The paradox of credence services how does service type affect loyalty?

Loyalty is a goal of any company aiming to be successful in the market. While it is expected that good quality would lead to satisfaction which in turn would result in loyalty, this relationship has not been so simple. Repeated research in this area has come up with contradictory results. Satisfaction measurement has not been a consistent predictor of loyalty, neither has quality. As a result, companies interested in increasing their loyal customer base face the dilemma of deciding if they can expect to see any benefits from improving quality.The purpose of this study is to better explain the relationship between quality, satisfaction and loyalty by including service type in the model. Service type classifies different services on the basis of ease of evaluation. The study looks at the impact of service type on the different relationships in the model, namely, quality to satisfaction, satisfaction to loyalty and quality to loyalty. Next, the mediating effect of satisfaction between quality and loyalty is examined. Finally, the study proposes that service type moderates the mediation effect of satisfaction between quality and loyalty.This study examined perceptions of quality, satisfaction and loyalty in consumers of three different services. These services were selected to represent each of the service types: search, experience and credence.The results provided strong support for the conceptual framework. Service type was found to moderate the relationships between quality and loyalty, satisfaction and loyalty but not between quality and satisfaction. The mediation effect of satisfaction was indeed moderated by service type. In credence services, as compared to other services, the relationship between satisfaction and loyalty as well as quality and loyalty was strongest. This is surprising since it has been believed that improving quality in credence services does not bring any benefits. However this research shows that while consumers may have difficulty evaluating credence services, once they have made a judgment about its quality, they can be the most loyal customers.