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Assessing Relationship Quality


Francis Buttle, Peter Naude

Industrial Marketing Management

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Assessing Relationship
Quality
Pete Naudé
Francis Buttle

Assessing the quality of any relationship has remained a dressed: What are the features that distinguish successful
problematic issue in spite of the recognized importance of rela- relationships from unsuccessful ones? What is it that
tionships within business-to-business marketing, and this pa- makes a relationship highly valued by those within it?
per attempts to redress this shortcoming. Working with a Why do actors in a relationship wish and act to pursue
group of 40 executives, and utilizing conjoint analysis, we ex- and protect that relationship?
plore this complex area by first identifying five underlying di- Our focus in this paper is on developing more clearly our
mensions of high quality business-to-business relationships: understanding of what counts as a “good” or “poor” quality
trust; needs fulfilment; supply chain integration; power; and relationship. This is integrally linked to the issue of cus-
profit. Our preliminary results indicate that there is no one tomer and relationship value, currently one of the most
measure of just what constitutes a good relationship. Rather, pressing and important managerial issues [1]. Our key re-
there are potentially four different types of “good” relationship, search question in this paper focuses on the benefit rather
each composed of different blends of these five attributes. than the cost element of value, and develops our under-
© 2000 Elsevier Science Inc. All rights reserved standing of what the characteristic attributes of a good re-
lationship are, and how they might vary in importance.
INTRODUCTION AND LITERATURE REVIEW Despite the general shortage of empirical investiga-
tion, there have been some useful contributions from a
Within the rapidly expanding literature of business-to- number of authors. However, these authors employ a va-
business marketing, supply-chain management, relation- riety of different constructs that are not always clearly
ship marketing and customer relationship management defined or distinguished from each other. Some write of
there is relatively little attention paid to the issue of rela- relationship quality, others of relationship value or of
tionship quality. Important issues remain poorly ad- partnership success. There is some face validity about the
use of these terms, but their construct validity remains
Address correspondence to Pete Naudé, University of Bath, Claverton unproven. It seems probable that a high quality relation-
Down, Bath BA2 7AY, UK ship will create value and be regarded as successful by at

Industrial Marketing Management 29, 351–361 (2000)


© 2000 Elsevier Science Inc. All rights reserved 0019-8501/00/$–see front matter
655 Avenue of the Americas, New York, NY 10010 PII S0019-8501(00)00112-7
What determines the quality of a
relationship?

least one of the parties. Broadly, however, they are all upon to behave in such a manner that the long-term inter-
seeking answers to the same question: what counts as est of the customer will be served. The authors found that
good relationship? These different contributions are re- relationship quality had a significant influence on the
viewed briefly below. customer’s anticipation of future commitment, arguing
Gummesson [2] identified relationship quality as one of that “ . . . relationship quality contributes to a lasting
four forms of quality encountered by customers. He re- bond by offering assurance that the salesperson will con-
garded it as the quality of the interaction with the customer, tinue to meet the customer’s expectations (satisfaction)
arguing that “ . . . high relational quality contributes to cus- and not knowingly distort information or otherwise sub-
tomer-perceived quality and thus enhances the chances for vert the customer’s interests (trust).”
a long-term relationship.” This construal of quality has Despite these insights, the need for more work to be
been absorbed into the Nordic School’s overall conceptual- done in this area is argued by Mohr and Spekman [7]
ization of service quality [see for example, 3, 4]. In later who stated that, “ . . . an understanding of the characteris-
work, Ravald and Grönroos [5] distinguish between epi- tics associated with partnership success is lacking.” On
sodic and relationship value, noting (as do Gale and Wood, the basis of empirical research, they suggest that the pri-
[1]) that value in relationships can come either from in- mary characteristics of any successful partnership are
creasing the benefit or decreasing the sacrifice. commitment, coordination and trust; communication
Crosby et al., [6] studied relationship quality within quality and participation; and conflict resolution through
the context of selling services. They examined the nature, joint problem solving. The focus of their research, part-
consequences and antecedents of relationship quality. nership, was defined as “ . . . purposive strategic relation-
Relationship quality was defined from the customer’s ships between independent firms who share compatible
perspective as being achieved through the salesperson’s goals, strive for mutual benefit, and acknowledge a high
ability to reduce perceived uncertainty, leading to an en- level of mutual interdependence.” Their analysis was
vironment where “ . . . the customer is able to rely on the based on over 120 questionnaires from partners in com-
salesperson’s integrity and has confidence in the sales- puter manufacturer–dealer relationships. In their model
person’s future performance because the level of past they used two indicators of partnership success: an objec-
performance has been consistently satisfactory.” Rela- tive indicator (sales volume flowing between the dyadic
tionship quality is accordingly a bivariate construct com- partners) and an affective measure (satisfaction of one
prised of trust and satisfaction. Trust was operationalized party with the other).
as the confident belief that a salesperson can be relied Storbacka et al., [8] built on some of these ideas by de-
veloping a conceptual model of the dynamics of relation-
ship quality. Their core thesis is based on the following
relationships between the variables: service quality →
PETE NAUDÉ is a Professor of Marketing at the School of customer satisfaction → relationship strength → relation-
Management, University of Bath in England. ship longevity → customer relationship profitability.
FRANCIS BUTTLE is Littlewoods Professor of Customer Relationship strength is their indicator of relationship
Relationship Management at the Manchester Business School, quality, and they comment that, “ . . . there are obviously
Manchester, England. aspects of relationship strength other than customer satis-
faction. These include, for example, the existence of

