1 Page 1 of 8 ANZMAC 2009 Determinants of Customer Loyalty: An Exploratory Investigation on Relational Benefits in the Context of Customer Club Kevin Siu-lung Yu*, University of South Australia, Song Yang, University of South Australia, Abstract Although relational benefits identified in previous studies have gained empirical supports in services contexts, their generalisability in a context of customer clubs is yet to be verified. Customer clubs may require different key success factors and its operation needs special environmental considerations. By using focus group interviews among milk product club members, this research found that most of the relational benefits identified in the literatures emerged in the context of customer clubs. Two new relational benefits, information benefits and sharing benefits, have been found which may constitute unique attributes of customer clubs. However, relational benefits may have different interpretations to customer club members. The research provides evidence to explore the generalibility of relational benefits in a context of customer clubs. Keywords: Relationship Marketing: relational, loyalty, customer; Consumer Behavior: motivation.
2 ANZMAC 2009 Page 2 of 8 Determinants of Customer Loyalty: An Exploratory Investigation on Relational Benefits in the Context of Customer Club Background Research on relational benefits has drawn much attention in relationship marketing. Researchers (e.g. Gwinner, Gremler and Bitner, 1998; Hennig-Thurau, Gwinner and Gremler, 2002; Lacey, Suh, and Morgan, 2007; Algesheimer, Dholakia and Herrmann 2005; Sweeney and Webb, 2002; Spake et al., 2003 and De Wulf, Odekerken-Schro der and van Kenhove 2003) have identified seven types of benefits which might be the antecedents to loyalty-building process, namely social, confidence, special treatment, symbiotic, identity-related, comfort and interactive benefit. In the study of three distinct benefit types: confidence, social and special treatment benefits, Gwinner, Gremler and Bitner (1998) suggested that confidence benefits are ranked the most important among the other relational benefits by consumers, followed by social and special treatment benefits, respectively. A review of the existing literature reveals a lack of the development of relational benefits in both psychological and functional point of view in the consumer goods aspects while the majority research focused on service industries. The impact and significance of relational benefits have not been systematically examined in the context of customer clubs (Gustafsson, Roos and Edvardsson, 2004). Many consumer goods brand managers who operate customer clubs aim to acquire new customers and retain current customers. However, majorities of them are merely on a me-too basis rather than really trying to engage the customers with strategic purposes. Given the importance of customer clubs, as a marketing vehicle, in enhancing customer loyalty and retention, it is imperative to identify the critical success factors which count for the variance in the attractiveness and success of customer clubs. Relational benefits Identified in Previous Literature The field of relational benefits from customers motivations to participate in relationship with companies has been the focus in relationship marketing for a decade (e.g. Bendapudi and Berry 1997; Gwinner, Gremle & Bitner 1998; Hennig-Thurau, Gwinner and Gremler 2000; Sweeney and Webb 2002). However, relational benefits have rarely been the focal concern in recent research in customer club. Customer clubs are a platform where the social context will be broadened to not only a relation between organisations and customers, but also facilitating networks amongst customers. Thus, customer clubs may lead to increase perceptions of social and any other benefits. Organisation who offered customer club program is to establish switching barrier, retention and customer loyalty. Gwinner et al. (1998) pointed out that customer satisfaction and loyalty strategies can be built around relational benefits. Gwinner et al. (1998) suggested that for a long-term relationship to exist, both the firm and the customer must benefit. They studied the benefits to the customer for being loyal to a service provider and findings from their studies indicated that consumer relational benefits have categorized into three distinct benefit types: confidence benefits, social benefits and special treatment benefits; and amongst these
3 Page 3 of 8 ANZMAC 2009 benefits, confidence benefits are received more attentions and rated as more important than the other relational benefits by consumers. In an attempt to examine the benefits from the perspective of both buyers and suppliers, Sweeney and Webb (2002) studied across 20 buyer-supplier pairs and identified seven benefit categories: symbiotic, psychological, operational, social, economic, strategic and customization. In an empirical study among members of the Volkswagen Customer Club, Germany s largest automotive customer club, Stauss et al. (2001) indicated that customer club is regarded as a suitable platform to increase the interaction frequency between company and customer (customer interaction effect) by creating contact and feedback opportunities. By doing so, a close contact is built around the client throughout the entire customer life cycle. More recently, in a study of European car club members, Algesheimer et al. (2005) found that stronger brand community identification leads to greater community engagement and brand loyalty intentions. This is in line with Hennig-Thurau