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Customer Loyalty

Customer Loyalty

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© 2004 CORNELL UNIVERSITY DOI: 10.

1177/0010880404265231 Volume 45, Issue 3 221-234

ARTICLE
10.1177/0010880404265231

Are Your Satisfied Customers Loyal?
ing in 25 to 50 percent reduction in corporate perfor1 mance. 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 customerretention 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 lim-

by ISELIN SKOGLAND and JUDY A. SIGUAW 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

C

ustomer-defection rates are high for businesses today. U.S. corporations routinely lose half their customers over a span of five years result-

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ited 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 8 • involvement is a determinant of loyalty; 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.

portant, a firm’s profitability. Prior research has shown that satisfied customers exhibit reduced price sensitivity and increase the customer base through positive 12 word of mouth. 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 confirmationdisconfirmation paradigm and comparisonlevel theory.16 Confirmation-disconfirmation theory. Customer satisfaction is defined as a postpurchase evaluative judgment concerning 17 a specific buying decision. 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

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 11 valuable customer group.” Satisfaction with a product or service offered has been identified as a key determinant for loyalty and, perhaps more im-

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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 22 levels of expectations. 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. 2 6 Conse-

quently, 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 recalled29 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 alternatives31 as a mechanism for reducing the risk of making a poor pur32 chase decision in the future. 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

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consistent with prior studies, which noted that high involvement resulted in brand commitment when the consumer was satisfied with product performance.34

Customer satisfaction—usually considered the brass ring of hospitality management—does not guarantee that customers will return.
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.

switching behaviour.” 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.
38

Research Method

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

For this examination of satisfaction, involvement, and loyalty, we contacted two hotels located in a major midwestern city in the United States. Both 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,

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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 selfadministered 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 Likerttype 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

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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. X3. X4. X5. X6. X7. X8. X9. X10. X11. X12. X13. X14. The friendliness of the hotel employees How well the staff/managers know me How well the hotel listens to my needs a The convenience and service of the reservation system The timeliness of the hotel staff in dealing with me as a a guest in busy times The room rate The price of other services (e.g., room service, dry cleaning) The location of the hotel to other businesses or attractions How easily accessible the hotel is from airports and major highways a The ambience in the hotel (interior design/decor) The amenities offered in the guest room The amenities offered in other parts of the hotel The quality of service offered by the hotel

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

Repeat Purchase
X15. When staying in [name of city], do you routinely stay at the [name of hotel]?

Loyalty
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. 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) b X19. In the near future, I intend to use this hotel more often. 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)
b

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 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

The Contrary Customer

(continued)

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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 intentions.48 However, hotel guests incur few switching costs. That is, lodging customers do not generally encounter procedural, financial, or

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 b something that is very important to me. X24. The relationship that I share with the [hotel name] is b something that deserves my maximum effort to maintain. b X25. I am very cautious in trying new/different products. X26. I would rather stick with a brand that I know than try b something that I am not very sure of. X27 I enjoy taking chances in buying unfamiliar brands just to get . b some variety in my purchases. (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. a X32. The frequent-guest program influences my choice in hotels. b X33. Choosing a hotel is an important decision for me. X34. All hotels are alike in the type and quality of services they b offer. (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. b X39. A bad choice in selecting a hotel could bring you grief.
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.

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,

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Exhibit 1: Relationship between Overall Satisfaction and Repeat-purchase Behavior

ROUTSTAY Overall
Very dissatisfied Dissatisfied Neutral Satisfied Very satisfied Total

No
3 12 16 128 65 224

Yes
2 1 5 78 52 138

Total
5 13 21 206 117 362

Exhibit 2: Regression Results

Source Variable
Overall satisfaction

Dependent Variable
Repeat purchase Attitudinal loyalty Word-of-mouth loyalty Risk-reduction involvement Price-comparison involvement Self-image involvement Need-for-recognition involvement Repeat purchase Attitudinal loyalty Word-of-mouth loyalty Risk-reduction involvement Price-comparison involvement Self-image involvement Need-for-recognition involvement Repeat purchase Attitudinal loyalty Word-of-mouth loyalty Risk-reduction involvement Price-comparison involvement Self-image involvement Need-for-recognition involvement Repeat purchase Attitudinal loyalty Word-of-mouth loyalty Repeat purchase Attitudinal loyalty Word-of-mouth loyalty

