Customer Satisfaction and Loyalty in Supply Chain: The Role of ...

Transportation Research Part E 35 (1999) 121±134

Customer satisfaction and loyalty in supply chain: the role of communication Alexander E. Ellinger a

a,* ,

Patricia J. Daugherty b, Quentin J. Plair

c

Villanova University, College of Commerce and Finance, Department of Marketing, 800 Lancaster Avenue, Villanova, PA 19085-1678, USA b The University of Oklahoma, Division of Marketing, 307 West Brooks, Room 1, Norman, OK 73019-0450, USA c Pepsi Cola, 1201 Dowry Drive, Lawrenceville, GA 30244, USA Received 18 September 1997; received in revised form 15 May 1998; accepted 18 December 1998

Abstract Communication between buyers and sellers is central to the supply chain philosophy. Further, the trend toward more detailed customer demands has made it even more important for ®rms to solicit input and feedback from their customers in order to better tailor their oerings to customer needs. Previous research suggests a strong linkage between customer satisfaction and customer loyalty. Highly satis®ed customers are more loyal than less satis®ed customers. Thus, it was hypothesized that ®rms proactively seeking information from customers should realize a ``pay o'' in terms of more satis®ed and, subsequently, more loyal customers. A survey of buyers in the personal products industry was used to examine three methods of listening to customers. Frequency of vendor meetings with customers, formalized contact through the solicitation of feedback and/or conducting surveys, and personal visits by senior vendor managers were found to be related to customer satisfaction as well as customer loyalty. Ó 1999 Elsevier Science Ltd. All rights reserved.

1. Introduction Many world-class ®rms have adopted a supply chain perspective in recent years. Such a business philosophy requires that trading partners ``jointly plan, execute, and co-ordinate logistical performance'' (Bowersox, 1991). Sharing of information and plans provides the potential to make channels more ecient and competitive (Closs et al., 1997; Daugherty et al., 1996; Ellram and Cooper, 1990; Gopal and Cypress, 1993). Thus, in recent years, many sellers have placed increased emphasis on listening to their customers in order to tailor their product and service *

Corresponding author. Tel.: +1 610 519 6055; fax: +1 610 519 5364; e-mail: [email protected]

1366-5545/99/$ ± see front matter Ó 1999 Elsevier Science Ltd. All rights reserved. PII: S 1 3 6 6 - 5 5 4 5 ( 9 9 ) 0 0 0 0 6 - X

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A.E. Ellinger et al. / Transportation Research Part E 35 (1999) 121±134

oerings to the customers' needs. Within the customer satisfaction literature, this is referred to as ``voice of the customer''. Listening to customers (and, subsequently, responding to their desires/ requests) should have a ``pay o'' in terms of more satis®ed and more loyal customers. Does it? The following sections present an overview and results of a recent survey addressing those issues. 2. Voice of the customer Customer satisfaction involves keeping customers happy both in day-to-day interactions and from a more global, long-term perspective (Hunt, 1977; Johnson and Fornell, 1991). Competitive pressures mandate that ®rms identify customer requirements and develop strategies that allow them to meet or beat the service levels provided by other vendors (Verwijmeren et al., 1996). Such customer-oriented contacts typically focus on determining relevant dimensions of service and/or products as well as an assessment of the customers' perceptions of how well the selling ®rm is doing in meeting those expectations (Sterling and Lambert, 1987). Excessive problems frequently translate to customer defections. However, it is less clear if the reverse is true. Is greater customer contact related to customer loyalty? Loyalty has been de®ned as a long-term commitment to repurchase involving both repeated patronage and a favorable attitude (Dick and Basu, 1994). The development, maintenance, and enhancement of customer loyalty represents a fundamental marketing strategy for attaining competitive advantage (Gould, 1995; Kotler, 1988; Reichheld, 1993). The current research addresses that issue by examining the two dimensions of customer loyalty ± repurchase intentions (repeat patronage) and commitment to the relationship (favorable attitude). Repurchase intentions encompass the customer's perceptions of continuity expectations such as relationship renewal (Kumar et al., 1995) and the customer's willingness to recommend the supplier to a successor (Cronin and Morris, 1992). Commitment exists only when the relationship is considered important, when a committed partner wants the relationship to continue inde®nitely, and when the partner is prepared to work at preserving it (Morgan and Hunt, 1994). Indications of relationship commitment include sharing of con®dential information, intentions to allocate future investments in the relationship, and level of assets and/or resources already committed to the relationship (Gundlach et al., 1995). The focus of the research is on one key component of business ± distribution service. The actual delivery of the product (or service) is critical to achieving customer satisfaction/success (Sterling and Lambert, 1989). While a number of customer employees are usually involved in purchase decisions, few could argue the critical in¯uence of one group ± buyers. Therefore, buyers were surveyed regarding distribution service provided by key vendors within their industry. Based upon the premise that communication (between buyers and sellers) should in¯uence customer satisfaction as well as customer loyalty, the research sought answers to the following questions: Q. 1(a) ± Is frequency of meeting with vendor distribution personnel related to customer satisfaction? Q. 1(b) ± Is frequency of meeting with vendor distribution personnel related to customer loyalty? Q. 2(a) ± Is regular, formalized vendor contact related to customer satisfaction?