352
Sometimes the desire for variety in buying
overrides any considerations concerning
customer loyalty.

bonds between the customer and provider. These bonds and conversely that cooperation between partners arises di-
function as switching barriers beside customer satisfac- rectly from relationship commitment and trust. Trust also
tion. Another dimension relates to the customer’s (and enhances the willingness to collaborate further [13].
the provider’s) commitment to the relationship. Commit- It seems logical to agree with the obvious premise that
ment might be based on customers’ intentions and plans any dissatisfaction with the outcomes of an exchange
for the future.” process, whatever the underlying constructs of quality or
Relationship strength, they observe, is reflected in both value, will tend to precipitate dissolution of that relation-
purchase behavior and communication behavior (e.g., ship [9]. Based on this, it has long been thought that cus-
word of mouth, complaints, etc.). Repeat purchase be- tomer satisfaction was sufficient to promote customer re-
havior based on positive commitment by the customer in- tention. Other research, however, indicates two apparent
dicates a stronger relationship. Relationships in turn are paradoxes: satisfied customers may defect, and dissatis-
strengthened by the presence of bonds between the cus- fied customers may remain loyal [14]. There has been re-
tomer and the provider. cent evidence that a significant percentage of satisfied
Arguing from a conceptual basis, Wilson and Jantrania customers are not retained, taking their business else-
[9] propose that successful business-to-business relation- where despite reporting their satisfaction with product,
ships are characterized by seven attributes: goal compati- service and process. Reichheld [15] points out that 65-
bility; trust; satisfaction; investments; structural bonds; 85% of recently defected customers claimed they were
social bonds; and the relative level of investment in alter- satisfied or very satisfied with their previous suppliers.
native relationships. These are the “ . . . glue which holds Jones and Sasser [16] report that customers indicating 4
it [the relationship] together and allows it to develop.” If on a customer satisfaction scale (out of a possible maxi-
goals are compatible, the companies will view joint action mum of 5) were six times more likely to defect than
as mutually beneficial. Carruthers [10] also claims that for those scoring 5. Reichheld [17] reported that the repeat
a “ . . . relationship to be an effective collaborative effort, purchase rates of cars in the U.S. market remains in the
or partnership, there should be a high degree of goal con- 30-40% range though satisfaction has reached 90%.
gruence concerning the major issues between the parties.” More recently, a financial services firm found that 10%
Trust, a construct common to this body of research on of those customers giving it the highest possible score in
relationship quality, is widely thought to be associated a satisfaction survey (rating it 10 out of 10) defected to a
with successful relationship development. Morgan and rival the following year [18]. There do appear to be a
Hunt [11] argue that trust is the cornerstone of relation- number of product and service categories (such as res-
ship commitment. Without it commitment flounders. taurants, vacations, wine, and some financial services) in
Geyskens and Steenkamp [12] conclude that there is a which the impetus to try something new, driven by
consensus emerging that trust encompasses two essential strong variety-seeking consumer motivation, is a more
elements: trust in the partner’s honesty and trust in the powerful force than the urge to stay loyal, driven by cus-
partner’s benevolence. Trust brings about a feeling of se- tomer satisfaction. These special circumstances aside, it
curity, reduces uncertainty and creates a supportive envi- can still be argued that customer satisfaction is not a
ronment. Morgan and Hunt’s research [11] suggests that sufficient condition to bond customers to suppliers
functional conflict and uncertainty arise from a lack of trust long-term.

