Relationship Marketing and Customer Satisfaction: An Information Economics Perspective

Marketing science has long been concerned with the question of the extent to which customer satisfaction leads to customer retention and, subsequently, to a positive effect on profits. Most of the behaviour-driven explanations posit a generally positive relationship between the two. However, this generality has not been confirmed in empirical investigations. In this paper, the relationship between customer satisfaction and customer retention is analysed from an economic perspective. The overall aim is to identify relevant factors that influence the effect of satisfaction on the retention of clients. Based on considerations derived from economics of information theory, it is revealed that apart from the speed of technological progress, the possibility of assessing product quality is a significant driver for customer satisfaction as a source of retention.