's Been Sleeping in Our Beds?" American Demographics, vol. 58 (March-April 1996), pp. 58-65. (4.) As put forth in: Ganesh. Arnold, and Reynolds, "Understanding the Customer Base." (5.) See, for example: Ruth N. Bolton, "A Dynamic Model of the Duration of the Customer's Relationship with a Continuous Service Provider: The Role of Satisfaction," Marketing Science, vol. 17, no. 1 (1998), pp. 45-65; Joseph J. Cronin Jr. and Steven A. Taylor, "Measuring Service Quality: A Reexamination and Extension," Journal of Marketing, vol. 56 (July 1992), pp. 55-68; Priscilla A. LaBarbera and David Mazursky, "A Longitudinal Assessment of Consumer Satisfaction/Dissatisfaction: The Dynamic Aspect of the Cognitive Process." Journal of Marketing Research, vol. 20 (November 1983), pp. 393-404; and Rajan Sambandam and Kenneth R. Lord, "Switching Behavior in Automobile Markets: A Consideration Sets Model," Journal of the Academy of Marketing Science, vol. 23 (Winter 1995), pp. 57-65. (6.) Kristof De Wulf, Gaby Odekerken-Schroder, and Dawn Iacobucci, "Investments in Consumer Relationships: A Cross-country and Cross-industry Exploration," Journal of Marketing, vol. 65 (October 2001), pp. 33-50.

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(7.) Josee Bloemer and Ko de Ruyter. "Customer Loyalty in High and Low Involvement Service Settings: The Moderating Impact of Positive Emotions." Journal of Marketing Management, vol. 15 (May 1999), pp. 315-30. (8.) Sharon E. Beatty, Pamela Homer, and Lynn R. Kahle, "The Involvement-Commitment Model: Theory and Implications," Journal of Business Research, vol. 16 (March 1988), pp. 149-67; and Palto Ranjan Datta, "The Determinants of Brand Loyalty," Journal of American Academy of Business, vol. 3 (September 2003), pp. 138-44. (9.) Patti Warrington and Soyeon Shim, "An Empirical Investigation of the Relationship between Product Involvement and Brand Commitment," Psychology & Marketing, vol. 17 (September 2000), pp. 761-82. (10.) O'Brien and Jones, "Do Rewards Really Create Loyalty?"; Richard L. Oliver, Satisfaction: A Behavioral Perspective on the Consumer, (Boston: Richard D. Irwin/McGraw-Hill, 1997); and Reichheld and Teal, The Loyalty Effect. (11.) Ganesh, Arnold, and Reynolds, "Understanding the Customer Base." (12.) Eugene W. Anderson, Claes Fornell, and Donald Lehman, "Customer Satisfaction, Market Share, and Profitability: Findings from Sweden," Journal of Marketing, vol. 58 (July 1994), pp. 53-66: and Claes Fornell, "A National Customer Satisfaction Barometer: The Swedish Experience," Journal of Marketing, vol. 56 (January 1992), pp. 6-21. (13.) Bolton, "A Dynamic Model": LaBarbera and Mazursky, "A Longitudinal Assessment"; and Steven A. Taylor and Thomas L. Baker, "An Assessment of the Relationship Between Service Quality and Customer Satisfaction in the Formation of Consumers' Purchase Intentions," Journal of Retailing, vol. 70, no. 2 (1994), pp. 163-78. (14.) Terrence Oliva. Richard L. Oliver, and Ian MacMillan, "A Catastrophe Model for Developing Service Satisfaction Strategies," Journal of Marketing, vol. 56 (July 1992), pp. 83-95; and Jose M. M. Bloemer and Hans D. P. Kaspar, "The Complex Relationship Between Consumer Satisfaction and Brand Loyalty," Journal of Economic Psychology, vol. 16 (July 1995), pp. 311-29. (15.) Michael A. Jones. David L. Mothersbaugh, and Sharon E. Beatty, "Switching Barriers and Repurchase Intentions in Services," Journal of Retailing, vol. 76 (Summer 2000), p. 