et al. s (2000) advocate on identity-related benefit. Although the relational benefits identified in previous studies have gained empirical supports in services contexts, their generalisability in customer clubs is yet to be verified. Customer clubs may require different key success factors and its operation needs special environmental considerations. Previous literatures have shown that both brand community identification (Algesheimer, Dholakia and Herrmann 2005) and interaction effects (Stauss et al., 2001) are club-specific and have played important roles in the setting of customer clubs environment while consumer comfort also plays a key role in service relationships (Spake et al., 2003). It is logical to posit that relational benefits in the service relationships may also appear in the setting of customer club programs. But their relative importance and relevance may vary. In the service relationships, the core product is the services while the relational benefits are added-value to the services. It can be managed in a structural or non-structural way. However, in the setting of customer club, the relational benefits given by the company to the consumers through customer clubs are managed in a more structural ways. Also, studies are yet to verify the status and to integrate the research streams on relational benefits which include the brand community identification, interaction effects and customer comfort in the setting of customer club. The primary objective of this study is to identify the key relational benefits in the setting of customer club from the consumers perspective. Methodology Focus group interview has been employed as the research method in the current research. A total five focus group interviews were conducted. Each group is with 5-6 respondents and each interview averaged about one to one and a half hour in length. In total, there were 27 interviewees, all female with a range of ages from The respondents were randomly selected from the database of the Friso customer club (Friso brand Infant milk powder from the Netherlands). The focus group interviews began with a brief introduction of the purpose of the study. Respondents were first asked to recollect former customer club experiences. Next, the researchers discussed with respondents why they might like to maintain a long-term relationship with customer club. In addition to the benefits of the products respondents were asked to
4 ANZMAC 2009 Page 4 of 8 identify and discuss any benefits they received and expected, as a result of engaging into the customer club. Analysis of the qualitative interview data followed the guidelines of Lincoln and Guba (1985), and Gwinner et al. s (1998) research also successfully dealt with data in this method. The conversation records were carefully read and analyzed several times, with key phrases highlighted. The goal in selecting these phrases was to understand and identify respondents real thoughts about relational benefits. Segments of each respondent s conversation that included related thoughts were identified and grouped. Next, these segment groups were organized into categories of benefit types. Then the benefits types were delivered and explained to the respondents. Discussion of the Results After several iterations, the authors discovered that the customer club member may receive nine types of relational benefits in the context of customer club: Confidence Benefits Nearly each respondent mentioned the creditability and safety issues in the customer club context. It can enhance my confidence to use the products ; Confidence is very important to me. Just like using the milk powder, if I know about the products and the ingredients of the products, it will build up my confidence to buy the products ; To know each other makes me feel more relax and confidence ; If I can know more about the products, I have confidence to use the products continuously. Special Treatment Benefits This benefit includes special treatment the consumer receives during the transaction process after joining the club. They provide more discounts and benefits to me ; I can buy the new products first and they provide free delivery service to me. There is no need for me to compare the prices. ; I can get benefits that other customers cannot entitle to ; I can call the hotline to consult the professions and get a solution. Social Benefits The authors discovered that consumers are very willing to use BBS, and join the club activities such as mama class to establish the relationship with other customers and service employees, Through communication with the members and the company, I can acquire the professional advice and can comfort my mind ; Through the social activities, I can get adequate knowledge ; To communicate with moms is my purpose to join the club ; The social aspects among members and with the company can enable us to get more knowledge ; I can exchange the ideas with the member. It also allows my child to play with other children. Symbiotic Benefits Consumers are seeing information exchange as the symbiotic benefit for the club and the customer. The relationship between club and customer is a symbiotic relationship. Clubs would like to know the demand of the consumers and consumers would like to get service from the clubs. ; It can create an interaction and exchange ideas among members ; We can rely on each other and can provide ideas to the firm. I can get new information. If there is any change in the recipe, I know it earlier than any other customers. I think the communication among each other is very important.
