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Customer satisfaction, customer retention, and customer partnerships

Purdue University
Publication Date
  • Business Administration
  • Marketing|Business Administration
  • Management|Economics
  • Commerce-Business


The purpose of this dissertation is to further our understanding of the impact of a variety of customer retention strategies on customers' satisfaction as well as repeat purchase behavior as well as on the profitability of retention-oriented business service firms. The dissertation consists of three essays. In the first essay we investigate the impact of waiting time guarantees on customers' waiting experiences. To this end, we develop a utility theory-based model of customers' satisfaction with waiting. We derive a set of hypotheses pertaining to the impact of the expected waiting time, perceived waiting time, queue length, and time guarantees on customers' satisfaction with waiting, both during as well as at the end of a wait. We empirically test these hypotheses using data from a set of computer-based experiments.^ In the second essay, we develop a multi-attribute model of business customers' overall satisfaction with an existing supplier and a reference-dependent model of their intention to repurchase from it. Our objective is to examine the antecedents of customers' overall satisfaction with an existing supplier and how and why the performance criteria that influence their overall satisfaction differ from those that influence their repurchase intent. We calibrate our models using data collected from the customers of a leading supplier of high technology products and services. Our findings reveal that customers' overall satisfaction depends on the supplier's performance on four key performance criteria. However, customers' repurchase intent is based on their assessment of the expected value of repurchasing from the supplier vis-a-vis a referent competitive supplier.^ In the third essay, we examine whether developing long-term relationships with select customers is a profitable strategy for business service firms. We use data from the Compustat and the Compact Disclosure databases to examine whether relationship-oriented service firms perform better over time than their transaction-oriented counterparts. Our results reveal that, whereas long-term relationships do not result in cost savings for business service firms, they do help improve returns on investment by enabling relational service firms to resist price pressures and retain their gross margins. ^

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