Understanding the antecedents to customer loyalty by applying structural equation modeling

Abstract

The purpose of this study is to employ structural equation modeling to find linear structural relationships related to customer satisfaction. Analysis of 495 car owners patronizing five automobile service and repair centers operated by Taiwan`s three major car companies (Nissan, Toyota, and Mitsubishi), produced the following empirical results: customers` perceptions of price fairness, the level of employee-customer interaction, and customers` perceptions of product quality all have the direct, positive impact on customer satisfaction. The authors identified and examined three dimensions of perceived service quality that positively affect customers` trust levels. These three are tangibility, employee-customer interaction, and employee empathy. Customers` perceptions of price fairness and product quality, as well as customer satisfaction and trust are all positively related to customer loyalty. Customer satisfaction can also affect customer loyalty by helping customers create trust. In light of these empirical findings, this study also includes a discussion of possible implications for managers.