Purpose The purpose of this paper is to attempt to explore the relative importance of the physical and interactive elements of service on overall satisfaction, particularly when these elements are moderated by the point‐of‐view of repeat and new customers. Evidence is drawn from the transport sector industry. Design/methodology/approach The data for this study come from 388 ferry passengers. Regression analysis was used to test the influence of each parameter and SEM employed to assess the moderating effects of repeat patronage on satisfaction. Findings The results suggest that the physical elements of the service are of greater importance in determining customer evaluations on overall satisfaction than interactive features of service. The results also suggest that these effects are not just direct but also moderated by the repeat use of the service. Finally, both elements are very good predictors of overall satisfaction. Research limitations/implications As results are obtained from only one industry, generalisations should be drawn with care. Practical implications The presumption of managers when looking at satisfaction as the primary, even sole, gauge of customer loyalty appears to be erroneous. The consequence is potential misallocations of resources due to myopic focus on customers' satisfaction increase. The findings suggest that attention should be given to increasing the loyalty of passengers/customers. Originality/value This study suggests a moderating role for repeat and new customers in the satisfaction‐loyalty relationship and implies that to maximise investments in service improvements based on a focus on increasing physical satisfaction rather than seeking to develop an interactive “delight” to the customer.
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