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On the relative importance of customer satisfaction and trust as determinants of customer retention and positive word of mouth

  • Chatura Ranaweera
  • Jaideep Prabhu
Paper

Abstract

This study examines the combined effects of customer satisfaction and trust on customer retention and positive word of mouth (WOM). Data from a large-scale survey of fixed line telephone users in the UK confirm that both satisfaction and trust have strong positive associations with customer retention and WOM. Contrary to some assertions in the literature, however, the authors find that the linear effect of satisfaction on retention is much stronger than that of trust. As a driver of WOM, however, trust is only marginally weaker than satisfaction. Furthermore, quantitative analysis, supported by qualitative evidence from the survey, suggests that even a satisfying service recovery process might still be inadequate to prevent loss of trust. Results illustrate, a) the need for firms to develop strategies that focus on building both satisfaction and trust, and b) that 'satisfactory' service recovery may not be the panacea for all service failures.

Copyright information

© Palgrave Macmillan 2003

Authors and Affiliations

  1. 1.School of Business, Wilfrid Laurier UniversityWaterlooCanada

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