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Q. 2(b) ± Is regular, formalized vendor contact related to customer loyalty? Q. 3(a) ± Are personal visits by vendors' senior managers related to customer satisfaction? Q. 3(b) ± Are personal visits by vendors' senior managers related to customer loyalty? 3. Research setting and methodology The research was sponsored by a leading US manufacturer of personal products interested in examining industry-speci®c dimensions of customer satisfaction. Initial research eorts focused on in-depth interviews with the manufacturer's employees (account representatives, customer service personnel, and a person from the credit area) and customers (buyers and distribution personnel). A total of 15 telephone interviews were completed. The interviews each lasted approximately 20 min. Information obtained during the interviews helped to identify relevant dimensions of distribution service. The information was subsequently used to develop a six-page survey. A list of 230 customers' names and phone numbers was provided by the sponsor. Contact was made with 200 buyers; 30 were unreachable. Of the 200 buyers contacted, 180 agreed to participate or asked to review the questionnaire before committing. The potential respondents were given the option of receiving the questionnaire by mail or FAX. Nearly three-quarters asked to have the survey FAXed. Following distribution, 99 usable surveys were returned (43% response rate). Non-response bias was tested by comparing the last quarter of the respondent base (those considered to be most similar to non-respondents) to earlier responses (Armstrong and Overton, 1977; Lambert and Harrington, 1990). Examination of relevant variables indicated that non-response bias was not an issue. The survey instrument included questions on demographic information. Mean responses indicate that respondents, i.e., buyers, had responsibility for purchasing for 659 stores involving 313 product lines and 6425 SKU's. Mean annual corporate sales per respondent ®rm were slightly over $2.4 billion. On average, the respondents' ®rms operated 3.5 distribution centers. 3.1. Frequency of meeting Question 1(a) addresses the relationship between frequency of meeting with distribution service personnel and overall customer satisfaction. More meetings with customers can enable suppliers to solicit the detailed and timely input necessary to ensure that eorts are concentrated on areas that are of particular importance to the customers. Focusing on key service areas has the potential to increase levels of overall customer satisfaction. The buyers were asked, ``On average, how many times per year do you meet with vendor distribution personnel?'' Respondents answered for each of the six vendors (or for each of the vendors they work with). The six manufacturers were identi®ed in the questionnaire; however, the data are considered proprietary and the sponsoring ®rm has asked that the competitor set examined not be identi®ed. Responses were divided into three groups: Group 1 includes the evaluations of vendors who never meet with customers; Group 2 includes evaluations of vendors meeting with customers 1±3 times per year; and Group 3 includes evaluations of vendors meeting with customers four or more