260. (16.) Richard L. Oliver, "A Cognitive Model of the Antecedents and Consequences of Satisfaction Decisions," Journal of Marketing Research, vol. 17 (November 1980), pp. 460-69; and John W. Thibaut and Harold H. Kelley, The Social Psychology of Groups (New York: John Wiley, 1959). (17.) Christian Homburg and Annette Giering, "Personal Characteristics as Moderators of the Relationship Between Customer Satisfaction and Loyalty--An Empirical Analysis," Psychology and Marketing Journal, vol. 18, no. 1 (2001), pp. 43-66. (18.) Oliver, "A Cognitive Model." (19.) Thibaut and Kelley, The Social Psychology. (20.) Ibid. (21.) Ernest R. Cadotte, Robert B. Woodruff. and Roger Jenkins, "Expectations and Norms in Models of Consumer Satisfaction," Journal of Marketing Research, vol. 24 (August 1987), pp. 305-14; and Robert B. Woodruff, Ernest R. Cadotte, and Roger L. Jenkins, "Modeling Consumer Satisfaction Processes Using Experience-Based Norms," Journal of Marketing Research, vol. 20 (August 1983), pp. 296-304. (22.) Valarie A. Zeithaml, Leonard L. Berry, and A. Parasuraman, "The Nature and Determinants of Customer Expectations of Service," Journal of the Academy of Marketing Science, vol. 21 (Winter 1993), pp. 1-12. (23.) Ronald T. Rust and Anthony J. Zahorik, "Customer Satisfaction, Customer Retention, and Market Share," Journal of Retailing, vol. 69 (Summer 1993), pp. 193-215. (24.) According to: A. Parasuraman, Valarie A. Zeithaml, and Leonard L. Berry, "A Conceptual Model of Service Quality and Its Implications for Future Research," Journal of Marketing, vol. 49 (Fall 1985), pp. 41-50; A. Parasuraman, Valarie A. Zeithaml, and Leonard L. Berry, "SERVQUAL: A Multiple-Item Scale for Measuring Consumer Perceptions of Service Quality," Journal of Retailing, vol. 64 (Spring 1988), pp. 12-37; and A. Parasuraman, Valarie A. Zeithaml, and Leonard L. Berry, "Reassessment of Expectations as a Comparison Standard in Measuring Service Quality: Implications for Further Research," Journal of Marketing, vol. 58 (January 1994), pp. 111-24. (25.) Ganesh, Arnold, and Reynolds, "Understanding the Customer Base"; Atila Yuksel and Fisun Yuksel, "Measurement of Tourist Satisfaction With Restaurant Services: A Segment-Based Approach," Journal of Vacation Marketing, vol. 9, no. 1 (2002), pp. 52-68. (26.) Leonard L. Berry, "Relationship Marketing," in Emerging Perspectives on Services Marketing, ed. Leonard L. Berry, Lynn Shostack, and Gregory Upah (Chicago: American Marketing Association, 1983); John A. Czepiel, "Service Encounters and Service Relationships: Implications for Research," Journal of Business Research, vol. 20, no. 1 (1990), pp. 13-21. (27.) Ganesh, Arnold, and Reynolds, "Understanding the Customer Base." (28.) According to: Banwari Mittal and Myung-soo Lee, "A Causal Model of Consumer Involvement," Journal of Economic Psychology, vol. 10 (November 1989), pp. 363-89; and Judith Lynne Zaichkowsky, "Measuring the Involvement Construct," Journal of Consumer Research, vol. 12 (December 1985), pp. 341-52. (29.) Valerie S. Folkes, "The Availability Heuristic and Perceived Risk," Journal of Consumer Research, vol. 15 (June 1988), pp.1 3-23. (30.) Ganesh, Arnold, and Reynolds, "Understanding the Customer Base." (31.) Richard L. Oliver and Russell S. Winer, "A Framework for the Formation and Structure of Consumer Expectations: Review and Propositions," Journal of Economic Psychology, vol. 8 (December 1987), pp. 469-99. (32.) Mittal and Lee, "A Causal Model."

