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Discussion - Indirect Financial Benefits from Service Quality

Summary: Peter Danaher and Roland Rust have presented a very interesting article on a difficult topic. As they point out, there is an important gap in the literature, a gap that perhaps exists because the topic is difficult. The approach taken in their article based on a new market with essentially no repeat sales (due to the long service contracts offered) appears to be a unique and innovative approach for isolating effects on new customer attraction. The results are interesting in that they appear to provide empirical support for the hypotheses that: (1) customer likeliness to recommend affects future new customer attraction; (2) overall service quality affects both likeliness to recommend and usage rates; (3) while advertising affects new customer attraction, it does not affect likeliness to recommend or usage rates. All of these are important propositions that are consistent with the idea that quality is an important driver of market performance. While these propositions may seem obvious to practitioners already committed to quality, developing plausible, empirical evidence that they are true is both challenging and important.

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  • Topics: Customer Satisfaction and Value
  • Keywords: Advertising,Customers,Customer retention,Word of mouth,Marketing
  • Author: Easton, George S.; Sullivan, Mary W.
  • Journal: Quality Management Journal