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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.
INTRODUCTION
Customer satisfaction has traditionally been regarded as a fundamental determinant of long-term customer behaviour.1 The more satisfied the customers are, the greater is their retention,2 the positive word of mouth (WOM)3 (also referred to in the literature as advocacy), and ultimately, the financial benefits to the firms who serve them.4 It is no surprise, therefore, that firms seek to increase customer satisfaction. Satisfaction alone, however, does not ensure continued service patronage.5 While satisfaction may be one important driver, trust is also likely to influence retention and WOM, both independently and in tandem. This paper incorporates into models of retention and WOM, the influence of trust in addition to the traditional emphasis on satisfaction. In the process, hitherto neglected effects are uncovered and some valuable insights into means of building loyal customers are provided.
Meta analysis studies on satisfaction6 and trust7 show that while satisfaction and trust are closely related, they are conceptually different. Further, some argue that trust is a stronger emotion than satisfaction and that it may therefore better predict retention and WOM behaviour.8 Nevertheless, little is known regarding the relative explanatory power of these two constructs. By studying the effects of trust and satisfaction together, the authors seek to shed more light on their relative importance in influencing retention and WOM. Doing so is particularly relevant in the highly competitive business environment...