Examining the role of customer value, customer satisfaction, and perceived switching costs: A model of repurchase intention for business-to-business services

It has been argued that customer retention is the most vital goal for company success (Jones and Sasser 1995). Research on customer retention shows that the quality of market share, measured by customer loyalty, is more vital to company's profitability than their quantity of market share (Reichheld and Sasser 1990). Therefore, understanding customer repurchase intentions is of vital importance.; Applying the investment model (Rusbult l980a; 1980b; Barksdale, Johnson and Suh 1997; Suh 1994), three factors can be identified as key antecedents to customer repurchase intentions; these are customer value, customer satisfaction and perceived switching costs. Traditionally, marketing literature has viewed customer satisfaction as the most important factor leading to repurchase intent (Oliver 1980; Bearden and Teel 1983). However, recent studies show that customer satisfaction is a necessary, but not sufficient condition (Barksdale, Johnson and Suh 1997; Reichheld 1996; Jones and Sasser 1995; Suh 1994). Like satisfaction, customer value has been touted as the central issue driving the customer repurchase decision (Reichheld 1996; Woodruff and Gardial 1996; Woodruff 1997). However, the theoretical conceptualization of customer value has not received adequate attention in the literature, and the measurement of customer value has not been rigorously examined. Furthermore, channel research concerning business customers' switching costs suggests that the higher the perceived costs of switching to another supplier, the less likely a business customer will switch to another supplier (e.g., Ping 1993; Heide and John 1988).; The purpose of this dissertation is to theoretically develop the concept of customer value and to test a theoretical framework that attempts to explain how a business-to-business customer's value perceptions influence repurchase intent. First, measurements of "share of business" repurchase intent as well as customer value are developed. A scale for repurchase intent is needed because many business-to-business customers tend to have multiple suppliers and tend to switch "share-of-business" among suppliers (Jackson 1985). Therefore, traditional measures of repurchase intention that only assess the "stay-or-leave" decision fail to capture the change in share given to a current supplier, and may be inappropriate in measuring repurchase intention in industries characterized by multiple sourcing.; Findings from testing the theoretical model support all a priori hypotheses. They provide evidence that: (1) the higher an industrial service customer's perception of the value provided by a supplier, the higher the repurchase intent; (2) the higher the perception of value, the higher the level of customer satisfaction; (3) the more satisfied the customer is with the supplier, the greater the repurchase intention; and (4) the higher a customer's perception of the costs associated with switching to another supplier, the higher the repurchase intention.; Thus, this dissertation contributes to the field of Marketing by conceptualizing customer value for industrial services as having three dimensions, by developing scales to measure these dimensions of customer value, and by developing the concept of repurchase intention in multiple sourcing business environments. In addition, it provides evidence for a model of repurchase intent that indicates that service suppliers should attempt to manage a customer's satisfaction, perceptions of value, and perceived switching costs as all three are related to a customer's intention to repurchase.