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times per year. These levels were chosen based upon the rationale that no meetings or only a few meetings with customers may be perceived by customers as a sign of minimal commitment. Accordingly, four meetings or greater was considered appropriate as the third category. Pre-survey interviews with the sponsoring ®rm's employees and customers had indicated the importance of meeting with customers at least once per quarter. Question 1(b) examines the relationship between frequency of meeting with distribution service personnel and the two dimensions of loyalty ± repurchase intentions and relationship commitment. Greater familiarity with customer operations and requirements ± the product of more frequent meetings ± may help vendor distribution personnel to evaluate additional opportunities for identifying product/service enhancements. For example, more frequent meetings can suggest service areas where vendors can be of assistance or identify merchandising opportunities. Such constructive presence may encourage customers to buy more product. In addition, frequent meetings between vendor distribution personnel and customers may be viewed as an indication that both parties are committed to working to preserve the relationship. 3.2. Formalized contact Manufacturing ®rms may not have the resources or the inclination to hold frequent meetings with all of their customers. Geographical separations and the amount of business involved are factors which can preclude regular face-to-face meetings between vendor distribution personnel and their ®rm's customers. Where frequent face-to-face meetings are not feasible, the solicitation of regular formal feedback by mail or telephone survey is an alternative method of gathering information and feedback. The current research anticipated that such formalized contact would positively impact customer satisfaction and customer loyalty. Questions 2(a) and (b) address the relationship between regular, formalized vendor contact and the two previously discussed areas of interest, overall customer satisfaction and customer loyalty. The buyers were asked, ``Do these vendors regularly ask for formal feedback or conduct surveys of distribution service?'' Yes/no response categories were provided. 3.3. Senior management visits Many ®rms rely upon senior management visits with customers to obtain valuable input and feedback. High level executives have the authority to realign their own ®rms' operations in order to be responsive to customer requests. Such initiatives are likely to be noticed by customers. Thus, personal visits by senior management were expected to in¯uence customer satisfaction and customer loyalty. Questions 3(a) and (b) investigate these suggested associations. To examine the relationships, the buyers were asked to indicate if their ®rms received personal visits from senior managers representing the six vendor ®rms examined. As before, yes/no response categories were provided. 3.4. Customer satisfaction To assess the buyers' overall level of satisfaction, they were asked to indicate how strongly they agreed or disagreed with statements regarding their overall satisfaction with the distribution


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service provided by each of the vendors. A 7-point scale was used (1 strongly disagree, 4 neutral, and 7 strongly agree). The satisfaction-related statements utilized were: we are delighted with our overall (distribution service) relationship with them; we wish more of our suppliers were like this one; it is a pleasure dealing with this supplier; and there is always some problem or another with this supplier (reverse scored). 3.5. Loyalty Repurchase intentions were assessed by asking the buyers the extent of their agreement with four statements: we are likely to increase purchases from this vendor in the next year; we are likely to decrease purchases from this vendor in the next year; all things being equal (price, product, quality, etc.), we intend to buy more from this vendor because of their distribution service; and I would recommend that my successor continue using this vendor. Information relating to relationship commitment was collected by asking the buyers their opinions regarding the following statements pertaining to their relationships with the six vendors under examination: the relationship that my ®rm has with this ®rm is something we are very committed to; the relationship that my ®rm has is something my ®rm intends to maintain inde®nitely; the relationship that my ®rm has with this vendor deserves our ®rm's maximum eort to maintain; and, maintaining a long-term relationship with this vendor is very important to this ®rm. Reliabilities for the satisfaction, repurchase intentions, and relationship commitment scales were 0.827, 0.659 and 0.876, respectively. 4. Results The following section presents the results of analyses examining the relationship between various types of listening to customers and customer satisfaction/loyalty. 4.1. Frequency of meeting It was expected that more meetings with distribution service personnel would be positively related to customer satisfaction. Table 1 presents analysis of variance (ANOVA) results. When comparisons were made between the three groups, signi®cant dierences were found, although the results were not what was expected. For three of the four overall satisfaction items, the buyers indicated higher levels of satisfaction for both the vendors meeting four or more times per year and the vendors not meeting with customers at all than for the vendors meeting with customers 1±3 times per year. Signi®cant dierences were found for: we are delighted with our overall (distribution service) relationship with them; it is a pleasure dealing with this supplier; and there is always some problem or another with this supplier. No signi®cant dierence was found between groups for the remaining statement, ``we wish more of our suppliers were like this one''. However, when all four items were summed into a single combination measure of overall customer satisfaction, the vendors that met with their customers four or more times per year had signi®cantly higher levels of overall customer satisfaction than both the other groups. As pro-

