beyond loyalty: customer satisfaction, loyalty, and fortitude

Beyond loyalty: customer satisfaction, loyalty,and fortitude

Martin Fraering

Schroeder Family School of Business Administration, University of Evansville, Evansville, Indiana, USA, and

Michael S. MinorCollege of Business, University of Texas-Pan American, Edinburg, Texas, USA

AbstractPurpose – This paper aims to discuss the first effort to examine the relationships between satisfaction, the four loyalty phases, fortitude, and a senseof virtual community.Design/methodology/approach – Oliver proposed an innovative framework to explain the relationships between satisfaction, loyalty, fortitude, anda sense of community.Findings – Analysis of questionnaire responses of 493 customers of banks and credit unions indicated that satisfaction, cognitive, affective, conative,and action loyalty are positively related to fortitude.Research limitations/implications – The Beyond Loyalty Model (BLM) does not address important strategic issues often associated with loyalty,such as firm profitability, complaint resolution, and firm profitability.Practical implications – This research is the first to find that customers of financial institutions acquire satisfaction and strong loyalty ties with theirbank or credit union after dealing with their financial services provider for a relatively short period of time. Thus financial institutions should consistentlyseek relationship-building opportunities from the outset of their relationships with their customers.Originality/value – The resulting Beyond Loyalty Model (BLM) improves upon the American Bankers Association’s ABA Financial Client SatisfactionIndex, and is a means by which financial institutions can monitor and enhance the satisfaction, loyalty, and fortitude of the customers of financialinstitutions. Further, the increasing acceptance of virtual banking calls for additional study of this area.

Keywords Loyalty, Fortitude, Virtual community, Satisfaction, Bank marketing, Financial services marketing, Customer loyalty, Customer satisfaction

Paper type Research paper

An executive summary for managers and executivereaders can be found at the end of this article.

1. Introduction

Highly satisfied customers regularly defect to the competition(Kapferer, 2005; Mittal and Lasser, 1998), in part due to aworld-wide declining trend in customer loyalty. Thephenomenon of satisfied but disloyal customers hasprompted trade journals for the banking (Oechsli, 2002),pulp and paper (Perkowski, 2003), and health care (Huff,2007) industries to emphasize the relatively greaterimportance of customer loyalty vis-a-vis satisfaction. Suchsentiments echo assertions made by Oliver (1999) that theonly customers that matter are those who are loyal.

1.1 Four forms of loyaltyThe implications of customer loyalty go far beyond customerretention (Motley, 2002). Increasing market share meanspersuading competitors’ customers with weak loyalty-basedopinions and beliefs to defect, as well as enhancing the loyalty

of one’s own customers to retain them (Tyler, 2002).Consistent with these efforts by practitioners is the notionthat loyalty formation is an evolutionary process in whichlogical (cognitive loyalty) reasons for ongoing patronage giveway to emotional (affective loyalty) associations between thecustomer and the product, followed by a commitment to re-buy a product (evidencing conative loyalty), and mayeventually result in ongoing repurchase even when action(loyalty) is necessary to overcome obstacles (Oliver, 1997).Research has confirmed this notion of four ascending

loyalty forms in a number of ways. The links between variouscombinations of portions of the four-phase loyalty frameworkhave been explored. For instance, Methlie and Nysveen(1999) studied the effects of satisfaction (and other exogenousconstructs) on affective and conative loyalty. Another efforttested cognitive perceptions of service quality, affectiveaspects of satisfaction, and conative loyalty responses(Chiou et al., 2002). The effects of self-esteem on conativeloyalty were tested by Trail et al. (2005). Relationshipsbetween customer satisfaction and action loyalty, and actionloyalty and profitability were explored by Helgesen (2006).Studies of cognitive, affective, conative, and action loyaltyhave been conducted by Sivadas and Baker-Prewitt (2000),McMullan and Gilmore (2003), Harris and Goode (2004),Samong and Omar (2004), and Evanschitzky and Wunderlich(2006). Very similar work was conducted by Kwon et al.

The current issue and full text archive of this journal is available at

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Journal of Services Marketing

27/4 (2013) 334–344

q Emerald Group Publishing Limited [ISSN 0887-6045]

[DOI 10.1108/08876041311330807]

Received: 23 November 2011Accepted: 12 January 2012

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(2005), who explored cognitive, affective, conative, andbehavioral loyalty.

1.2 FortitudeIn spite of the robust nature of action loyalty, customers aresubject to information about competing products, and at leasta trace of vulnerability to brand switching remains (Oliver,1999). Oliver believes that some consumers acquire themental toughness and confidence in a branded productrequired to reject or ignore the marketing appeals ofalternative products. These customers have acquired thefortitude to reject such appeals, which suggests that theconsumer has gone beyond loyalty to the point of a love-likeattachment to the product.Likewise there are products that are consumed in the

company of the firm’s other customers. These encounters takeplace both via the internet (Fraering and Minor, 2006) and inperson (Oliver, 1999). Close friendships can form betweenservice providers and customers (Goodwin, 2000), as well asamong customers (Schouten and McAlexander, 1995). Thesesocial ties between the firm’s personnel, its customers, and thefirm’s products can result in a relationship with customersbased on camaraderie (Oliver, 1999) that goes well beyondloyalty. Thus, unlike action-loyal customers, those who haveacquired fortitude and/or a sense of community are unlikely todesert their favorite brand because they have proactively ruledout competitive alternatives.Noticeably absent is a study of the customers of financial

institutions that includes devotion to a brand that transcendsloyalty, that is, no study examines fortitude and a sense ofcommunity. To date no study has been conducted to examinethe relationship between these notions and loyalty. This paperformulates and tests a model of the relationships betweensatisfaction, the four incrementally stronger phases ofconsumer loyalty (cognitive, affective, conative, and action),the innovative fortitude, and a sense of virtual community istested in recognition of the vital role of e-marketing in thecorporate strategy of financial institutions.

