The role of relationship quality and loyalty programs in building customer loyalty

Abstract

Purpose Despite the abundance of B2B loyalty programs (LPs), the research on their interplay with relationship marketing is scarce. The purpose of this paper is to investigate a LP (a relational practice) on a transactional business market to test if and how a B2B LP affects relationship outcomes. Design/methodology/approach The study is based on dyadic research in a multi-theory framework. Data were collected from 200 small and medium enterprises that purchase office supplies from a company and merged with the company’s internal records.The formative-reflective measurement model is estimated using structural equation modeling – partial least squares (SEM-PLS). Findings Relationship quality (RQ) directly affects sales and customer share of wallet. The effect is strengthened by customer activity in a LP. RQ results directly in a longer tenure and willingness to recommend only for members of a LP. Research limitations/implications RQ is driven mainly by customer’s evaluation of prior experience with a supplier, while a LP is based on a forward-looking promise of a reward. The results of the study point to the level of customers’ activity in a LP as a boundary condition of the program’s efficacy. Practical implications RQ affects both attitudinal and behavioral outcomes but through distinct mechanisms. Once a supplier is a preferred one, LP membership strengthens the attitudinal outcome of a relationship. The effect of RQ on company performance is magnified by the level of customer activity in a LP but not by the membership status. Originality/value The theoretical framework integrates transaction costs, relational contract and relational exchange theories to investigate a LP on a transactional market. The study adds to the scant literature on LPs in business-to-business and provides evidence for similarities and differences in comparison to consumer research.

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“…According to previous research, relationship quality and loyalty program are known to influence consumer loyalty, repurchase, and word of mouth advertisement [4] [7]. The present research conducted referenced upon relationship marketing concept with the aim to improve some understanding of the interplay between antecedents regarding online relationship quality and their impact on attitudinal and behavioral loyalty on the e-commerce industry.…”