Relationship marketing has been the focus of marketing research for decades (Bagozzi 1975; Sheth and Parvatiyar 1995). In this stream of research, the gold standard of sustaining long-term relationships is customer satisfaction. More recently, researchers have challenged the mantra that satisfaction will always lead to customer loyalty, contending that satisfaction is not enough (Jones and Sasser 1995; Oliver 1999). For example, Reichheld (1996) reported that 65%-85% of customers who defect state that they were satisfied or very satisfied before defection. More recently, the quest for a stronger and more enduring predictor of customer loyalty than customer satisfaction in competitive markets has An extensive review of brand health, customer loyalty, and customer-company identification literatures suggests that this variable might be in the form of customer identification with a brand.

Previous marketing research has been trying to identify a stronger and more enduring predictor of brand loyalty than customer satisfaction in competitive markets. Perceived value, the difference between benefits and costs, appears to be the perfect candidate. Does it? Drawing from the literature on customer-company identification and brand health, we show through two large scale studies that customer-brand identification (CBI), defined as the customer’s perception, emotional significance, and value of sharing the same self-definitional attributes with a brand, constitutes a sustainable competitive advantage. Compared with perceived value, CBI is more predictive and enduring in explaining brand health, both current health under normal market conditions and brand resistance under abnormal circumstances such as competitive attacks.

Our first study examines the relative importance of CBI vis-à-vis perceived value as the economic driver in predicting customer repurchase intention and customer forgiveness in a cross-sectional setting. Hierarchical linear modeling using a data set of 6,000+ consumers from 15 countries shows that cross-sectionally, perceived value is a stronger driver of customer loyalty intention while CBI is more predictive of customer forgiveness. Furthermore, these relationships are generally non-linear, with increasing returns. Surprisingly, national culture interacts more with CBI than with perceived value in predicting customer behavior. Our second study complements the first essay by investigating why it is important to build CBI in a competitive, disruptive market setting using a longitudinal design. Results show that when a market is disrupted by an innovative new entrant, CBI saliency serves as a more enduring predictor of switching behavior, an important indicator of customer behavioral loyalty that underlies both the current well-being of a brand and all measures of brand resistance.