2. Conceptual development

The study of consumer loyalty appears to be a product of thestudy of customer satisfaction (Oliver, 1999). Hence tounderstand loyalty one must first explore satisfaction.Following this exploration we turn our attention to thesatisfaction-loyalty relationship, then to an in-depthdiscussion of the four loyalty phases, and finally we discussfortitude and a sense of virtual community.

2.1 Customer satisfactionResearch indicates that satisfaction primarily consists ofcognitive and affective variables. Cognitive measures includedisconfirmation and expectations (Oliver, 1980), as well asperceived performance (Tse and Wilton, 1998). Otherindicators include equity and performance (Oliver andDeSarbo, 1988), “fairness” (Oliver and Swan, 1989),expectancy disconfirmation (Oliver and Burke, 1999), needfulfillment (Oliver, 1995), and price acceptance/willingness topay (Huber et al., 2000). The weakest of these measures isexpectancy disconfirmation (Churchill and Surprenant, 1982;Spreng and Olshavsky, 1993; Spreng and Sonmez, 2000).Efforts to improve the measurement of satisfaction led to

the discovery of affective variables. Positive relationships havealso been found between emotional measures of satisfactionand repurchase intentions (Martin et al., 2008; Chitturi et al.,

2008). As expected, positive affect is positively related tosatisfaction, while negative affect is negatively related tosatisfaction, and both positive and negative affect are relatedto post-purchase word of mouth (Westbrook, 1987).Satisfaction is also positively associated with arousal andpleasure (Ladhari, 2007). Patterns of satisfaction,dissatisfaction, and an unemotional pattern of emotionalexperience have also been identified (Westbrook and Oliver,1991). Also consistent with expectations are positiverelationships between cognitive and affective judgments andsatisfaction (Mano and Oliver, 1993). A conceptual study byBagozzi et al. (1999), however, concluded that it is unlikelythat satisfaction is a basic emotion, but it may be a synonymfor “happy.” Other work argues that satisfaction is an affectiveresponse (Giese and Cote, 1999). Between these twopositions is the assertion that affect lies within a cognitiveframework of satisfaction (Oliver, 1997). A particularlyintense form of satisfaction (delight) has also been observed(Oliver et al., 1997). And a negative relationship has beenfound between the longevity of b-to-b relationships and thepropensity to switch suppliers (Sharma, 2007).

2.2 Consumer loyaltyThe relationship between satisfaction and loyalty has alsobeen tested. Satisfaction has been demonstrated to moderatethe relationship between product performance and loyalty(Selnes, 1993); and satisfaction was found to affect short-term loyalty more than long-term loyalty (Dube and Maute,1998). Loyalty measured in terms of relationship durationwas also found to also be positively related to satisfaction(Alonso, 2000; Garcia del los Salmones et al., 2009; Bolton,1998; Rundle-Thiele, 2005). And a positive relationship hasbeen observed between overall satisfaction and attitudinalloyalty (Bodet, 2008), as well as customer satisfaction andloyalty (Pollack, 2009), congruity and brand loyalty (Sirgyand Lee, 2008), and purchase satisfaction and attitudinalloyalty (Russell-Bennett et al., 2007). Shukla (2009) found apositive relationship between contextual factors and brandloyalty, as well as brand and purchase decisions. Longitudinalresearch has identified true, spurious, latent, and “not” loyaltycategories of beauty salon customers (Bove and Johnson,2009). But at least one effort (Khatibi et al., 2002) did notfind a positive relationship between a high level of satisfactionand loyalty.Studies of customer satisfaction and loyalty of bank

customers have found that satisfaction, market position,service reliability, and efficiency contribute to loyalty(Bloemer et al., 1998); and satisfaction affects consumerloyalty, willingness to pay more for services, and the responseto a service failure (Pont and McQuilken, 2005). A positiverelationship was also found between online customersatisfaction and affective and conative loyalty (Methlie andNysveen, 1999), but yet another effort failed to find arelationship between satisfaction and loyalty (Al-Wugayanet al., 2008).