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(33.) Peter H. Bloch and Marsha L. Richins, "A Theoretical Model for the Study of Product Importance Perceptions," Journal of Marketing, vol. 47 (Summer 1983), pp. 69-81. (34.) Bloemer and de Ruyter, "Customer Loyalty"; and Warrington and Shim, "An Empirical Investigation." (35.) Bloemer and de Ruyter, "Customer Loyalty"; Warrington and Shim, "An Empirical Investigation"; and Marsha L. Richins and Peter H. Bloch, "After the New Wears Off: The Temporal Context of Product Involvement," Journal of Consumer Research, vol. 13 (September 1986), pp. 281-85. (36.) Musafer Sherif and H. Cantril, The Psychology of Ego-Involvement (New York: John Wiley, 1947). (37.) Bloch and Richins, "A Theoretical Model." (38.) Arjun Chaudhuri and Morris B. Holbrook, "The Chain of Effects from Brand Trust and Brand Affect to Brand Performance: The Role of Brand Loyalty," Journal of Marketing, vol. 15 (April 2001), pp. 81-94. (39.) Richard L. Oliver, "Whence Consumer Loyalty?" Journal of Marketing, vol. 63 (Special Issue 1999), pp. 33-44. (40.) Thibaut and Kelley, The Social Psychology. (41.) J. Scott Armstrong and Terry S. Overton, "Estimating Nonresponse Bias in Mail Surveys," Journal of Marketing Research, vol. 14, no. 3 (1977), pp. 396-402. (42.) Rust and Zahorik, "Customer Satisfaction"; Ganesh, Arnold, and Reynolds. "Understanding the Customer Base." (43.) Ganesh, Arnold, and Reynolds, "Understanding the Customer Base" (44.) Homburg and Giering, "Personal Characteristics as Moderators." (45.) Ganesh, Arnold, and Reynolds, "Understanding the Customer Base." (46.) According to: Parasuraman, Zeithaml, and Berry, "A Conceptual Model of Service Quality"; Parasuraman, Zeithaml, and Berry, "SERVQUAL"; and Parasuraman, Zeithaml, and Berry, "Reassessment of Expectations." (47.) Alan S. Dick and Kunal Basu, "Customer Loyalty: Toward an Integrated Conceptual Framework," Journal of the Academy of Marketing Science, vol. 22, no. 2 (1994), pp. 99-113; Ganesh, Arnold, and Reynolds, "Understanding the Customer Base." (48.) Jones, Mothersbaugh, and Beatty, "Switching Barriers." (49.) Abod Ali Khatibi, Ismail Hishamuddin, and Venu Thyagarajan, "What Drives Customer Loyalty: An Analysis from the Telecommunications Industry," Journal of Targeting, Measurement and Analysis for Marketing, vol. 11, no. 1 (2002), pp. 34-44; and Banwari Mittal and W. M. Lassar, "Why Do Customers Switch?" Journal of Service Marketing, vol. 12, no. 3 (1998), pp. 177-94. (50.) LaBarbera and Mazursky, "A Longitudinal Assessment"; David Mazursky, Priscilla LaBarbera, and Al Aiello, "When Customers Switch Brands," Psychology and Marketing, vol. 4 (Spring 1987), pp. 17-30. (51.) Judy A. Siguaw and Cathy A. Enz, "Best Practices in Hotel Architecture," Cornell Hotel and Restaurant Administration Quarterly, vol. 40, no. 4 (October 1999), pp. 44-49. See also: Laurette Dube, Cathy A. Enz, Leo M. Renaghan, and Judy A. Siguaw, American Lodging Excellence: The Key To Best Practices in the U.S. Lodging Industry (New York: American Express and American Hotel Foundation, 1999). (52.) Bloch and Richins, "A Theoretical Model"; Mittal and Lee, "A Causal Model"; and Oliver and Winer, "A Framework for the Formation." (53.) Parasuraman, Zeithaml, and Berry, "A Conceptual Model of Service Quality"; Parasuraman, Zeithaml, and Berry, "SERVQUAL"; and Parasuraman, Zeithaml, and Berry, "Reassessment of Expectations." (54.) Bloch and Richins, "A Theoretical Model"; Mittal and Lee, "A Causal Model"; and Oliver and Winer, "A Framework for the Formation." Exhibit 1: Relationship between Overall Satisfaction and Repeat-purchase Behavior ROUTSTAY Overall No Yes Total Very dissatisfied 3 2 5 Dissatisfied 12 1 13 Neutral 16 5 21 Satisfied 128 78 206 Very satisfied 65 52 117 Total 224 138 362 Exhibit 2: Regression Results Mean Source Variable Dependent Variable Square Overall satisfaction Repeat purchase 0.193 Attitudinal loyalty 0.143 Word-of-mouth loyalty 0.708 Risk-reduction involvement 0.151 Price-comparison involvement 0.202 Self-image involvement 0.229 Need-for-recognition 0.718 involvement Satisfaction with people Repeat purchase 0.132 Attitudinal loyalty 0.282 Word-of-mouth loyalty 0.303 Risk-reduction involvement 1.170

