Quantifying the Benefits: Application of Customer Loyalty Modeling in Public Transportation Context

This paper provides a demonstration of potential applications of customer loyalty modeling in the public transportation industry. Customer loyalty modeling investigates the cumulative effects of influencing factors on customers’ tendencies to choose one service or product over another for a particular need. Industries, such as airlines and telecommunications, model customer loyalty extensively to better understand and improve customer retention. A review of the literature returned only one direct application of this approach in the public transportation industry. The influencing factors of public transportation customer loyalty are explored with the use of structural equation modeling and other empirical tests to demonstrate the appropriateness of this application. A comprehensive set of hypotheses explores the relationships between public image, problem experience, service quality, service value, customer satisfaction, and customer loyalty. Initial findings suggest that service quality and customer satisfaction positively and directly influence customer loyalty. In addition, public image and problem experience exert a stronger influence on service quality, customer satisfaction, and service value than initially predicted. Recommendations and managerial implications based on experiences and challenges during the research are offered for this technique.