353
The majority of managers found that trading
off trust and profitability were the most
important attributes of a relationship.

This position was endorsed in the context of supply- asset specific investments in product development, prop-
chain relationships by Wilson and Mummaleneni [19] erty and technology, make relationship dissolution both
when they described the developmental process of cus- costly and difficult. Where structural bonds exist, they in-
tomer–supplier relationships. They suggested that com- dicate that the parties are or have been committed to rela-
mitment to a supplier came only when investments were tionship maintenance, effectively serving as exit barriers.
made in the relationship, subsequent to satisfaction with Companies that form weak structural bonds to their sup-
the outcomes of their transactions. As they argue, “ . . . ply-chain neighbors may be indicating that an alternative
investments in general, of course, are made into those re- relationship is equally, or perhaps more, attractive.
lationships which are considered satisfactory. These in- Buttle [22] conducted observational research and inter-
vestments might take the form of several adaptations in views in a dozen supplier–customer contexts with a view
product and process areas . . . In addition to satisfaction, to better understanding the nature of relationship quality.
the quality of available alternatives as well as the level of Examining the communication between these dyads, he
investment determine the level of an organisation’s com- addressed two questions relevant to this paper: Does it
mitment to that relationship.” make sense to talk of relationship quality? What counts
This perspective, of commitment versus satisfaction, as a relationship of high or low quality? All the dyads
was reinforced by Ulrich [20] who urged companies to studied were able to identify qualitative differences
strive to develop committed rather than just satisfied cus- within their customer–supplier relationships. Having ob-
tomers. He argues that “ . . . satisfied customers are served a number of episodes between supplier and cus-
pleased, humoured and fulfilled; committed customers tomer, these were categorized as task-centered (e.g., pay-
are dedicated and faithful . . . the totally committed cus- ing invoices, placing an order, raising a query) and
tomer says, ‘we have developed interdependencies, process-centered (e.g., joking, story-telling). He noted
shared values and strategies to the extent that our sepa- that the more asymmetric the relationship (unequal
rate needs can best be met through long-term devotion power/knowledge distribution), and/or the more medi-
and loyalty to each other’.” ated the relationship (communication by phone, fax), the
When trust exists between partners, both are motivated more task-centered were the communication episodes.
to make investments in the relationship. These invest- Communication episodes indicative of high quality in
ments, which serve as exit barriers, may be either tangi- one context were construed as low quality in another. For
ble (e.g., property) or intangible (e.g., knowledge). Such example, rapid completion of an episode was highly val-
investments may or may not be retrievable when the rela- ued by both parties in an Information Technology (IT)
tionship dissolves [19]. help desk context; but slow completion was highly val-
Wilson and Jantrania [9] also comment on the signifi- ued, again by both parties, in a financial advisor context.
cance of strong social and structural bonds to successful It did appear that customers and suppliers were able to
relationship development. Social bonds are close per- discriminate between relationship types and adjust their
sonal relationships that exist between actors in partner or- communication accordingly.
ganizations. Where these bonds are highly valued, they The different constructs underlying relationship qual-
enhance the probability that the relationship between the ity that have been identified in the literature above are
actors will endure [21]. Structural bonds, such as mutual summarized in Table 1, in which we also indicate the

354
TABLE 1
Major Constructs of Relationship Quality Identified in the Literature

Construct Cosby et al. [6] Mohr and Spekman [7] Storbacka et al. [8] Wilson and Jantrania [9] This research

