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eBusiness Research Center Case Study December, 2002

Customer Satisfaction and Loyalty in Online and Offline Environments

Venkatesh Shankar Amy K. Smith Arvind Rangaswamy

Final Version December 2002 (Forthcoming, International Journal of Research in Marketing)

eBusiness Research Center 401 Business Administration Building University Park, PA 16802 Phone: 814.861.7575 Fax: 814.863.0413 Web: www.ebrc.psu.edu

Customer Satisfaction and Loyalty in Online and Offline Environments

Venkatesh Shankar* Amy K. Smith** Arvind Rangaswamy***

Final Version December 2002 (Forthcoming, International Journal of Research in Marketing)

*Visiting Faculty, Sloan School of Management, M.I.T. and Ralph J. Tyser Fellow and Associate Professor of Marketing, Robert H. Smith School of Business, University of Maryland, College Park, MD 20742. Tel: (301) 405-2175. Fax: (301) 405-0146. Email: vshankar@rhsmith.umd.edu ** Assistant Professor of Marketing, George Washington University, School of Business and Public Management, 2023 G Street, N.W., Lisner Hall, Suite 135, Washington, D.C. 20052. Tel: (202) 9940903. Fax: (202) 994-8999. Email: aksmith@gwu.edu *** Jonas H. Anchel Professor of Marketing, The Smeal College of Business, Penn State University, University Park, PA 16802. Tel: (814) 865-1907. Fax: (814) 865-3015. Email: arvindr@psu.edu

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Customer Satisfaction and Loyalty in Online and Offline Environments

Abstract We address the following questions that are becoming increasingly important to managers in service industries: Are the levels of customer satisfaction and loyalty for the same service different when customers choose the service online versus offline? If yes, what factors might explain these differences? How is the relationship between customer satisfaction and loyalty in the online environment different from that in the offline environment? We propose a conceptual framework and develop hypotheses about the effects of the online medium on customer...