A cost/benefit approach to understanding service loyalty

Examines determinants of service loyalty under the assumption that consumers perform a cost/benefit analysis when deciding whether or not they want to be “regular customers”. It develops potential determinants of service loyalty based on the service quality, transaction cost, and switching cost literature, and estimates their relative influences with survey data from customers currently using banks and travel agencies. The results indicate that, in addition to service quality perceptions, transaction/switching cost factors have a significant impact on service loyalty. Implications of the results are discussed.