Trust ✓ ✓ ✓ ✓
Satisfaction ✓ ✓ ✓ ✓
Commitment ✓ ✓
Coordination ✓ ✓
Communication ✓ ✓
Joint Problem Solving ✓
Bonds ✓ ✓
Goal Congruence ✓
Investments ✓
Power ✓
Profit ✓

constructs that we have used. Trust is included by almost derstanding of needs; and profit. We can see from Table
all authors. We have categorized “needs fulfilment” as 1 that two of the most commonly found attributes from
being similar to satisfaction and “supply chain integra- the literature review (trust and satisfaction) were re-
tion” as being coordination, although we accept that it flected in our sample. The third, coordination, was re-
also overlaps with many of the other constructs in the ta- ported only by Mohr and Spekman [7]. However, there is
ble. The aspects of power and profit are more problemat- clearly a lot of overlap between constructs such as com-
ical as they do not easily relate to other constructs. We mitment, coordination, communication, bonds, and goal
are especially cognisant of the fact that relationships may congruence, and this remains an area for future clarifica-
be profitable for both parties in a financial sense, and yet tion. As mentioned above, the two remaining constructs
not offer less tangible or personal quality. Indeed, the op- that we found to be present, power and profit, have not
posite is also possible: dyadic relationships that both par- been explicitly reported in the literature reviewed.
ties consider to offer quality in terms of being enjoyable, Each of the five attributes was then specified at three
fulfilling or rewarding, and yet which do not yield finan- different levels (essentially better than, the same, or worse
cial profit. The same conclusion is drawn by Geyskens et than the current relationship). By using the process of fac-
al., [23] in their meta-analysis of satisfaction within torial designs [24], 15 different combinations of these five
channels, arguing that a distinction needs to be drawn be- different attributes and levels were used to draw up a
tween economic and non-economic satisfaction, both of questionnaire based on conjoint analysis [25]. This is an
which can lead independently to trust and commitment. approach well suited to understanding how buyers trade
off different features, and has been much used in indus-
RESEARCH METHODOLOGY trial marketing (see, for example, [26]). Our interest in us-
ing this approach was to develop our understanding of
Our sample consisted of a group of 40 middle to senior how the various constructs would be traded off against
executives attending a management development course. each other in different relationship settings and/or types.
The average age across the sample was 33 years, and While other quantification techniques do exist that mea-
they had been with their current companies for an aver- sure attribute or construct importance [27], conjoint anal-
age of six years. The respondents were asked to indicate ysis remains the best approach to understand how such
what they thought to be the most important attributes of a trade-offs are made. A common problem with the ap-
good supply chain relationship of which they had experi- proach is to ensure that the appropriate attributes are se-
ence. We did not specify the nature of the relationship, lected [26], which was overcome by getting the respon-
and they were encouraged to look either backward to dents to generate the initial attributes themselves, and
their own suppliers, or forward to their customers. They then selecting only the most common among them. How-
were asked simply to write down these attributes, without ever, problems such as how the different attribute levels
any constraints as to structure or order. These responses are anchored and the number of attribute levels to use re-
were then collated, and five attributes were found to main problematical [see, for example, 25, 28]. The latter
dominate the lists: trust; power; integration; mutual un- problem was largely dispensed with by the relatively low