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Price-comparison involvement 1.384 Self-image involvement 0.939 Need-for-recognition 1.115 involvement Satisfaction with ambience Repeat purchase 0.322 Attitudinal loyalty 0.591 Word-of-mouth loyalty 0.986 Risk-reduction involvement 0.648 Price-comparison involvement 0.744 Self-image involvement 0.649 Need-for-recognition 0.704 involvement Risk-reduction involvement Repeat purchase 0.166 Attitudinal loyalty 1.154 Word-of-mouth loyalty 0.607 Price-comparison Repeat purchase 0.221 involvement Attitudinal loyalty 1.781 Word-of-mouth loyalty 0.658 Self-image involvement Repeat purchase 0.333 Attitudinal loyalty 1.110 Word-of-mouth loyalty 0.408 Need-for-recognition Repeat purchase 0.754 involvement Attitudinal loyalty 3.074 Word-of-mouth loyalty 1.617 Purpose of travel Repeat purchase 0.188 Attitudinal loyalty 1.751 Word-of-mouth loyalty 0.564 Risk-reduction involvement 0.462 Price involvement 6.119 Self-image involvement 0.992 Need-for-recognition 0.541 involvement Gender Repeat purchase 0.009 Attitudinal loyalty 0.238 Word-of-mouth loyalty 0.380 Risk-reduction involvement 5.755 Price involvement 0.150 Self-image involvement 0.006 Need-for-recognition 0.750 involvement Age Repeat purchase 0.262 Attitudinal loyalty 4.643 Word-of-mouth loyalty 0.621 Risk-reduction involvement 0.006 Price-comparison involvement 0.756 Self-image involvement 2.485 Need-for-recognition 10.005 involvement Income Repeat purchase 0.001 Attitudinal loyalty 0.087

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Word-of-mouth loyalty 0.565 Risk-reduction involvement 1.507 Price-comparison involvement 3.476 Self-image involvement 0.018 Need-for-recognition 0.806 involvement Education Repeat purchase 0.008 Attitudinal loyalty 0.934 Word-of-mouth loyalty 2.120 Risk-reduction involvement 0.002 Price-comparison involvement 0.032 Self-image involvement 2.236 Need-for-recognition 0.051 involvement F Source Variable Dependent Variable value Overall satisfaction Repeat purchase 0.743 Attitudinal loyalty 0.309 Word-of-mouth loyalty 2.121 Risk-reduction involvement 0.149 Price-comparison involvement 0.316 Self-image involvement 0.461 Need-for-recognition 1.180 involvement Satisfaction with people Repeat purchase 0.508 Attitudinal loyalty 0.608 Word-of-mouth loyalty 0.903 Risk-reduction involvement 1.152 Price-comparison involvement 2.163 Self-image involvement 1.889 Need-for-recognition 1.832 involvement Satisfaction with ambience Repeat purchase 1.239 Attitudinal loyalty 1.274 Word-of-mouth loyalty 2.956 Risk-reduction involvement 0.638 Price-comparison involvement 1.162 Self-image involvement 1.305 Need-for-recognition 1.157 involvement Risk-reduction involvement Repeat purchase 0.708 Attitudinal loyalty 2.051 Word-of-mouth loyalty 0.927 Price-comparison Repeat purchase 0.902 involvement Attitudinal loyalty 3.620 Word-of-mouth loyalty 1.009 Self-image involvement Repeat purchase 1.463 Attitudinal loyalty 2.005 Word-of-mouth loyalty 0.624 Need-for-recognition Repeat purchase 3.466

