Reports

Do Satisfied Customers Always Buy More? The Roles of Satiation and Habituation in Customer Repurchase

Glenn B. Voss, Andrea Godfrey, and Kathleen Seiders, 2010, 10-101

Companies across a wide range of industries focus on customer satisfaction to achieve their business objectives, such as increased revenue, profitability, and customer share. However, some evidence suggests that satisfaction has no effect on customer repurchasing in certain scenarios. For marketers the question is, What other factors influence repurchase levels, or moderate the relationship between satisfaction and repurchase? Marketing research offers little guidance on the topic.

In this study, authors Voss, Godfrey, and Seiders develop a framework for understanding the relationship between customer satisfaction, moderating variables, and repurchase levels. Their findings offer new theoretical insights and provide substantive guidance for managers to enable them to effectively allocate resources to initiatives that complement or substitute for customer satisfaction and thereby increase repurchase.

To begin, the authors posit that the links between customer satisfaction and repurchase levels are subject to complementary and substitution effects. The managerial implications of each are radically different. The presence of complementary effects suggests that repurchase rates can be maximized by investing in customer satisfaction and the complement simultaneously. The presence of substitution effects suggests that repurchase rates can be maximized by investing in either customer satisfaction or the substitute.

What determines the emergence of complementary or substitution effects? The authors suggest that satiation and habituation are the key underlying mechanisms. Specifically, complementary effects are more likely when the satiation effects are weak (when demand for the purchase category increases as income increases). Conversely, substitution effects are more likely when satiation effects are strong (when relative demand for the purchase category decreases as income increases) and when customers become habituated to the purchase behavior. They test their hypotheses using survey and longitudinal purchase data from two categories, fashion apparel and automobile services.

Their test provides strong support for their hypotheses. In the fashion apparel purchase category (where satiation effects are weak), six customer, relational, and marketplace characteristics exert complementary effects on repurchase. In the automobile service purchase category (where satiation effects are high and habituation occurs), involvement, income, relationship-building programs, and convenience exert substitution effects on the satisfaction–repurchase relationship.

Managerial implications

These findings offer managers a practical path to assessing whether investing in customer satisfaction initiatives will be more or less productive.

In weak-satiation purchase categories, such as fashion apparel, restaurants, entertainment, and other luxury goods categories, even the most satisfied customer can be induced to increase repurchase rates through marketing initiatives that complement customer satisfaction.

Simultaneously maximizing customer satisfaction and leveraging other types of initiatives (i.e., focused on customer, relational, or marketplace characteristics) and product complementary effects increase both the size and share of the customer’s wallet.

Managers can take a broader, multifaceted approach to marketing investments and initiatives designed not only to target highly involved customers but also to increase involvement among all customers, since the positive effect of satisfaction increases with involvement.

In strong-satiation purchase categories—essential, utilitarian, and commodity product categories such as telecommunications, insurance, financial service, automobile services, and fuel—customer wants and needs are satisfied quickly. Repurchase rates can be maximized by allocating resources to either satisfaction or the substitute, but investing simultaneously in both might waste resources and lower customer profitability.

Further, managers might want to avoid increasing involvement in strong-satiation categories, since lack of involvement leads to customer habituation—and higher repurchase—among moderately satisfied customers.

Thus, the optimal strategy may be to generate moderate levels of satisfaction combined with a focused assortment of substitution initiatives to maximize customer repurchase and profitability. For example, many auto maintenance and dry cleaners offer moderate levels of customer satisfaction, target low-involvement and moderate- to high-income customers with personalized communications, and rely on convenience (locational or delivery services) to drive repurchase.

Glenn B. Voss is Associate Professor of Marketing, Southern Methodist University. Andrea Godfrey is Assistant Professor of Marketing, University of California, Riverside. Kathleen Seiders is Associate Professor of Marketing, Boston College

Acknowledgments

The three authors contributed equally. The authors wish to thank their research partners for providing access to their data; the Boston College (Carroll School of Management) Dean’s Research Fund; the University of California, Riverside, Regent’s Faculty Fellowship; Dhruv Grewal for his valuable insights in developing the survey instrument; and Rex Du and Wagner Kamakura for providing access to their household consumption data.

Related links

Do Satisfied Customers Always Buy More? (2010) [Article]

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