2.3 Cognition to action loyaltyOliver (1997, 1999) suggests that there are four phases ofloyalty, with each successive stage stronger than itspredecessor. The weakest is cognitive loyalty, which is basedon factual information. Since the repurchase decisions ofcognitive loyalists are logic-based, they are vulnerable to thepersuasive appeals of competitors. The second phase isaffective loyalty. It is stronger than cognitive loyalty for tworeasons: First, the consumer has used a product for a longer

Beyond loyalty: customer satisfaction, loyalty, and fortitude

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period of time, and second, successful consumptionexperiences have resulted in positive attitudes and anemotional attachment to the product. The consumer’sfeelings, however, are vulnerable to the promotional appealsof competing brands. “True” loyalty emerges in the thirdphase, conative loyalty. In this phase repurchase becomes abehavioral intention, similar to the “impulse or compulsion toact” (Bagozzi, 1993). There is also a deeply held desire (ormotivation) to repurchase, yet the consumer remainsvulnerable to a diminution of the impulse or compulsion torepurchase. The ultimate loyalty state is action loyalty, whichrefers to the action control process (Kuhl and Beckman,1985). Action loyal customers have not only the intention, butalso the motivation to repurchase. The consumer is evenprepared to proactively search for the product if it becomesdifficult to find. The devotion of action loyal consumers isthought to be nearly unshakable.Prior studies have tested the various forms of loyalty in a

number of different ways. For instance, Methlie and Nysveen(1999) hypothesized that satisfaction was positively related toboth conative and affective loyalty. Harris and Goode (2004)obtained similar regression equation beta coefficients in twostudies for the sequence of cognitive, affective, and conativeloyalty. The relationship between satisfaction and conativeloyalty reported by Trail et al. (2005) was mediated byconstructs measuring mood and self-esteem. Helgesen (2006)found a weak positive relationship between satisfaction andloyalty, as well as a relatively high satisfaction score to meetthe minimum threshold for action loyalty. A relationshipbetween monetary and service vulnerabilities and cognitive,affective, conative, and action loyalty has also been observed(McMullen, 2005). And Jones and Taylor (2007) found apositive covariance between attitudinal/cognitive andbehavioral loyalty (analogous to conative loyalty).

2.4 Beyond loyaltyOliver (1999) has also proposed constructs that measureunwavering allegiance to a branded product: fortitude and asense of community. Oliver defines fortitude as the extent towhich a consumer ignores, refuses, or fails to attend to thepromotional appeals of competitors of the branded product towhich he is loyal. In the fortitude-building process arelationship develops between the consumer and a brandedproduct. Thus fortitude at least partially corresponds with acloseness between consumers and their favorite products(Fournier, 1998), the concept of product love (Ahuvia, 1992),and the intimacy between a consumer and his or herpossessions (Belk, 1988). One example of advertising thatencourages fortitude loyalty is bumper stickers with themessage “I love my credit union.” The very close conceptualcorrespondence between action loyalty and fortitude suggeststhat the latter must be considered when testing the former.Oliver (1999) also posited that another particularly strong,

personal relationship between a consumer and a brand can befound in the communities that form around the camaraderieassociated with a product (i.e. H.O.G. chapters of Harley-Davidson motorcycle owners). In the financial servicesindustry, brand communities are likely to form among thecustomers of member-owned institutions such as creditunions and mutual savings banks. And at least one studyfound a relationship between a sense of community andproduct love, and that loyalty and active engagement areoutcomes of brand love (Bergkvist and Bech-Larson, 2010).The rapid growth of the Internet as a communications

medium has encouraged financial institutions to strengthen

ties with the communities they serve. Such virtualcommunities are “any group of people who share a commonbond, yet who are not dependent on physical interaction anda common geographical location in order to sustain theirgroup affinity” (Barnatt, 1998). Virtual communities ofcustomers of financial institutions can be described by fourelements: membership, influence, integration and needfulfillment, and a shared emotional connection (Fraeringand Minor, 2006). They influence their financial servicesprovider by voicing their opinions and otherwisecommunicate with its employees. Customers fulfill theirneeds when they request financial guidance and informationregarding current events in the community. And customerswant to build shared emotional connections bycommunicating with fellow customers through the firm’swebsite.

3. Models and hypotheses

The literature suggests that there are at least three ways thatconsumer loyalty can be measured. One method (Oliver,1997) does so in terms of a progression of successive stages.Another (Oliver, 1999) evaluates the strength of a sense ofself-isolation and integration into a community of fellowconsumers. And a third method distinguishes between loyaltyprograms in terms of the sense of community perceived bycustomers (Rosenbaum et al., 2005). In this research we test amodel comprised of three constructs, satisfaction-loyalty,fortitude, and a sense of virtual community. The satisfaction-loyalty construct is based on panel four of Oliver’s sixconceptualizations of the relationship between satisfactionand loyalty (Oliver, 1999, pp. 34-42); it asserts thatsatisfaction is distinguishable from loyalty, as well as one ofits component parts. This triangular model suggests thatsatisfaction-loyalty can result in “ultimate loyalty” or fortitude(Oliver, 1999), and a sense of virtual community (Fraeringand Minor, 2006) (Figure 1).

