The above results have been found in the offline environment. We do not know much about the relationship between satisfaction and loyalty in the online environment. In this paper, we address the following questions: (1) For a given service, other things equal, are the levels of customer satisfaction and loyalty different when the service is chosen online as compared to offline? If yes, what factors might explain these differences? (2) Is the relationship between satisfaction and loyalty stronger or weaker online compared to the offline environment? To answer these questions, we develop a set of hypotheses based on a conceptual framework. To test the hypotheses, we formulate simultaneous equation models and estimate them using data from online and offline samples in the lodging sector of the travel industry.

An important characteristic of the online travel industry is that although customers may choose the service provider online, the actual service is experienced by the customer offline. Many service industries share this characteristic, including hotels, airlines, rental car agencies, tourism and hospitality, entertainment (e.g., movie, theater, and concert tickets), and restaurants (e.g., reservations for many restaurants can be made online via opentable.com). By holding the servic e delivered

constant (regardless of whether the customer chose the hotel online or offline), we can isolate the effects of the medium on satisfaction. Therefore, our results should be generalizable to many other service industries. Another differentiating aspect of our study is that we use two independent data sets for assessing the validity of our hypotheses, which enables us to converge closer to the true relationships between satisfaction and loyalty online.

We extend previous research in many ways. First, to the best of our knowledge, ours is the first empirical study to compare the effects of the medium (online versus offline) on customer satisfaction, loyalty, and the relationship between satisfaction and loyalty. Second, we study the reciprocal relationship between customer satisfaction and loyalty that offers the potential for deeper insights into the nature of the relationship between these constructs. We also empirically test this reciprocal relationship. Much prior research has focused on the impact of customer satisfaction on loyalty, but not vice-versa. Third, unlike previous studies that have generally focused on action/behavioral loyalty, we focus explicitly on attitudinal loyalty to the service provider. Attitudinal loyalty is similar to affective/conative loyalty proposed by Oliver (1999) and represents a higher-order, or long-term, commitment of a customer to the organization that cannot be inferred by merely observing customer repeat purchase behavior. Customer retention can occur without attitudinal loyalty, if for example, the customers are indifferent, or there are no other viable choices in the market.

In the next section, we present our conceptual framework and the hypothesized relationships among the constructs. In the section that follows, we describe the data we collected for testing our hypotheses. Next we formulate a measurement model, together with alternative specifications. In the subsequent two sections, we summarize and discuss the results, and outline the managerial implications, limitations, and directions for future research.