355
Our research identified four different
categories of quality relationships.

numbers of both attributes and levels that were used, should yield a profit (25.46%). The overall results can be
while the former was effectively negated by anchoring seen as being rational in that higher utilities are achieved
each person’s response in the middle of the scale (i.e., the by the “better” level of each attribute, apart from the case
same level of the attribute as currently experienced). of power. However, this is the least important attribute to
These questionnaires were then distributed to the same the whole sample, and we would interpret the fact that
group of respondents as before. They were now asked to higher levels of power achieved a lower utility than lower
consider the same relationship that they had in mind be- levels as being the result of insufficient attention having
fore, and to rank order the 15 different alternatives from been paid to the least important attribute when filling out
that which described the best possible way for the partic- the questionnaire. The results indicate, therefore, that the
ular relationship to develop, through to the worst. most valuable relationship is seen as one in which trust,
Analysis of the collected demographics indicated that needs, integration and profit are all somewhat better than
respondents typically worked for Industrial Services, they currently are, but that power does not have a strong
Raw Materials, or Manufacturing companies (nine, six, influence on perceived relationship quality.
and five cases, accounting for 40% of the sample). Most The question that needs to be addressed next is the ex-
considered supply chain relationships with similar kinds tent to which there is meaningful variation in the data.
of companies (Financial Services Providers, Manufactur- Are the results in Table 2 indicative of a general consen-
ing, and Industrial Services accounted for 70% of the sus among the managers concerned, or are there, in fact,
customers/suppliers considered). The average length of different perspectives on what constitutes a good quality
the relationship under consideration was 14 years (with a relationship? In order to answer this question, the data
range of two to 110 years!), and it typically involved an were subjected to two different forms of clustering. Fig-
annual revenue of $90 million per annum. ure 1 shows the output of a standard cluster analysis
based on each individual’s original rank ordering of the
15 alternatives. We can see, for example, that respon-
RESULTS dents 23 and 40, as well as 29 and 32, are very similar in
their perspective. Respondent 30 (at the bottom of the
The overall results of the study are shown in Table 2. figure), however, is very dissimilar to all the other re-
As can be seen, the two most important attributes to the spondents. Figure 2 shows the results of submitting the
respondents were that there should be high trust in the re- same data set to correspondence analysis, a perceptual
lationship (29.64%), and yet also that the relationship mapping procedure [29, 30, 31]. We can see here that re-
spondents 40 and 23 are plotted fairly close together, as
TABLE 2 are 29 and 32, as we would expect from Figure 1. In this
The Overall Conjoint Analysis Results Showing Attribute Scores case, the two axes account for 48% of the variation in the
and Part-Worths data, suggesting that there are more complicating under-
Trust Needs Integration Power Profit lying dimensions to the data, and hence the clusters
shown in Figure 2 should be interpreted with some care.
Importance (%) 29.64 20.14 12.79 11.97 25.46
Utilities: Respondent 30, for example, is closer to both 5 and 25
better 2.37 1.67 0.72 20.03 2.30 that Figure 1 would suggest.
the same 0.78 0.45 0.23 0.02 20.15 The output from these two approaches suggests that
worse 23.15 22.11 20.95 0.01 22.16
the data could be grouped into four different clusters. The

356
FIGURE 1 The different relationship types, based on cluster analysis.

first, shown at the top of Figure 1, would consist of all 39, 25, and 36) shown at the bottom of Figure 1/lower
the respondents numbered from 23 through to 28. This right of Figure 2. Finally, although interpretation of Fig-
group forms the largest sub-cluster, accounting for 23 of ure 2 does not readily lead one to suggest this, interpreta-
the 40 respondents. The second group lies largely to the tion of Figure 1 would suggest that individual 30 is
left in Figure 2, and would consist of the 11 respondents treated as a cluster of one, with his/her profile being
labelled as 8 through to 26 in Figure 1. The final multi- somewhat different to the rest. The overall results for
ple-respondent cluster would be the four individuals (5, each of these four segments is shown in Table 3.

357
FIGURE 2 The different relationship types based on correspondence analysis.

The results from Table 3 suggest that there are indeed how power is handled in the relationship was the dominant
fundamentally different perceptions concerning just what issue—far more so than to any of the other clusters, and jus-
determines quality in a supply chain relationship. Cluster 1 tifying the inclusion of this manager as a cluster of just one.
is the largest and hence has most influence on the overall These conclusions are shown more clearly in Figure 3,
figures in Table 2. These respondents regard trust and needs which again uses Correspondence Analysis, this time to plot
issues to be the most important, with profit being third. Inte- the data from Table 3. The extent to which the four clusters
gration and power are less important to them than to any of are associated with different criteria is now clear.
the other four clusters. Cluster 2, on the other hand, is clearly Of course, the analysis above falls short on one impor-
profit oriented, with the remaining attributes all clearly of tant dimension. Although conjoint analysis does yield in-
less importance. Cluster 3 is concerned with integration in sights into overall attribute importance, it also indicates
the supply chain, and hence is logically also interested in is- the part-worths of the different levels of the attribute, as
sues surrounding trust. To the manager making up cluster 4, was shown in Table 2. The point was made there that the
full set of results were indicative of some overall ratio-
nality, in the sense that “better” levels of each attribute
TABLE 3 tended to be associated with higher utility levels. Given
The Conjoint Analysis Results for each Cluster, Showing Attribute that it has been ascertained that there are indeed different
Importance Scores
clusters within the data set, it needs to be determined
Trust Needs Integration Power Profit whether or not this is still the case across all segments.
Overall (n 5 40) 29.64 20.14 12.79 11.97 25.46 This data is shown in Table 4, which indicates both the
Cluster 1 (23) 38.00 25.25 9.98 8.89 17.88 importance of the different attributes to each cluster, as
Cluster 2 (11) 17.28 12.31 10.51 13.91 46.00 well as the part-worths for the different levels of each at-
Cluster 3 (4) 22.75 15.79 35.99 15.76 9.70 tribute. It is clear from these figures that both clusters 1
Cluster 4 (1) 13.33 14.07 11.85 44.44 16.30
and 2 behave in the expected fashion, in that more of