126


Table 1 Customer satisfaction ratings by frequency of meetings (One-way ANOVA tests of dierences in means a ) Satisfaction with distribution service

We are delighted with our overall (distribution service) relationship with them (SAT1) We wish more of our suppliers were like this one (SAT2) It is a pleasure dealing with this supplier (SAT3) There is always some problem or another with this supplier (SAT4) c Combination measure a b c

Meetings with vendor distribution personnel 0

1±3

Mean (s.d.)

Mean (s.d.) Mean (s.d.)

5.39

b

(1.38) 4.95 (1.35)

5.03 (1.62) 5.35 2.05

b b

4.86 (1.56)

(1.56) 4.85 (1.55) (1.18) 2.39 (1.13)

17.61 (4.10)

4 or more 5.42

b

4.08 (510)

0.017

5.09 (1.70)

0.61 (506)

0.541

b

5.23 (517) 2.98 (517)

0.006 0.051

3.21 (489)

0.041

5.45 2.27

b

(1.34)

F-ratio (d.f.) P-value

(1.47) (1.12)

17.06 (4.02) 18.22 b (3.74)

7-point scale: 1 strongly disagree; 7 strongly agree. Indicates signi®cant dierences between means at 0.05. Indicates reverse scoring.

posed, the research provides at least partial support for the existence of a positive relationship between frequency of meeting with distribution service personnel and customer satisfaction. Table 2 presents analysis of variance (ANOVA) results for each of the two dimensions of loyalty. It was expected that more meetings with distribution service personnel would be positively related to repurchase intentions. When comparisons were made between the three groups, signi®cant dierences were found, although, once again, the results were not what was anticipated. As expected, the vendors meeting with customers four or more times per year generated signi®cantly higher agreement with the statement, ``we are likely to increase purchases from the vendor in the next year'', than the vendors meeting 1±3 times per year and the vendors that did not meet with customers at all. For the statement, ``all things being equal (price, product, quality, etc.), we intend to buy more from this vendor because of their distribution service'', the vendors meeting four or more times and the vendors meeting 1±3 times per year both had signi®cantly higher repurchase intentions than the vendors that did not meet with customers at all. There was no signi®cant dierence between the three groups on the remaining two repurchase intentions items: we are likely to decrease purchases from this vendor in the next year, and I would recommend that my successor continue using this vendor. As with overall customer satisfaction, when all four items were aggregated into a single combination measure of overall repurchase intentions, the vendors that met with their customers four or more times per year had signi®cantly higher levels of repurchase intentions than the other groups. Therefore, a positive relationship between frequency of meeting with distribution service personnel and repurchase intentions was supported. It had been predicted that more meetings with distribution service personnel would be positively related to relationship commitment. However, when comparisons were made between the three groups, no signi®cant dierences were found for any of the four individual relationship commitment items, or for the single combination measure of relationship commitment comprising


127

Table 2 Customer loyalty ratings by frequency of meetings (One-way ANOVA tests of dierences in means a ) Meetings with vendor distribution personnel 0 meetings

1±3 meetings 4 or more meetings F-ratio (d.f.) P-value

Mean (s.d.) Mean (s.d.) Repurchase intentions We are likely to increase purchases from this vendor in the next year (REP1) We are likely to decrease purchases from this vendor in the next year (REP2) c All things being equal (price, product, quality, etc.), we intend to buy more from this vendor because of their distribution service (REP3) I would recommend that my successor continue using this vendor (REP4) Combination measure Relationship commitment The relationship that my ®rm has with this ®rm is something we are very committed to (COM1) The relationship that my ®rm has with this ®rm is something my ®rm intends to maintain inde®nitely (COM2) The relationship that my ®rm has with this vendor deserves our ®rm's maximum eort to maintain (COM3) Maintaining a long term relationship with this vendor is very important to my ®rm (COM4) Combination measure a b c

