B2B Marketing: Situational Characteristics as Moderators of the Satisfaction-Loyalty Link
Situational Characteristics as Moderators of the Satisfaction-Loyalty Link An Investigation in a Business-to-Business Context Florian v. Wangenheim University of Dortmund
OverviewIn business, the relationship between satisfaction andloyalty is of fundamental importance.A study of 425 European businesses was conducted withresults showing that the relationship between them isdependent on different contextual factors. When analysing the results, they pointed towards focusingon specific customer groups as opposed to the price of theproduct.
OverviewIt is assumed that higher levels of loyalty equate tohigher levels of success in the marketplace.Evaluating what it is to be a loyal customer (if dependenton satisfaction) proves to be challenging as we need tounderstand the asymmetries between them. It is possible to infer that differences do occur betweenthe satisfaction-loyalty link and from this; it may bepossible to segment customer groups accordingly.
OverviewA strong desire for a business to business applicationof such research is called on to confirm such findings.In the paper, hypotheses in the business to businessmarket are tried and tested and further elucidation oftheir results show some interesting indications.
Overview of the HypothesesH1: The more satisfied a customer is, the higher her/ his loyalty will be.H2: The relationship between satisfaction and loyalty is stronger when perceived purchase importance is high.H3: The relationship between satisfaction and loyalty is weaker when perceived purchase uncertainty is high.H4: The relationship between satisfaction and loyalty is weaker when switching costs are high.H5: The relationship between satisfaction and loyalty is stronger for old than for new customers.
Satisfaction and LoyaltyPositive relationshipLoyalty: “deeply held commitment to rebuy a preferredproduct or service in the future” (Oliver, 1997).Loyalty is based upon relationships.Relationship Satisfaction View (Kelley, 1959) believes thatsatisfying experiences increase the motivation forcustomers to remain in a purchasing relationships.Expectations of future costs and benefits are alsoinfluenced by these prior experiences in this relationship.
Perceived Purchase ImportanceSatisfaction Loyalty Product Importance: “the buyer’s perception of the significance of the buying decision.” (Bunn, 1993) “The buyer will take into consideration the future impact of the purchase to the functioning firm.” (Bunn, 1993)
Perceived Purchase Importance High Perceived Strong Purchase Importance Importance Small Differences in Expected and Actual Levels of Performance being Noticed Bigger Chance of Product Termination due to Trust being Broken When perceived purchase importance is taken into account, therelationship between satisfaction and loyalty may be even stronger. More Thorough Research
Perceived Purchase Uncertainty High Degree of Purchase Uncertainty Low Commitment of the Customers Low Resistance to Marketing Efforts and Price Tactics of CompetitiorsEven if the degree of the customer satisfaction is high, the customer loyalty tends tobe lower if the customers feel uncertain about the quality of the product/service
Switching Costs Transaction-Specific Investments Switching Suppliers Strongly InhibitedIn case of dissatisfaction, high switching costs can still outweigh switchingbenefits.
Duration of Customer Relationship ? DURATION = LOYALTYDuration of business relationship ONLY as a behavioral variable Independent of attitudinal loyalty
Duration of Customer Relationship New Customers VS. Old Customers Driven by the“newness” of the situation Rely on past experiences Transactional Relational Low satisfaction-retention Stronger satisfaction- link retention link Cumulative TIME rather than one-time satisfying experience
Duration of Customer Relationship Hypothesis 5: “The relationship betweensatisfaction and loyalty is stronger for old than for new customers.”
Research MethodGerman Market for Industrial Energy Design Necessary service Buying decisions reviewed by a single person Recent liberalization of German energy marketTrained interviewers conducted the survey via telephone (total of 418 questionnaires) Samples randomly drawn
Research MethodScales from previous researches were used Measuring customer satisfaction and customer loyalty
Results and DiscussionHYPOTHESIS 1: STRONGLY SUPPORTED Satisfaction exhibits positive, statistically significantinfluence on both types of loyalty.
Results and DiscussionHYPOTHESIS 2: PARTIALLY SUPPORTED High Purchase Importance stronger relationship between satisfaction and active loyalty. No significant findings for passive loyalty.HYPOTHESIS 3: PARTIALLY SUPPORTED High Purchase Uncertainty weaker relationship between satisfaction and passive loyalty. No significant findings for active loyalty.
Results and DiscussionHYPOTHESIS 4: PARTIALLY SUPPORTED High Rate of Switching Costs weaker relationship between satisfaction and active loyalty. No significant findings for passive loyalty.HYPOTHESIS 5: FULLY SUPPORTED Effect on old customers > effect on new customers
Managerial ImplicationsLong term relationships customers Investing in service quality and increasing satisfaction will increase retention rates and loyalty behaviorNew customers Investing in service quality and increasing satisfaction must be based on a careful cost-benefit analysis, as they are more likely to defect, since high satisfaction is not a strong predictor of retention for them.The effect of satisfaction is stronger on active than passiveloyalty.
Limitations and Future ResearchLimitations Future research Not generalizable as the Test if the effect could be sample was limited to one confirmed in other industry and one country. industries. Some hypotheses were not confirmed.