Heterogeneity in the satisfaction-retention relationship - A finite-mixture approach

Abstract

Despite the claim that satisfaction ratings are linked to actual repurchase behavior, the number of studies that actually relate satisfaction ratings to actual repurchase behavior is limited (Mittal and Kamakura 2001). Furthermore, in those studies that investigate the satisfaction-retention link customers have repeatedly been shown to defect even though they state to be highly satisfied. In a dramatic illustration of the problem Reichheld (1996) reports that while around 90% of industry customers report to be satisfied or even very satisfied, only between 30% to 40% actually repurchase. In this contribution, the relationship between satisfaction and retention was examined using a sample of 1493 business clients in the market of light transporters of a major European market. To examine heterogeneity in the satisfactionrelationship, a finite-mixture approach was chosen to model a mixed logistic regression. The subgroups found by the algorithm do differ with respect to the relationship between satisfaction and loyalty, as well as with respect to the exogenous variables. The resulting model allows us to shed more light on the role of the numerous moderating and interacting variables on the satisfaction-loyalty link in a business-to-business context.