Mean (s.d.) 0.037

2.11 (1.26)

0.06 (513)

0.944

b

6.07 (504)

0.003

6.12 (1.17)

0.53 (505)

0.588

b

4.20 (489)

0.016

5.58 (1.33)

5.86

2.11 (1.32)

2.06 (1.30)

3.91 (1.56)

4.39

6.02 (1.25)

6.18 (1.26)

b

(1.55)

17.68 (2.64) 18.21 (2.72)

b

3.31 (516)

5.54 (1.46)

4.48

18.53

(1.28)

(1.78)

(2.89)

5.76 (1.44)

5.62 (1.34)

5.81 (1.24)

0.70 (522)

0.499

5.88 (1.31)

5.76 (1.41)

5.77 (1.43)

0.32 (510)

0.726

5.56 (1.49)

5.46 (1.44)

5.53 (1.43)

0.15 (522)

0.862

6.10 (1.28)

6.04 (1.21)

6.10 (1.10)

0.10 (521)

0.901

23.54 (4.50) 22.93 (4.53)

23.23 (4.44)

0.54 (508)

0.581


all four items. The current research failed to support a positive relationship between frequency of meeting with vendor distribution personnel and relationship commitment. 4.2. Formalized contact T-tests were used to identify dierences between the two groups: those formally requesting feedback from their customers and those that do not solicit feedback with respect to distribution service performance. The results for the association between formalized vendor contact and overall customer satisfaction are shown in Table 3. As anticipated, the buyers indicated signi®cantly higher satisfaction with the group that requested formal feedback from their customers than with the group that did not do so. Signi®cant

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Table 3 Customer satisfaction by formalized vendor contact (T-tests of dierences in means for customer satisfaction a ) Satisfaction with distribution service

Regular, formalized visits Yes

We are delighted with our overall (distribution service) relationship with them (SAT1) We wish more of our suppliers were like this one (SAT2) It is a pleasure dealing with this supplier (SAT3) There is always some problem or another with this supplier(SAT4) d Combination measure a b c d

No

5.46 5.31 5.54 2.17

c

18.42

b

b b

5.30 4.94 5.25 2.23 17.66

7-point scale: 1 strongly disagree; 7 strongly agree. Indicates signi®cant dierences between means at 0.05. Indicates signi®cant dierences between means at 0.10. Indicates reverse scoring.

dierences between groups were found on three of the four individual satisfaction items: we are delighted with our overall (distribution service) relationship with them; we wish more of our suppliers were like this one; and it is a pleasure dealing with this supplier. There was no signi®cant dierence between groups on the ®nal satisfaction item: there is always some problem or another with this supplier. Further, the ratings for the vendors soliciting formal feedback from customers were signi®cantly higher in terms of overall satisfaction, i.e., on the single combination measure of overall satisfaction comprising of all four items. Thus, the research supported a positive association between formalized vendor contact and overall customer satisfaction. Positive relationships between formalized vendor contact and the two dimensions of loyalty were also anticipated. Results of T-tests performed to examine the relationships are presented in Table 4. The group that solicited formal feedback from customers had signi®cantly higher repurchase intentions ratings than the group not formally soliciting feedback, on three of the four individual items: we are likely to increase purchases from this vendor in the next year; we are likely to decrease purchases from this vendor in the next year; and all things being equal (price, product, quality, etc.), we intend to buy more from this vendor because of their distribution service, as well as on the single combination measure for overall repurchase intentions. There was no signi®cant dierence between the two groups on the fourth item: I would recommend that my successor continue using this vendor. Similarly, the group of vendors that solicited formal feedback from customers generated signi®cantly higher relationship commitment than the group of vendors who did not, on all four individual items, as well as on the single combination measure of overall relationship commitment. Thus, positive associations between formalized vendor contact and both dimensions of loyalty were con®rmed by the research. 4.3. Senior management visits Two groups were formed for analysis purposes: those vendors where senior managers made personal visits to customers, and those vendors where they did not. T-tests were used to test for dierences between the two groups; results are presented in Tables 5 and 6.


