Examine the Effects of Customer Satisfaction
on Customer Loyalty: An Empirical Study in the
Healthcare Insurance Industry in Hong Kong*
Aims: Customer loyalty, which is affected by satisfaction, brand preference and switching
costs, is an important concept in service industries as it is known to increases market
share and revenue while bringing down the cost of acquiring and retaining customers.
Healthcare insurance is one such service industry and it is currently the focus of attention
in Hong Kong due to the introduction of an insurance-based healthcare plan for its
citizens. In the past decade, a number of empirical studies related to healthcare have
been conducted in Western countries. However, in order to acquire a better
understanding of customer loyalty in the context of healthcare insurance in Hong Kong it
was considered essential to conduct an in-depth study in that special administrative
region of China. The objectives of the research were to determine the following: the direct
effects of customer satisfaction on customer loyalty; the direct effects of customer
satisfaction on brand preference; the direct effects of brand preference on customer
loyalty; the direct effects of customer satisfaction on switching costs; the direct effects of
switching costs on customer loyalty; the direct effects of switching costs on brand
preference; the mediating effects of brand preference on the causal relationship between
customer satisfaction and customer loyalty; the mediating effects of switching costs on the
causal relationship between customer satisfaction and customer loyalty; and the
mediating effects of brand preference on the causal relationship between switching costs
Original Research Article
British Journal of Economics, Management & Trade, 4(3): 372-399, 2014
373
and customer loyalty.
Study Design: This study employed positivism paradigm, cross-sectional and quantitative
study.
Place and Duration of Study: The study was taken in Hong Kong between June 2011
and June 2012.
Methodology: The research methodology of this study involved a questionnaire survey of
over five hundred respondents and quantitative analysis of the collected data using
structural equation modeling.
Results: The results indicate that: customer satisfaction has a positive direct effect on
customer loyalty; customer satisfaction has a positive direct effect on brand preference;
brand preference has a positive direct effect on customer loyalty; customer satisfaction
has a positive direct effect on switching costs; switching costs have a positive direct effect
on customer loyalty; switching costs have a positive direct effect on brand preference; the
influence of customer satisfaction on customer loyalty is mediated by brand preference;
the influence of customer satisfaction on customer loyalty is mediated by switching costs;
and that the influence of switching costs on customer loyalty is mediated by brand
preference.