358
There is not one measure of relationship
quality—it is a multidimensional construct.

each attribute has greater utility (This is not true in the this case the relationship was between two very large
case of power to Cluster 1, but the attribute is of such low multinationals in the telecommunications and IT indus-
importance that we would disregard this result). tries, involved a turnover of over about $40 million a
For clusters 3 and 4, some apparent anomalies arise. In year, and had been in existence for many years. A core
the case of cluster 3, we can see that less power is pre- requirement, from both sides, was to be seen to not be ex-
ferred to more. We interpret this as being a corollary of erting excessive influence over the counterpart.
the importance placed on both integration (36%) and
trust (23%). If both of these are above average, there CONCLUSIONS AND
should be little need for power to play a part in the rela- MANAGERIAL IMPLICATIONS
tionship. The results of the one individual in cluster 4
also requires closer inspection. Although Table 3 shows The core contribution of many researchers over the
the importance of power to this person, it is only by look- past two decades has been to identify the importance of
ing at Table 4 that it becomes clear that in fact higher lev- relationships in business-to-business markets. However,
els of the attribute are more negatively evaluated, i.e., defining just what managers regard as a good relationship
more power is worse. Our interpretation of this, backed is not an issue that has been studied in any depth. We be-
up by discussion with the individual concerned, is that lieve our paper to be a start in developing our understand-
this is indicative of a close and mature relationship. In ing of this important issue.

FIGURE 3 The four clusters indicating different views of relationship quality.

359
TABLE 4 likely to influence the levels of investment and of asset
Conjoint Analysis per Cluster, Showing Attribute Scores
and Part-Worths
specificity dedicated to the particular relationship. How-
ever, we would suggest that there are also, possibly, po-
Cluster 1 Trust Needs Integration Power Profit tentially more subtle relationship-specific variables con-
Importance 38.00 25.25 9.98 8.89 17.88 cerning both the companies involved, and also the
Utilities: relationship itself that determine the quality of the rela-
better 3.03 1.98 0.58 20.08 1.77 tionship. Managers need, for example, to consider the in-
the same 1.08 0.83 0.16 20.01 20.41
worse 24.11 22.80 20.74 0.09 21.36 fluence of the relationship age, whereby “mature” or
“young” relationships within the same industry might
Cluster 2 Trust Needs Integration Power Profit well vary in what determines quality. In addition, the key
Importance 17.28 12.31 10.51 13.91 46.00 players or decision makers involved in the relationship
Utilities: have an influence in determining the overall relationship
better 1.20 1.18 0.17 0.74 4.27
the same 0.63 20.12 0.23 0.08 20.08
quality. Future research therefore needs to focus not only
worse 21.83 21.06 20.40 20.82 24.19 on identifying the obvious demographic factors that in-
fluence how managers need to vary their approach to re-
Cluster 3 Trust Needs Integration Power Profit
lationship management, but also the more subtle and
Importance 22.75 15.79 35.99 15.76 9.70 variable ones.
Utilities:
better 2.54 1.33 3.25 21.05 0.12
the same 20.49 0.28 0.50 20.07 0.78
worse 22.05 21.60 23.75 1.12 20.90
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