129

Table 4 Customer loyalty by formalized vendor contact (T-tests of dierences in means for customer loyalty a ) Regular, formalized visits Yes Repurchase intentions We are likely to increase purchases from this vendor in the next year (REP1) We are likely to decrease purchases from this vendor in the next year(REP2) c All things being equal (price, product, quality, etc.), we intend to buy more from this vendor because of their distribution service (REP3) I would recommend that my successor continue using this vendor (REP4) Combination measure Relationship commitment The relationship that my ®rm has with this ®rm is something we are very committed to (COM1) The relationship that my ®rm has with this ®rm is something my ®rm intends to maintain inde®nitely (COM2) The relationship that my ®rm has with this vendor deserves our ®rm's maximum eort to maintain (COM3) Maintaining a long term relationship with this vendor is very important to my ®rm (COM4) Combination measure a b c

6.10 1.92 4.60

No b

5.57 2.18 4.18

b b

6.19

6.07

18.79

b

18.00

6.19

b

5.63

5.98

b

5.75

5.84

b

5.42

6.33

b

6.00

24.34

b

22.92


Vendors whose senior managers personally visited customers generated signi®cantly higher perceptions of overall satisfaction and loyalty than the vendors whose senior managers did not make personal visits to customers. Firms whose senior management conducted customer visits were rated signi®cantly higher on three of the four individual satisfaction items: we wish more of our suppliers were like this one; it is a pleasure dealing with this supplier; and there is always some problem or another with this supplier, as well as on the single combination measure for overall Table 5 Customer satisfaction by senior management visits (T-tests of dierences in means for customer satisfaction a ) Satisfaction with distribution service

Senior management visits Yes

We are delighted with our overall (distribution service) relationship with them (SAT1) We wish more of our suppliers were like this one (SAT2) It is a pleasure dealing with this supplier (SAT3) There is always some problem or another with this supplier (SAT4) c Combination measure a b c


5.42 5.42 5.59 2.06 18.51

No b b b b

5.28 4.84 5.18 2.31 17.52

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Table 6 Customer loyalty by senior management visits (T-tests of dierences in means for customer loyalty a ) Senior management visits Yes Repurchase intentions We are likely to increase purchases from this vendor in the next year (REP1) We are likely to decrease purchases from this vendor in the next year(REP2) c All things being equal (price, product, quality, etc.), we intend to buy more from this vendor because of their distribution service (REP3) I would recommend that my successor continue using this vendor (REP4) Combination measure Relationship commitment The relationship that my ®rm has with this ®rm is something we are very committed to (COM1) The relationship that my ®rm has with this ®rm is something my ®rm intends to maintain inde®nitely (COM2) The relationship that my ®rm has with this vendor deserves our ®rm's maximum eort to maintain (COM3) Maintaining a long term relationship with this vendor is very important to my ®rm (COM4) Combination measure a b c

No

6.17 1.96 4.55

b

6.43

b

5.94

19.05

b

17.79

6.11

b

5.60

6.05

b

5.67

5.84

b

5.36

6.22

b

6.00

24.22

b

22.74

b b

5.47 2.22 4.13


satisfaction. There was no signi®cant dierence between groups for the ®nal satisfaction item: we are delighted with our overall (distribution service) relationship with them. In addition, vendors whose senior management conducted customer visits had signi®cantly higher ratings on all of the individual loyalty items, as well as on the single combination measures for repurchase intentions and relationship commitment. Therefore, the anticipated positive relationships between personal visits by senior management, and overall customer satisfaction and customer loyalty, were con®rmed by this study. 4.4. Analysis of low volume accounts To further examine the veracity of the causal links implied by the current research, additional analyses were undertaken. Intuitively, transaction volume may also in¯uence associations between contact behavior and attitude. For example, high volume accounts involve repeat business and, therefore, are likely to generate the most visits. Thus, vendors were divided into high and low volume accounts based upon information supplied by the sponsoring company. As expected, signi®cant dierences (at the 0.05 level) were found between high and low volume accounts for formal feedback and senior management visits. There was no signi®cant dierence between high and low volume accounts for number of visits. These results suggest that volume does in¯uence contact activity.