3.1 Specification of the constructsThe satisfaction-loyalty construct is composed of satisfactionitems measuring purchase evaluation, success attribution,positive affect, and a satisfaction anchor (Oliver, 1997). Thefour loyalty phases (in ascending order) are cognitive(rational), affective (emotional), conative (a commitment toa goal by a consumer), and action (the consumer’sdetermination to act). The cognitive loyalty constructaddresses brand quality or superiority and cost. Affectiveloyalty should assess feelings regarding prior (dis)satisfactionand involvement. Items are drawn from not only Oliver(1997), but also Beatty et al. (1998) and Mittal and Lee(1989). Conative loyalty measures are brand commitment(and erosion thereof), and purchase intention (Beatty et al.,1988; Mittal and Lee, 1989; Oliver, 1997). The detection of

Figure 1 The beyond loyalty model




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action loyalty involves the history of the relationship and itsfuture prospects (Oliver, 1997; Raju, 1980). Action loyaltyitems address strong consumer confidence in the brand, andthe likelihood that a consumer would seek informationregarding competing products or switch brands. Butmeasuring action loyalty is difficult: first, it is thought that aconsiderable length of time is required to achieve it; second,the study from which the action loyalty items are adapted isthe same work recommended for the fortitude construct(Raju, 1980). For these reasons Oliver (1997) believes thatthere is a high likelihood of a considerable degree of overlapbetween the two constructs.The two endogenous constructs are fortitude and a sense of

virtual community. Measures of fortitude are items thataddress product adoration (Fournier, 1998) andinterdependence (Raju, 1980). The second endogenousconstruct is a sense of virtual community (Fraering andMinor, 2006). Perceived membership in a virtual communitycan be described in terms of integration and need fulfillment(a desire to obtain information regarding managing personalfinancial matters and sponsored events), a desire to exertone’s influence on his bank or credit union by voicing one’sopinion by communicating with the institution’s employeesvia their web site, and communicating with fellow customers.

3.2 HypothesesOliver (1999, pp.34-42) suggested that there are as many assix different ways to conceptualize the relationship betweensatisfaction and loyalty. To date satisfaction and the variousforms of loyalty (cognitive, affective, conative, and/or action)have been studied as separate constructs (Helgesen, 2006;Harris and Goode, 2004; Kwon et al., 2005; Methlie andNysveen, 1999). Two notions not yet tested are thatsatisfaction is a part of loyalty, and “ultimate loyalty.”Ultimate loyalty begins when a consumer acquires thefortitude to ignore the appeals of competing brands due toher close, personal relationship with a branded product(Oliver, 1997, pp. 392-393).Evidence for the incremental, phased approach to loyalty is

found in a virtuous cycle that begins with a satisfactory initialpurchase, followed by subsequent favorable patronage thatcreates a relationship of reliance upon firms such asrestaurants (McMullan and Gilmore, 2003), retail grocers(Samong and Omar, 2004), wholesale seafood exportmerchants (Helgesen, 2006), home improvement retailers(Evanschitzky and Wunderlich, 2006), and department stores(Sivadas and Baker-Prewitt, 2000). An online bookstore andairline ticket-seller have also been studied (Harris and Goode,2004), as well as a collegiate athletic program (Kwon et al.,2005). These products share in common an importantcharacteristic that defines the relationship between the firmand the customer: loyal customers repeatedly purchase theproduct.Here we survey the satisfaction, loyalty, fortitude, and sense

of virtual community of bank and credit union customers.Loyal account holders at these institutions passively maintaintheir existing accounts. This distinction between transaction-based and account maintenance-based business relationshipssuggests important differences in the loyalty formationprocess. Whereas restaurants, grocers, and departmentstores compete for customers’ loyalty on each shopping trip,financial institutions keep loyal customers as long as therelationship remains intact. Thus the loyalty formationprocess for customers of financial institutions is inherentlydifferent from other commercial enterprises, and suggests that

cognitive, affective, and conative attitudes can be formedsimultaneously (Aurifeille et al., 2001), hence:

H1. Satisfaction and loyalty comprise one construct, whichincludes not only satisfaction, but also cognitive,affective, and conative loyalty.

Findings of a study of automobile owners who concurrentlyacquired cognitive and affective loyalty (Anisimova, 2007)also support H1.Fortitude is a construct that at a minimum describes the

relationship between a firm and a customer who trulyappreciates its clearly superior products; at this point theconsumer is committed to an ongoing relationship, but couldbecome vulnerable to the promotional appeals of competitors(Oliver, 1999). When a consumer’s reliance on a productincreases from low to high fortitude the transition to“determined self-isolation” of the consumer is complete. Atthis point the customer and the firm have taken theirrelationship beyond loyalty because the customer ignores thecompetition. Consistent with Goodwin’s findings, a bankcustomer may become dependent on the advice of hiscustomer service representative (Goodwin, 2000). Creditunion customers may feel that membership in their favoritefinancial institution supports their self-concept. And it isunderstandable that such a consumer acquires the intestinalfortitude to ignore all competing promotional appeals to saveor borrow elsewhere. However, fortitude is a concept that isvery closely related to action loyalty, and thus there are threepossible outcomes of a test of action loyalty and fortitude.First, it is possible that action loyalty and fortitude are uniqueconstructs describing very similar yet distinctly differentattitudes. However, analysis indicates that it is likely thateither action loyalty is a subset of fortitude, or fortitude is apart of action loyalty (Oliver, 1999). If the former is the casefortitude should depicted as an endogenous construct andsatisfaction-loyalty its exogenous construct; but if fortitude isa subset of action loyalty the applicable variables arecomponents of the satisfaction-loyalty construct. Evidencethat fortitude is a subset of action loyalty is found in a study ofconsumers who engaged in a very small consideration set offinancial institutions, regardless of whether the search was forlow-value services (i.e. checking account service charges orcredit cards), or higher-value services such as automobileloans or home mortgages (Dawes et al., 2009). Mostrespondents consult only one institution. Thus support forrobust action loyalty and fortitude is expected due to theongoing nature of the relationship between the customer andthe institution. Because deposit accounts and credit cards areused for the sake of convenience and require little if anyinvolvement to maintain, bank and credit union customers areless likely to notice advertisements of competing institutionsurging them to switch providers. And the longer a customerdeals with a financial institution the more likely it will be thata unique sense of communality (Goodwin, 2000) will formwith employees of the financial institution. Thus, fortitudetakes the bank-customer relationship beyond loyalty, and:

