Robert W. Palmatier, Lisa K. Scheer, and Jan-Benedict E.M. Steenkamp
Executive Summary
Cultivating loyal customers can lead to increased sales and customer share, lower costs, and higher prices. Practitioners bombard consumers with patronage programs and target industrial customers with relationship marketing efforts, value-creating strategies, and key account programs, but is greater customer loyalty always beneficial for the selling firm?
Loyalty to the selling firm, as it is typically measured, comingles customer loyalties to the firm and to the salesperson with whom that customer interfaces. If customer loyalty to the selling firm is based in elements inextricably bound to a specific salesperson, that "loyalty" would evaporate should the salesperson leave. Some portion of a customer's reported loyalty to the firm may actually be salesperson-owned loyalty, fealty directed specifically toward an individual salesperson independent of his or her affiliation with the selling firm. This study makes several contributions to the management of business-to-business relationships by investigating salesperson-owned loyalty across 362 buyer–salesperson dyads.
First, the authors theoretically explicate, conceptualize, and measure salesperson-owned loyalty. The results demonstrate that salesperson-owned loyalty can pay large dividends in financial outcomes for the selling firm as long as the salesperson remains with the firm, but it can have a major negative impact if the salesperson leaves.
Second, the authors explore salesperson-owned loyalty's consequences for the selling firm, focusing on three distinct financial outcomes and the latent risk that potential salesperson defection poses. The hypotheses are tested with data obtained from salespeople, sales managers, and customers. Across both cross-sectional and longitudinal studies, loyalty to the selling firm positively affects only customer willingness to pay a price premium. In contrast, salesperson-owned loyalty significantly affects all three financial outcomes in the cross-sectional study and positively affects sales growth longitudinally; these results are difficult to dismiss as an artifact of any one metric, data source, or measurement method. The longitudinal structural model provides solid evidence for causal direction because the customer's salesperson-owned loyalty and loyalty to the firm were measured before the resultant actual sales growth achieved.
Third, the authors investigate antecedents of salesperson-owned loyalty, examining how loyalty-capturing strategies and selling-firm consistency enhance or curb the effects of relationship-building activities. Relationship-building efforts increase customer value received, but their impact on customer loyalty is complex, moderated both by perceived selling firm consistency and by loyalty-capturing strategies that both the selling firm and the salesperson employ. The authors demonstrate how loyalty-capturing strategies and perceived selling-firm consistency, new constructs derived from social judgment theory, moderate the positive effects of relationship-enhancing activities on customer loyalty, thus providing insight into how firms can mitigate the negative effects of salesperson-owned loyalty.
Biography
Robert W. Palmatier is Assistant Professor of Marketing in the College of Business at the University of Cincinnati. His current research focuses on the effectiveness of relationship marketing strategies at building both interfirm and interpersonal relational bonds in business-to-business and channel contexts.
Lisa K. Scheer is Emma S. Hibbs Distinguished Professor and Associate Professor of Marketing in the College of Business at the University of Missouri–Columbia. Her current research focuses on the structure and effectiveness of interorganizational relationships at both interfirm and interpersonal levels, including the roles of relationship orientation, trust, negotiation, and dependence.
Jan-Benedict E.M. Steenkamp is C. Knox Massey Professor of Marketing and Marketing Area Chair in the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill. His current research focuses on global marketing, marketing research methods and techniques, effectiveness of marketing instruments, and interorganizational relationships.
Journal of Marketing Research, Vol. XLIV, No. 2, May 2007
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