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involvement Attitudinal loyalty 6.220 Word-of-mouth loyalty 2.593 Purpose of travel Repeat purchase 0.722 Attitudinal loyalty 3.778 Word-of-mouth loyalty 1.690 Risk-reduction involvement 0.456 Price involvement 9.563 Self-image involvement 1.997 Need-for-recognition 0.889 involvement Gender Repeat purchase 0.036 Attitudinal loyalty 0.513 Word-of-mouth loyalty 1.139 Risk-reduction involvement 5.669 Price involvement 0.234 Self-image involvement 0.011 Need-for-recognition 1.232 involvement Age Repeat purchase 1.008 Attitudinal loyalty 10.016 Word-of-mouth loyalty 1.863 Risk-reduction involvement 0.006 Price-comparison involvement 1.180 Self-image involvement 5.001 Need-for-recognition 16.440 involvement Income Repeat purchase 0.003 Attitudinal loyalty 0.187 Word-of-mouth loyalty 1.692 Risk-reduction involvement 1.484 Price-comparison involvement 5.433 Self-image involvement 0.036 Need-for-recognition 1.324 involvement Education Repeat purchase 0.030 Attitudinal loyalty 2.015 Word-of-mouth loyalty 6.356 Risk-reduction involvement 0.002 Price-comparison involvement 0.050 Self-image involvement 4.500 Need-for-recognition 0.084 involvement Source Variable Dependent Variable Significance Overall satisfaction Repeat purchase 0.528 Attitudinal loyalty 0.819 Word-of-mouth loyalty 0.099 Risk-reduction involvement 0.930

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Price-comparison involvement 0.814 Self-image involvement 0.710 Need-for-recognition 0.319 involvement Satisfaction with people Repeat purchase 0.896 Attitudinal loyalty 0.820 Word-of-mouth loyalty 0.534 Risk-reduction involvement 0.324 Price-comparison involvement 0.018 Self-image involvement 0.044 Need-for-recognition 0.052 involvement Satisfaction with ambience Repeat purchase 0.265 Attitudinal loyalty 0.243 Word-of-mouth loyalty 0.001 Risk-reduction involvement 0.794 Price-comparison involvement 0.317 Self-image involvement 0.225 Need-for-recognition 0.321 involvement Risk-reduction involvement Repeat purchase 0.884 Attitudinal loyalty 0.041 Word-of-mouth loyalty 0.494 Price-comparison Repeat purchase 0.585 involvement Attitudinal loyalty 0.000 Word-of-mouth loyalty 0.452 Self-image involvement Repeat purchase 0.138 Attitudinal loyalty 0.024 Word-of-mouth loyalty 0.822 Need-for-recognition Repeat purchase 0.001 involvement Attitudinal loyalty 0.000 Word-of-mouth loyalty 0.010 Purpose of travel Repeat purchase 0.396 Attitudinal loyalty 0.054 Word-of-mouth loyalty 0.195 Risk-reduction involvement 0.501 Price involvement 0.002 Self-image involvement 0.159 Need-for-recognition 0.347 involvement Gender Repeat purchase 0.850 Attitudinal loyalty 0.475 Word-of-mouth loyalty 0.287 Risk-reduction involvement 0.018 Price involvement 0.629 Self-image involvement 0.916 Need-for-recognition 0.269 involvement Age Repeat purchase 0.317 Attitudinal loyalty 0.002

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Word-of-mouth loyalty 0.174 Risk-reduction involvement 0.937 Price-comparison involvement 0.279 Self-image involvement 0.027 Need-for-recognition 0.000 involvement Income Repeat purchase 0.956 Attitudinal loyalty 0.666 Word-of-mouth loyalty 0.195 Risk-reduction involvement 0.225 Price-comparison involvement 0.021 Self-image involvement 0.850 Need-for-recognition 0.252 involvement Education Repeat purchase 0.863 Attitudinal loyalty 0.158 Word-of-mouth loyalty 0.013 Risk-reduction involvement 0.964 Price-comparison involvement 0.823 Self-image involvement 0.035 Need-for-recognition 0.772 involvement Note: Significance relationships are shown in boldface. RELATED ARTICLE: Scale items. Overall Satisfaction X1. Overall, how satisfied are you with the hotel? Satisfaction This section pertains to how satisfied/dissatisfied you are with the various aspects of the hotel. X2. The friendliness of the hotel employees X3. How well the staff/managers know me X4. How