H2. Fortitude is positively related to satisfaction-loyalty.

Just as fortitude describes an intimate relationship between aconsumer and a product, a sense of community describes aclose relationship between a consumer and fellow users of abranded product (Oliver, 1999). Thus not only the product,but also the good times shared with fellow customers are“consumed.” Pure play marketing promotions that emphasizecommunities of users include frequent diner and frequent flier




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programs (Dowling and Uncles, 1997). In the context of thefinancial services industry many institutions have offeredpreferential terms to customers who use two or more of abank’s or credit union’s products. Such a combination ofsocial and financial benefits keeps customers close to not onlythe firm, but also fellow customers, minimizing the likelihoodthat the customer will defect to another financial institution.As with fortitude, a sense of virtual community takes therelationship between the customer and the institution beyondloyalty, and:

H3. The sense of virtual community construct is positivelyrelated to the satisfaction-loyalty construct.

Just as ultimate loyalty begins with fortitude, it reaches itszenith with a consumer’s self-identity, immersed in not onlythe fortitude to faithfully use only his one favorite product atthe exclusion of all possible alternatives, but also membershipin the community of the product’s users (Oliver, 1999). Thiscombination of fully bonded commitment of the customer tothe product and community of fellow users forms a triangle inwhich each side reinforces the other. The result is the BeyondLoyalty Model, or BLM.

4. Method

The satisfaction-loyalty construct is measured by a total ofseven items (two satisfaction, one cognitive loyalty, twoaffective loyalty, one conative loyalty, and one action loyaltyitem). Survey items measuring satisfaction and cognitive,affective, and conative loyalty were adapted from Oliver(1997). Fortitude is measured by two product adoration itemsderived from Fournier (1998) and Raju (1980). The two senseof virtual community scale items were obtained from Fraeringand Minor (2006). Three demographic items were obtained toclassify respondents, and the questionnaire included a numberof other items to address related research objectives.The “product” examined in this research is the satisfaction,

loyalty, fortitude, and sense of virtual community ofindividuals in regard to their relationship with their primaryfinancial services provider (PFSP). PFSPs include banks andcredit unions. The sector was selected due to its importanceto the US economy: There are about 7,436 banks whosedeposits are insured by the Federal Deposit InsuranceCorporation and approximately 9,500 credit unionsregulated by the National Credit Union Administration. APFSP is the firm with which an individual transacts most ofher financial business (i.e. deposit accounts, loans,investments, etc.).

4.1 Sample and data collectionUndergraduate Business Administration students atuniversities in Indiana, Louisiana, New Mexico, Texas, andVirginia, as well as college graduates in Mississippi, Utah,Florida, Maryland, Ohio, Illinois, Texas, North Carolina,Tennessee, and California were surveyed. A total of 529surveys were obtained. Due to the large number of surveyitems about seven percent of the forms were incomplete; 493respondents provided complete questionnaires. An analysis ofthe demographic data indicated that the incidence ofincomplete forms was entirely at random, as the distributionof data by gender (50 percent women), age (73 percentbetween the ages of 18 and 25), primary financial serviceprovider (77 percent using a bank), and relationship longevity(38 percent five years) was virtually the same for allquestionnaires, as well as the complete survey form subset

of respondents. Hence the incomplete survey forms weredropped from the analysis, as item nonresponse appeared tobe intentional rather than accidental.This sample frame comprised of a large number of college-

educated adults is appropriate because all respondentsindicated they were competent to answer the questionnaire(Calder et al., 1981). Competence was demonstrated byasking respondents to provide the name of their PFSP. Thesample frame is also appropriate because at least one studyhas determined that survey results can be generalizable to theadult population even when a large portion (73 percent) of astudent sample is between the ages of 18 and 25, providedrespondent competence is demonstrated (Browne and Brown,1993). In this research 76 percent of survey participantsindicated that they have maintained their account(s) withtheir PFSP for three or more years, demonstrating a highdegree of competence in their ability to assess the relationshipwith their PFSP.