131

Next, to better assess the potential impact of contact behavior, analysis was focused on only low volume accounts. This allowed comparisons of accounts equal in terms of current volume, but dierent in terms of level of contact. Low volume accounts were compared on satisfaction, repurchase intentions, and relationship commitment for each of the three individual types of contact behavior. In addition, contact pro®le types were created for low volume accounts and comparisons on attitude were made between low volume accounts who received none of the three types of contact behavior and low volume accounts who received either two or three of the three types of contact behavior. Results for the T-tests of dierences between groups are presented in Table 7. To summarize the results, low volume accounts who were visited three or more times per year by vendors had signi®cantly (at 0.05 level) more favorable attitudes toward the vendors on 8 of 15 items than low volume accounts who were visited 0 to 2 times a year by vendors. Similarly, vendors who requested formal feedback from low volume accounts generated signi®cantly higher scores on ten of 15 attitudinal items than vendors who did not request formal feedback from low volume accounts. It was also found that vendors whose senior management visited low volume

Table 7 Low volume accounts: dierences in individual contact behaviors (T-tests of dierences in means a ) Item

Regular, formalized visits

Formal feedback

Senior management visits

Contact behaviors

3 or more

No

Yes

No

2 or 3

5.33 4.92 5.27 6.0 17.48

5.52 5.55 5.73 6.12 18.68

5.34 4.86 5.27 5.94 17.45

5.55 5.55 5.74 6.09 18.77

5.68 6.05 4.20 6.05 17.93

6.36 6.29 4.58 6.41 18.97

b

5.61 6.06 4.13 6.00 17.77

6.36 6.41 4.60 6.41 18.88

b

5.58 5.81 5.40 6.01 23.05

6.10 5.91 5.73 6.19 23.94

b

5.62 5.85 5.42 6.09 23.26

6.20 5.97 5.77 6.22 24.16

b

0±2

Yes

Satisfaction with distribution SAT1 5.42 SAT2 4.14 c SAT3 5.53 b SAT4 d 6.16 b Combo 18.19 b

service 5.31 4.88 5.16 5.85 17.05

5.57 5.39 5.77 5.96 18.60

Repurchase intentions REP1 6.00 b REP2 6.23 c REP3 4.54 b REP4 6.21 b Combo 18.47 b

5.60 6.02 3.84 5.94 17.47

6.35 6.42 4.32 6.32 18.52

b

Relationship commitment COM1 5.86 COM2 5.89 COM3 5.52 COM4 6.16 Combo 23.47

5.59 5.82 5.47 6.08 23.44

6.50 6.13 5.89 6.63 25.14

b

a b c d

b

b b b

b c c

b b b b

7-point scale: 1 strongly disagree; 7 strongly agree. Indicates signi®cant dierences between means at 0.05. Indicates signi®cant dierences between means at 0.10. Indicates reverse scoring.

