The effects of satisfaction and loyalty on profits and growth: Products versus services

The paper uses data from the Swedish Customer Satisfaction Index together with performance data from competing industries to study the difference in logic in terms of customer satisfaction and loyalty between services and products. We find that for product firms loyalty can have a negative effect on company performance, while for service firms the effect is positive. The implication is that service firms must earn their loyalty but product firms can lower their prices and thus retain their customers.