The dynamics of satisfaction and loyalty after relational transgressions

Purpose – This study aims to investigate how customer satisfaction and loyalty evolve during the initial years of a business services relationship. In addition to assessing the potential for dynamic effects, models explore how relational transgressions such as very poor sales and implementation experiences might moderate customer satisfaction dynamics and the relationship trajectory. Design/methodology/approach – Analyses utilize structural equation modeling on longitudinal data obtained over a three‐year period from customers contracting with a global provider for IT services. Findings – Results reveal significant dynamic effects for satisfaction across two successive time periods but not for loyalty intentions, suggesting prime importance for finding ways to continually satisfy customers. Customers' initial sales and implementation experiences negatively moderated the dynamic effects of satisfaction from time 1 to time 2, but not for time 2 to time 3. This result indicates that customers who experience relational transgressions strongly update their perceptions with new information in early phases of the relationship, but subsequently, customers anchor future evaluations using their existing perceptions. Originality/value – Whereas a growing amount of work explores how satisfaction and loyalty evolve for consumers, there is very little empirical knowledge to help managers understand how business customers' evaluations shift or follow certain trajectories based on initial relationship experiences. This study aims to address this important gap and finds evidence that customers do rely on their satisfaction perceptions from previous periods and, given time, can move beyond past relational transgressions when they evaluate their providers.