5. Analysis and results

5.1 The measurement modelsConfirmatory factor analysis was conducted to determine theexogenous and endogenous constructs of the model. Thesatisfaction-loyalty construct is comprised of seven variables,two measuring satisfaction and five assessing cognitive,affective, and conative loyalty. Construct reliability isexcellent (0.906). Variance extracted is satisfactory (0.581)and model fit (chi-square ¼ 30.098 [ p ¼ 0.005], chi-square/df ¼ 2.315, GFI ¼ 0.983, CFI ¼ 0.992, TLI ¼ 0.987,RMSEA ¼ 0.052) is good.The two-item fortitude construct is unsatisfactory.

Model fit is unacceptable (chi-square ¼ 0.000[ p ¼ 0.000], chi-square/df ¼ 0.00, and fit statistics areunsatisfactory: GFI ¼ 1.000, CFI ¼ 1.000, TLI ¼ 0.000,RMSEA ¼ 0.576). The two-item sense of virtualcommunity construct is also unsatisfactory. Model fit isunacceptable (chi-square ¼ 0.000 [ p ¼ 0.000], chi-square/df ¼ 0.000, and fit statistics were unsatisfactory (Chi-square ¼ 0.000 [ p ¼ 0.000], GFI ¼ 1.000, CFI ¼ 1.000,TLI ¼ 0.000, RMSEA ¼ 0.546). Thus the twoendogenous constructs are unsuitable to comprise ahybrid structural equation model.

5.2 The beyond loyalty modelThe beyond loyalty model (BLM) describes satisfaction andfour types of loyalty within one construct, which ishypothetically related to the acquisition of fortitude and asense of virtual community. Structural analysis indicates thatthe sense of virtual community construct variables do notcontribute to the model due to its excessive error variance.When the offending variables are deleted the fit of the model’snine variables is quite good: (chi-square ¼ 60.080[ p ¼ 0.000], chi-square/df ¼ 3.162, GFI ¼ 0.971,CFI ¼ 0.985, TLI ¼ 0.971, RMSEA ¼ 0.066). The model’sreliability (0.922) is excellent, and average variance extractedis satisfactory (0.575). These findings are important becauseit suggests that the action-product adoration-fortitudeconstruct signals that loyal customers of financialinstitutions acquire action loyalty in combination with a traitthat is thought to be indicative of fortitude (Figure 2).

5.3 Results of tests of hypothesesThis research makes an important contribution to the study ofservices marketing by successfully testing, for the first time,




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customer satisfaction, Oliver’s (1999) four loyalty phases, andfortitude. The first hypothesis defines the satisfaction-loyaltyconstruct to be inclusive of observed variables measuringsatisfaction, cognitive, affective, conative, and action loyalty.The reliable and valid satisfaction-loyalty construct includesthe satisfaction and loyalty items; hence H1 is supported.Thus consumers can simultaneously adopt favorablecognitive, affective, conative, and action loyalty (Anisimova,2007), as well as cognitive, affective, conative, and actionattitudes (Aurifeille et al., 2001), and the robust explanatorypower of the combination of behavioral and attitudinal/cognitive loyalty (Jones and Taylor, 2007). The outcome isalso consistent with the nature of relationships betweenfinancial institutions and their customers, which are usuallyongoing unless either party does something that causes theother party to terminate it.

H2 asserts that fortitude is positively related to thesatisfaction-loyalty construct. Thus, in the context of thefinancial services industry, fortitude is a subset of actionloyalty, and the applicable variables are components of thesatisfaction-loyalty construct. H1 and H2 support the notionthat robust, strong customer loyalty is readily attainable.

H3 states that the sense of virtual community construct ispositively related to the satisfaction-loyalty construct. Theresult of the structural equation analysis of the construct wasunsatisfactory due to excessive error variances.

6. Discussion

Oliver’s (1997) four phase loyalty framework changed the waymarketing scholars think about the relationship betweensatisfaction and loyalty. He suggested six possible means ofcombining satisfaction and loyalty. The action loyaltyconstruct is confirmed in this research by the notions thatconsumers can acquire confidence in their financial institutionto solve their financial problems (Oliver, 1999), and that they

would decline to engage in variety-seeking behavior through aproclivity to continue the relationship (Jones and Taylor,2007; Raju, 1980). Fortitude suggests that customers arecapable of going beyond loyalty in their devotion to a brandedproduct (Oliver, 1999). In this research we confirm thenotions advanced by Fournier (1998) that a passionate, love-like relationship is possible between a consumer and herfavorite brand, and that it can be relied upon to “be there” forthe consumer. In that process it was determined that actionloyalty and fortitude in the context of a consumer’srelationship with a financial institution are part of thesatisfaction-loyalty construct. The notion that consumers canadopt cognitive, affective, conative, and action attitudes(Aurifeille et al., 2001) to acquire cognitive, affective, andaction loyalty go beyond loyalty and acquire fortitude isconfirmed (Anisimova, 2007). Thus the satisfaction-loyalty-fortitude relationship between a financial institution and itscustomers is most accurately associated with a “superordinateexistence of ultimate loyalty [. . .] of which satisfaction and“simple” loyalty are components” (Oliver, 1999).A 37-point index with a range from nine (very dissatisfied,

