June 10, 2014

Study examines business relationships

by Christi Mathis

CARBONDALE, Ill.  -- It is crucial that businesses retain loyal customers in order to succeed, and a team of researchers including Southern Illinois University Carbondale faculty member Cheryl Burke Jarvis may change the way that businesses think about their customer relationships.    

The research, “Reaching the Breaking Point:  A Dynamic Process Theory of Business-to-Business Customer Defection,” will be published in an upcoming issue of The Journal of the Academy of Marketing Science.   Jarvis is also incorporating the research into her classroom curriculum. 

Jarvis, professor of marketing and associate dean of the College of Business, is among several educators researching how businesses decide to end a relationship with other businesses. Other researchers include Thomas Hollmann, assistant marketing professor at North Carolina State University’s Poole College of Management, and Mary Jo Bitner, professor at Arizona State University’s W.P. Carey School of Business. 

The educators conducted numerous in-depth interviews with business customers who had “defected” from a relationship with a supplier. The work also included identifying the event or events that over a period of time cause customers to decide to discontinue buying a business’ goods or services. 

There’s little or nothing a business can do to minimize outside influences on customers, Jarvis said.  But by focusing on things vendor/service providers can control, how internal and external factors interact, and a customer’s underlying and organizational goals, practices and values, a business can work to offset the “defection energy” that prompts customers into making that decision, Jarvis said.  

“By better understanding the underlying process through which business customers make defection decisions, we can encourage managers in supplier firms to broaden the scope of their ‘defection radar’ in several important ways,” Jarvis said.  

Those include thinking beyond the core service delivery, 90-day cycles, major incidents, organizational issues and the “last straw.”  

Jarvis said their research indicates the interactions involved in delivering services are about as important to customers as the core service delivery itself. Although people tend to focus on big or unusual incidents in a relationship, the ongoing, small incidents and encounters over a long period of time play a major role in maintaining sound relationships. 

Thus, it’s not all about “the last straw” that causes a defection.  That trigger event likely just cements a decision made during preceding months or even years as “defection energy” builds based on ongoing encounters and events, the study reveals.  

Jarvis said business people often acquire a 90-day cycle mentality driven by quarterly financial reporting requirements.  But this research demonstrates that customer businesses don’t share that perspective.  

When it comes to service failures, customers have “elephant memory,” the ability to recall and connect events that happen years apart.  While old or ongoing issues continue to shape present-day relationships for customers, suppliers tend to believe a problem that is addressed has essentially gone away.  The research indicates that even good outcomes of consumer problems never really bring customers’ mindset back to a point before problems arose, Jarvis said. 

The other important finding is that in any business relationship, even in business-to-business relationships, individuals are the decision makers.  Managers and customers are subject to their own feelings and desires and it is important for businesses to recognize this and act accordingly and wisely, Jarvis said.