Mean Square
0.193 0.143 0.708 0.151 0.202 0.229 0.718 0.132 0.282 0.303 1.170 1.384 0.939 1.115 0.322 0.591 0.986 0.648 0.744 0.649 0.704 0.166 1.154 0.607 0.221 1.781 0.658

F value Significance
0.743 0.309 2.121 0.149 0.316 0.461 1.180 0.508 0.608 0.903 1.152 2.163 1.889 1.832 1.239 1.274 2.956 0.638 1.162 1.305 1.157 0.708 2.051 0.927 0.902 3.620 1.009 0.528 0.819 0.099 0.930 0.814 0.710 0.319 0.896 0.820 0.534 0.324 0.018 0.044 0.052 0.265 0.243 0.001 0.794 0.317 0.225 0.321 0.884 0.041 0.494 0.585 0.000 0.452
(continued)

Satisfaction with people

Satisfaction with ambience

Risk-reduction involvement Price-comparison involvement

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Exhibit 2 (Continued)

Source Variable
Self-image involvement Need-for-recognition involvement Purpose of travel

Dependent Variable
Repeat purchase Attitudinal loyalty Word-of-mouth loyalty Repeat purchase Attitudinal loyalty Word-of-mouth loyalty Repeat purchase Attitudinal loyalty Word-of-mouth loyalty Risk-reduction involvement Price involvement Self-image involvement Need-for-recognition involvement Repeat purchase Attitudinal loyalty Word-of-mouth loyalty Risk-reduction involvement Price involvement Self-image involvement Need-for-recognition involvement Repeat purchase Attitudinal loyalty Word-of-mouth loyalty Risk-reduction involvement Price-comparison involvement Self-image involvement Need-for-recognition involvement Repeat purchase Attitudinal loyalty Word-of-mouth loyalty Risk-reduction involvement Price-comparison involvement Self-image involvement Need-for-recognition involvement Repeat purchase Attitudinal loyalty Word-of-mouth loyalty Risk-reduction involvement Price-comparison involvement Self-image involvement Need-for-recognition involvement

Mean Square
0.333 1.110 0.408 0.754 3.074 1.617 0.188 1.751 0.564 0.462 6.119 0.992 0.541 0.009 0.238 0.380 5.755 0.150 0.006 0.750 0.262 4.643 0.621 0.006 0.756 2.485 10.005 0.001 0.087 0.565 1.507 3.476 0.018 0.806 0.008 0.934 2.120 0.002 0.032 2.236 0.051

F value Significance
1.463 2.005 0.624 3.466 6.220 2.593 0.722 3.778 1.690 0.456 9.563 1.997 0.889 0.036 0.513 1.139 5.669 0.234 0.011 1.232 1.008 10.016 1.863 0.006 1.180 5.001 16.440 0.003 0.l87 1.692 1.484 5.433 0.036 1.324 0.030 2.015 6.356 0.002 0.050 4.500 0.084 0.138 0.024 0.822 0.001 0.000 0.010 0.396 0.054 0.195 0.501 0.002 0.159 0.347 0.850 0.475 0.287 0.018 0.629 0.916 0.269 0.317 0.002 0.174 0.937 0.279 0.027 0.000 0.956 0.666 0.195 0.225 0.021 0.850 0.252 0.863 0.158 0.013 0.964 0.823 0.035 0.772

Gender

Age

Income

Education

Note: Significant relationships are shown in boldface.

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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 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 com-

parisons, 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, selfimage, 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 selfimage involvement and word-of-mouth loyalty.

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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. 75– 83; 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.”

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Ganesh, Arnold, and Reynolds, “Understanding the Customer Base.” Jones, Mothersbaugh, and Beatty, “Switching Barriers.” 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. 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. 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 Dubé, 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.”

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).

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