devoid of loyalty and fortitude) to 45 (very satisfied, veryloyal, and high fortitude) was computed. Patrons who hadconducted business with their primary financial servicesprovider for one year had index scores between nine and 45;customers with their PFSP for two years had index scores of13 to 45; customers with five years’ experience with theirfinancial institution had scores of nine to 45; those with theirPFSP for ten years had scores of 14 to 45; and those withmore than 10 years of patronage had scores between 22 and45. Hence, customers reached a high plateau of satisfaction,loyalty, and fortitude fairly early in their relationship withtheir financial services provider.The frequency distributions of the satisfaction-loyalty-

fortitude scores indicate that only 66 (13 percent) of the 493of the survey participants’ responses were less thanenthusiastic regarding their relationship with their financialservices provider. A total of 16 respondents’ satisfaction-loyalty-fortitude scores were at the midpoint of the scale,indicating a neutral attitude toward satisfaction, loyalty, andfortitude in regard to their primary financial services provider.The other 83 percent (411) survey participants mildly orstrongly agreed that they were satisfied, loyal customers whohave the fortitude to maintain their accounts with their PFSP,despite the promotional efforts of competing firms. Thus thisresearch confirms the notion that cognitive and affectiveloyalty can be acquired concurrently (Anisimova, 2007), andthat cognitive, affective, and conative attitudes can be formedsimultaneously as well (Aurifeille et al., 2001).Empirical support for the beyond loyalty model means that

these findings are only the beginning of additional progress inunderstanding satisfaction-loyalty relationships. The results ofthis research are only generalizable to the financial servicesindustry, and furthermore are only generalizable at the retaillevel. Thus this research is a starting point for exploring therelationships between satisfaction, the phases of loyalty, and asense of virtual community in the institutional market forfinancial services, as well as related service industries such asinsurance, securities broker/dealers, and mutual funds. Thetime has also come for marketing strategists to formulateplans to make good use of the empirical evidence obtained inthis research.These results also constitute very good news for the

financial services industry, as it clearly demonstrates thevirtues and rewards of encouraging customer loyalty and a

Figure 2 The revised beyond loyalty model




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sense of virtual community. Financial institutions now have anine-item questionnaire to determine the satisfaction, loyalty,and sense of community of their customers. With the additionof demographic and product-related data they can explorerelationships with segments of their clientele to obtain specificinformation, pinpoint problematic market segments, andformulate strategies to increase the number of satisfied andloyal customers, as well as strengthen loyalty and fortitudebonds. It is also a parsimonious improvement over the presentAmerican Bankers Association Client Satisfaction Index: thebeyond loyalty questionnaire not only provides extensiveinformation regarding loyalty, and a sense of virtualcommunity, but also asks customers to answer fewerquestions than the ABA survey, which is comprised of 54items.This research also suggests that financial institutions that

offer loyalty or rewards programs should re-consider theterms and conditions of their offers, as they may encouragecognitive loyalty, which is the weakest form thereof (Fergusonand Hlavinka, 2007). Rather than emphasizing credit cardsand other kinds of loans that can be transferred or refinancedat competing institutions, banks and credit unions shouldreward customers who utilize services that are associated witha long-term relationship. Such products include traditionaland Roth individual retirement accounts, college savingsplans, and safety deposit boxes.

7. Limitations and future research

This research formulates and tests the beyond loyalty model(BLM). Hypothesis-testing of this research was fairlysuccessful. The nine variables measuring satisfaction,loyalty, and fortitude comprise a reliable and valid constructfor measuring satisfaction, cognitive, affective, conative, andaction loyalty, as well as fortitude. The hypothetical sense ofvirtual community construct did not survive confirmatoryfactor analysis.Additional research should be conducted in other sectors of

the financial services industry, such as securities brokeragefirms, mutual funds, and insurance companies. The beyondloyalty model does not address other substantive issues suchas profitability, pricing and promotional strategies, orcomplaint response and resolution within the financialservice industries, and substantial modification of thequestionnaire would be required to make it suitable tosurvey institutional customers of financial service firms and,customers of businesses in other industries. Use of structuralequation modeling to analyze the data in this research shouldnot infer that the model has any predictive power.This effort is the starting point for a body of research to

better understand relationships between satisfaction, the fourloyalty phases, and fortitude. Also potentially fruitful is thestudy of the relationships between customers and theirfinancial services providers. For instance, Internet socialnetworking sites such as LinkedIn and Facebook are makingconnections between professionals and their financialinstitutions in ways that have not been anticipated by virtualcommunity research. Future efforts may determine thatadditional variables would improve the model. Scholars maydiscover a means by which customer switching behavior canbe precluded or predicted.And there are opportunities to increase the external validity

of the beyond loyalty model by surveying the satisfaction-loyalrelationships between customers and other types of servicesproviders. The satisfaction and loyalty of customer-service

provider relationships in other industries should be conductedto determine the extent to which other services businesses areapplicable to the beyond loyalty model, and the extent towhich customer satisfaction and loyalty is acquired in amanner more similar to the four ascending forms of loyaltydiscussed by Oliver (1997, 1999).