5 Page 5 of 8 ANZMAC 2009 Interactive Benefits Consumers considered interactive benefits as important elements for them to join the club, Fairly important and I acquire more adequate information through interaction with various members ; Consumers can reflect their opinions via the club activities; to improve the products as well as the related services ; I can talk to the manufacturer and give advice to them for product modification. The interaction is very important. Comfort Benefits Consumers feel more comfortable to use the products after they join the club and learn more news about the products, I feel good and have comfortable feeling ; Comfort is very important benefits to me. It makes me feel comfortable. Identity-related Benefits Consumers feel that they cannot get any identity-related benefits by joining the club. I don t care how people think about me ; I join the club not because of the identity. Information Benefits This is a new benefit factor that was not discovered previously, and it was different and unable to be converged into other benefit types. By joining the club, I can get much baby-related information. I want to get more new information thereafter ; I can get more knowledge related to the products. It provides me valid information to make my decision to buy the products ; I can get information about the products, how to raise a child and new products information after joining the club. Consumers may want to seek information to prove that their choice of the products is correct. The information that they get from the customer club reassures the buying decision. Thus, information benefits are unique and it is different from the social benefits because social benefits are driven by the interactive behavior while the information benefits are driven by the results of interactive behavior: information. Sharing Benefits This is another new benefit factor that was not discovered previously. Through the membership, I can share the happiness of nurturing the child and can meet with other moms and children ; I can communicate and share the experience for raising a child and also would like to share this kind of experience with friends and members. Consumers may want to share their doubt in mind and seek positive feedback to resolve their concerns. Also, some of them may want to get compliments by sharing their experience of using the products. Thus, the sharing benefits may play an important role to create word of mouth as well as customer retention and the loyalty. Summary of Results In virtue of the qualitative investigation, this research gets some basic ideas about relational benefits under the context of customer club. Nine types of relational benefits have been identified. Seven types of them, namely social benefit, confidence benefit, special treatment benefit, symbiotic benefit, identity-related benefit, comfort benefit and interactive benefit were found in the previous studies on traditional services. Thus, this qualitative study supports the prior studies in relational benefits (e.g. Gwinner, Gremler and Bitner 1998; Sweeney and Webb, 2002; Algesheimer, Dholakia and Herrmann, 2005; Hennig-Thurau, Gwinner and Gremler, 2000; Spake et
6 ANZMAC 2009 Page 6 of 8 al., 2003). In addition, the findings of this study show that there exist two new dimensions: Information and Sharing Benefits. These new dimensions of relational benefits may form unique attributes of customer clubs. However, among nine types of relational benefits, which types of relational benefits appear more important in the context of customer clubs is still unknown. Also, the importance of each benefit vary in terms of their contribution to customer loyalty is uncertain. Conclusion Given its exploratory nature, this study is the first attempt to investigate the relational benefits of the customer clubs. The result could generate some insights into the understanding of rationale underlying the success of customer club by identifying the relative importance of relational benefits. Nonetheless, this qualitative research suggests that customers may remain in the relationship if they receive important relational benefits. Drawing from the results, we offer the following strategic suggestions for managers who seeking to build customer relationships in the setting of customer club: Recognize the importance of nine types of relational benefits: These are added benefits for organisations engaging in consumer-customer club relationship and so too are benefits to customers beyond the core product or service. Differentiate the customer club against the competition by promoting the value of relational benefits: The results of this research imply that an organisation who implements customer club may be able to focus on one or more of these benefits as a means to differentiating itself from the competition. One may argue that even though there are nine types of relational benefits appeared in the setting of customer club, whether different types of benefits will have different effects on customer loyalty is still unclear. Hence, the authors should explore and test/ examine empirically the contribution of each relational benefit types and their association with customer loyalty in customer clubs in the future research. Based on the findings of this research, a questionnaire will be developed which aims to further examine the dimensionality and relative importance of customers relational benefits in customer club and its causal relationship to customer satisfaction, commitments and customer loyalty. Also, the authors will elucidate how product involvement is linked to relational benefits, customer satisfaction, commitment, and customer loyalty in the context of customer club.
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