Marketing Services

The Dark Side of Long-Term Relationships in

Marketing Services



The Dark Side of Long-Term Relationships in Marketing Services

Introduction

As markets mature and competition intensifies, firms are exploring ways to increase customer retention which has been shown to increase company profitability. One strategy that has gained considerable attention is the strategy of relationship marketing in which firms invest in developing long-term bonds with individual customers. A key feature of this strategy is that not only does it result in increased customer retention, but also provides a sustainable competitive advantage to the firm as the intangible aspects of a relationship are not easily duplicated by competitors.

Although several papers in the channels and sales literature have measured the relationship quality between manufacturers and resellers and between salespersons and customers, there is no tested scale by which service firms can begin to measure the quality of their relationship with customers and thus evaluate the success of their relational programs. Furthermore, it has not been empirically demonstrated whether the quality of the intangible aspects of a relationship adds any additional explanatory power over the commonly used service quality scale (SERVQUAL) in explaining behavioral intentions.

There are several reasons why one needs to research the quality of relationships between service firms and their customers. First, there are differences between organizational buyer behavior and consumer buyer behavior which need to be accounted for when applying findings developed in the industrial and channel markets to the study of individuals in consumer markets. Business-to-business relationship theories are based primarily on the assumptions of rational behavior and mutual acceptance of reciprocity, given the contractual nature of organizational relationships. Such interactions in organizational markets are also more formal and more intense, given the greater customization involved in product-and-service transactions and the negotiation of contractual obligations between firms. This is in stark contrast to consumer purchases, which are more emotionally driven and are often less planned and at prices and terms set by the individual firm. Thus, the key differences between organizational and consumer markets are the degree of necessity of relationships from the purchasing entity's point of view and the social and affective dimensions such relationships.

Last, but not the least, there is need to test empirically whether a valid measure of relationship quality predicts important relational outcomes from the firm's perspective, if relationship quality is to be meaningful managerially. Given that service quality measurement is ongoing in major service firms, there is also need to examine whether the intangible aspects of a relationship, as measured by relationship quality, add any further explanation of behavioral intentions over and above routine service quality measures. If so, then this would suggest that managers implement and monitor relationship marketing programs, over and above programs aimed at improving service delivery. This research program is also consistent with the top most priority of Marketing Science Institute (MSI) priorities for 1998-2000 which states that “in particular, research that measures marketing performance in new and creative ways - especially linking such performance to enterprise success” is ...