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Service Equity, Satisfaction, and Loyalty: From Transaction-Specific to Cumulative Evaluations

Norwegian School of Management BI

Michael D. Johnson

University of Michigan Business School

Perceived equity is a key psychological reaction to the value that a service company provides. Yet equity research has focused on a customer’s satisfaction with relatively well-defined service episodes or transactions. The authors argue and show that equity plays a very different role in affecting customer loyalty as one moves from transaction-specific to cumulative evaluations. Whereas equity is an important driver of transaction-specific satisfaction, equity is more of a postsatisfaction evaluation when modeling cumulative satisfaction. The research also demonstrates the superiority of cumulative evaluations toward explaining service loyalty and providing a balanced view of loyalty drivers. The results have important implications for how equity, satisfaction, and loyalty are modeled and managed in a service context.

Key Words: perceived equity • customer satisfaction • loyalty modeling

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