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Appendix

About the authors

Dr Martin Fraering was an executive in several sectors of thefinancial services industry for more than 20 years. Hisresearch concentrations include consumer ethnocentrism,consumer loyalty in the context of financial services, andcorporate strategy. He has published in the Journal of AppliedBusiness Research, International Journal of Bank Marketing,Marketing Management Journal, Logistics InformationManagement, and the Journal of Consumer Marketing. MartinFraering is the corresponding author and can be contacted at:[email protected] Michael S. Minor, whose research focuses on

comparative consumer behavior, online advertising andgaming, and the consumption of high-technologyexperiential products, has published in the Journal ofRetailing, the Journal of Advertising, Journal of InternationalBusiness Studies, Psychology and Marketing, the Journal ofConsumer Marketing, International Studies of Management andOrganization, the Journal of Services Marketing, and elsewhere.

Executive summary and implications formanagers and executives

This summary has been provided to allow managers and executivesa rapid appreciation of the content of this article. Those with aparticular interest in the topic covered may then read the article intoto to take advantage of the more comprehensive description of theresearch undertaken and its results to get the full benefits of thematerial present.

Customers are a fickle lot. Provide them with an excellentservice, fulfill their expectations and more, please them andensure that they are completely satisfied, and the next thingthat happens is they are tempted away by the overtures of acompetitor. The thing to remember is that satisfaction doesn’tnecessarily lead to loyalty – a fact recognized by the service

providers who have come to believe that the only customers

who matter are the loyal ones.The implications of customer loyalty go far beyond

customer retention. Increasing market share means

persuading competitors’ customers with weak loyalty-based

opinions and beliefs to defect, as well as enhancing the loyalty

of one’s own customers to retain them. Consistent with these

efforts by practitioners is the notion that loyalty formation is

an evolutionary process in which logical (cognitive loyalty)

reasons for ongoing patronage give way to emotional (affective

loyalty) associations between the customer and the product,

followed by a commitment to re-buy a product (evidencing

conative loyalty), and may eventually result in ongoing

repurchase even when action (loyalty) is necessary to

overcome obstacles.It was Professor Richard L. Oliver who suggested these four

phases of loyalty, with each successive stage stronger than its

predecessor. The weakest is cognitive loyalty, which is based

on factual information. Since the repurchase decisions of

cognitive loyalists are logic-based, they are vulnerable to the

persuasive appeals of competitors. The second phase is

affective loyalty. It is stronger than cognitive loyalty for two

reasons: First, the consumer has used a product for a longer

period of time, and second, successful consumption

experiences have resulted in positive attitudes and an

emotional attachment to the product. The consumer’s

feelings, however, are vulnerable to the promotional appeals

of competing brands.“True” loyalty emerges in the third phase, conative loyalty.

In this phase repurchase becomes a behavioral intention.

There is also a deeply held desire to repurchase, yet the

consumer remains vulnerable to a diminution of the impulse.

The ultimate loyalty state is action loyalty. Action loyal

customers have not only the intention, but also the motivation

to repurchase. The consumer is even prepared to proactively

search for the product if it becomes difficult to find. The

Figure AI Beyond loyalty model items




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devotion of action loyal consumers is thought to be nearlyunshakable.So, fickle though customers can be – and you really have to

“love” a product to turn a blind eye and deaf ear to the sirencalls of competitors offering something they want you to tryinstead – some customers have the toughness to stay loyal.This suggests that customers who have acquired the fortitudeto reject such appeals and rule out any alternative to theirfavorite brand have indeed gone beyond loyalty to a love-likeattachment to the product.You can understand that being the case with some products

– take the Harley Davidson motorcycle aficionados forexample. But what about something more mundane, such asfinancial institutions – banks and credit unions, for example?In “Beyond loyalty: Customer satisfaction, loyalty andfortitude” Martin Fraering and Michael S. Minor addresssuch a question in a study which discovers that customers offinancial institutions acquire satisfaction and strong loyaltyties with their bank or credit union after dealing with theirfinancial services provider for a relatively short period of time.They confirm an assertion in previous research that apassionate, love-like relationship is possible between aconsumer and his or her favorite brand, and that it can berelied upon to “be there” for the consumer. And that “actionloyalty” and “fortitude” in the context of a consumer’srelationship with a financial institution are part of thesatisfaction-loyalty construct.

These results, the authors claim, constitute very good news

for the financial services industry, as they clearly demonstrate

the virtues and rewards of encouraging customer loyalty and a

sense of virtual community. With a questionnaire to

determine the satisfaction, loyalty, and sense of community

of their customers, along with the addition of demographic

and product-related data, they can explore relationships with

segments of their clientele to obtain specific information,

pinpoint problematic market segments, and formulate

strategies to increase the number of satisfied and loyal

customers, as well as strengthen loyalty and fortitude bonds.This research also suggests that financial institutions that

offer loyalty or rewards programs should re-consider the

terms and conditions of their offers, as they may encourage

cognitive loyalty, which is the weakest form. Rather than

emphasizing credit cards and other kinds of loans that can be

transferred or refinanced at competing institutions, banks and

credit unions should reward customers who utilize services

that are associated with a long-term relationship. Such

products include retirement accounts, college savings plans,

and safety deposit boxes.

(A precis of the article “Beyond loyalty: customer satisfaction,

loyalty, and fortitude”. Supplied by Marketing Consultants for

Emerald.)




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