well the hotel listens to my needs X5. The convenience and service of the reservation system (a) X6. The timeliness of the hotel staff in dealing with me as a guest in busy times (a) X7. The room rate X8. The price of other services (e.g., room service, dry cleaning) X9. The location of the hotel to other businesses or attractions X10. How easily accessible the hotel is from airports and major highways X11. The ambience in the hotel (interior design/decor) (a) X12. The amenities offered in the guest room X13. The amenities offered in other parts of the hotel X14. The quality of service offered by the hotel Repeat Purchase X15. When staying in [name of city], do you routinely stay at the [name of hotel]? Loyalty

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Please indicate how strongly you agree or disagree with each of the statements presented below. X16. I consider myself to be a loyal guest of the hotel. (b) X17. If the hotel were to raise the price of my stay, I would still continue to be a guest of the hotel. X18. If a competing hotel were to offer a better rate or discount on their services I would switch. (R) X19. In the near future, I intend to use this hotel more often. (b) X20. As long as I travel to this area, I do not foresee myself switching to a different hotel. X21. I would highly recommend the hotel to my friends and family. X22. I am likely to make negative comments about the hotel to my friends and family. (R) Involvement Please indicate how strongly you agree or disagree with each of the statements presented below. X23. The relationship that I share with the [hotel name] is something that is very important to me. (b) X24. The relationship that I share with the [hotel name] is something that deserves my maximum effort to maintain. (b) X25. I am very cautious in trying new/different products. (b) X26. I would rather stick with a brand that I know than try something that I am not very sure of. (b) X27. I enjoy taking chances in buying unfamiliar brands just to get some variety in my purchases. (b) (R) X28. I constantly compare the prices and rates offered by various hotels in the area. X29. The brand image of the hotel played a major role in my decision to become a guest at the hotel. X30. I called various other hotels in the area before I decided to stay at this hotel. X31. I compared the prices and rates of several hotels in this area before I selected this hotel. X32. The frequent-guest program influences my choice in hotels. (a) X33. Choosing a hotel is an important decision for me. (b) X34. All hotels are alike in the type and quality of services they offer. (b) (R) X35. The hotel I stay at says a lot about who I am. X36. It is important for me to choose a hotel that "feels" right. X37. After deciding on the [hotel name], I have compared this hotel with other hotels in the area. X38. After deciding on the [hotel name], I have weighed the pros and cons of my choice. X39. A bad choice in selecting a hotel could bring you grief. (b) Note: (R) = item reverse scored. (a.) Item added to scale. (b.) Item originally appeared on Ganesh, Arnold, and Reynolds questionnaire but was not used in their study. Iselin Skogland is a graduate of the Cornell University School of Hotel Administration, where Judy A. Siguaw, DBA, is J. Thomas Clark Professor of Entrepreneurship and Personal Enterprise (jas92@cornell.edu). COPYRIGHT 2004 Cornell University Reproduced with permission of the copyright holder. Further reproduction or distribution is prohibited without permission. Copyright 2004, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company. NOTE: All illustrations and photos have been removed from this article.

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