What Will Last: Long-run Differences between Customer Satisfaction and Customer Company Identification

Jan Wieseke, University of Bochum Mario Rese, ESMT Berlin & University of Bochum Benjamin Quaiser, FOM Berlin & University of Bochum Till Haumann, University of Bochum

SUMMARY

Awareness of how to strengthen relationships with customers is crucial for firms financial success. In pursuit of this understanding, several researchers have investigated the link between customer metrics and market performance indicators like customer loyalty and the willingness to pay a price premium. We seek to strengthen this link by examining how customer satisfaction (CS) and customercompany identification (CCI) could lead to loyalty and a higher willingness to pay (WTP) and thereby be positive antecedents of a firms financial performance, even in the long run. For some time, CS has been recognized as an important antecedent of customer behaviors and financial performance. A number of empirical studies have demonstrated that CS has a positive influence on WTP (Anderson 1996), word of mouth (Brown et al. 2005), loyalty (Fornell et al. 1996), share of wallet (Cooil et al. 2007), shareholder value (Grewal, Chandrashekaran, and Citrin 2010), and other important financial outcomes (Luo and Homburg 2007). However, if firms focus mainly on increasing or maintaining the satisfaction levels of new and existing customers, costs increase. Also, meeting or exceeding constantly increasing customer expectations becomes difficult (Rust and Oliver 2000), and keeping a growing, heterogeneous customer portfolio satisfied is tricky (Grewal, Chandrashekaran, and Citrin 2010).

In light of these challenges, CCI seems to offer a way to strengthen the financial performance of a firm by generating more loyal customers who pay higher prices. CCI has shown a strong impact on WTP (Homburg, Wieseke, and Hoyer 2009), loyalty (Ahearne, Bhattacharya, and Gruen 2005), and store performance (Lichtenstein, Netemeyer, and Maxham III 2010), which underscores the usefulness of CCI as a means of enhancing financial performance. Researchers widely accept the changeable nature of both CS (Bolton and Lemon 1999; Homburg, Koschate, and Hoyer 2006; Oliver 1980) and CCI (Bhattacharya and Sen 2003; Einwiller et al. 2006; Mael and Ashforth 1992). Although investigators have tested CS for this facet several times (Cooil et al. 2007; Luo, Homburg, and Wieseke 2010), to our knowledge only one study has examined CCI with a longitudinal view (Lam et al. 2010). We address this research gap through a longitudinal data collection of individually recorded satisfaction and identification levels of 517 airline customers, gathered at four measurement points. Using a latent growth modeling approach, we show that both CS and CCI exert a shortterm effect on loyalty and WTP. Further, our investigation demonstrates that the effect of CS significantly decreases over time, whereas the effect of CCI remains stable. Our findings make an important contribution to the ongoing research objective of finding additional explanatory power beyond the positive impact of CS on certain customer behaviors. In addition, from a practical standpoint, the study provides managers with arguments for initiating marketing actions that not only deliver satisfying products and services but also build differentiated brand or company identities.