b b b

c c b b

b

None

b b b

b b b b

b c c

5.37 4.91 5.19 6.28 17.10 5.45 6.00 3.74 5.83 17.20

5.51 5.85 5.37 5.92 23.20

132


accounts had signi®cantly higher scores on eight of 15 attitudinal items when compared to vendors whose senior managers did not visit low volume accounts. Finally, to assess the potential impact of multiple contact behaviors, low volume accounts receiving either two or three types of contact behavior were compared to low volume accounts where vendors made no contact. On ten of the 15 attitudinal items, low volume accounts receiving multiple contacts rated vendors signi®cantly higher than low volume accounts where vendors did not make contact. Based upon these results, low volume vendors with high contact behaviors appear to generate higher satisfaction, repurchase intentions, and commitment than low volume vendors with low contact behaviors. These results lend additional credence to the premise that contact behaviors positively in¯uence customers' perceptions of satisfaction and loyalty toward vendors. The differences do not appear to be merely a function of high volume, i.e., big accounts get more attention and, therefore, are ``happier''. When only low volume or smaller accounts were examined, dierences in attitudes (satisfaction, repurchase intentions, and commitment) related to vendor contact behavior were revealed. In sum, the current research suggests that there are signi®cant positive relationships between meeting frequency and overall perceptions of customer satisfaction and repurchase intentions. In addition, formalized contact and personal visits by senior management were found to signi®cantly impact overall perceptions of customer satisfaction and loyalty. 5. Conclusions and implications The research focused on the importance of voice of the customer ± listening to and proactively seeking input from customers. Three methods of listening to customers ± vendor meetings with customers, formalized contact through the solicitation of feedback and/or conducting surveys, and personal visits by senior vendor managers ± were examined. Frequency of meetings was theorized to be positively associated with customer satisfaction. Frequency of meetings was also expected to be associated with customer loyalty. The results support these contentions although there was a somewhat surprising twist. Speci®cally, in two instances, the respondents indicated signi®cantly higher levels of customer satisfaction with distribution service relating to vendors that hold four or more meetings per year with customers and the vendors who do not hold customer meetings than their satisfaction levels with vendors making 1±3 visits per year. It is dicult to understand why either no meetings or four or more would, in eect, be preferable to 1±3 meetings per year. Solicitation of formal feedback and conducting customer surveys appear to be appropriate methods for gathering relevant input. Strong relationships were found between satisfaction and the formal collection of customer feedback as well as between loyalty and the formal collection of customer feedback. Rather than waiting for unsolicited feedback and the inevitable complaints associated with problems, vendors are advised to routinely seek customer input as a means of avoiding problems and collaborating on service enhancements. The level of contact, i.e., the job title of contact person, also appears to be an important component of building satisfaction and loyalty. Personal visits by senior managers make a good impression. Customers may be ¯attered with the attention from senior managers. Also, they are


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likely to believe there will be ``follow through'' because senior managers have the clout to handle account-related decisions and make adjustments as necessary. In general, the research provides strong support for seeking the voice of the customer. Meeting frequency, formalized vendor contact, and personal visits from senior managers were all found to relate to the two constructs ± customer satisfaction and customer loyalty. With respect to loyalty, a stronger relationship was found between customer contacts and repurchase intentions than between customer contacts and relationship commitment. The respondents may not be willing to acknowledge commitment to the vendors, but they intend to keep buying. The current research provides empirical support for the development of programs/policies aimed at actively soliciting input from customers. A range of methods were examined; however, the study does not allow the assessment or evaluation as to which type of ``listening'' is best. Generally, it is recommended that multiple research approaches to collecting input from customers be used (Berry and Parasuraman, 1997). Future research should focus on assessing the relative value of various methods for gaining customer input such as vendor meetings, visits from senior managers, and surveys. The research centered only on quanti®able components of customer contact ± do vendors make contact, what kind, and how often. No attempt was made to gauge the quality of the contacts. Intuitively, it seems likely that not all customer contacts are created equal. Sheer number of contacts alone cannot be counted on to engender satisfaction and/or loyalty from customers. Future research looking at the types of contact, content/subject areas covered, etc. is likely to provide greater insights into the potential to be gained from allocating time and resources to actively gathering customer input. One area of particular interest would be to examine allocation of time during meetings/visits (or space allocation in survey instruments). For example, examination of the importance of time spent dealing with problems versus time spent jointly planning and developing innovative strategic approaches could provide guidance for managing contacts. Finally, a caveat should be added. While personal contact and listening to customers is important, it should be acknowledged that although manufacturers in the personal products industry face considerable competition they also enjoy a certain level of consumer loyalty. For some brands, the retailers are forced to carry the products. While personalized contact regarding distribution service can help to cement the relationship, store-level demand dictates brands carried and it would be dicult to drop successful products regardless of contact activity/service, particularly in consumer product markets. However, the objective of contact activities ± as evidenced by Proctor and Gamble's cohort of representatives permanently stationed at Wal-Mart's headquarters in Bentonville, Arkansas ± is to further increase the volume of product sold by ensuring that customers' potential requirements are clearly understood and actioned.

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