Retail Services Survival in an Economic Crisis Context

Depósito de investigación de la Universidad de Sevilla https://idus.us.es/ “This is an Accepted Manuscript of an article published by Taylor & Francis in Services Marketing Quarterly on 2014, available at: https://doi.org/10.1080/15332969.2014.946880.” 1 Running head: RETAIL SERVICES SURVIVAL IN AN ECONOMIC CRISIS CONTEXT Retail Services Survival in an Economic Crisis Context The touristic industry grew 3% in 2012, globally creating 101.2 million jobs and the growth forecasts for 2013 continue being positive in terms of the industry’s contribution to the GDP (3.1%) and even more so in the long term (in 2023 the forecast is that tourism will be 10% of GDP) (WTTC, 2013). Tourism is, then, an industry with a capacity of generating employment and incomes all over the world, as well as fostering the distribution of wealth. Travel agencies, which play a fundamental role within the touristic distribution sector, arrange the transport, accommodation and food and beverages services for travellers (Eurostat, 2012) in a retail business which sells a mixture of travel and leisure products to consumers - both individuals and businesses. Travel agencies - whose distinctive characteristic is the service of assessment which they offer the customer - are facing a rapidly-changing environment with an increase of competitiveness due to the appearance and expansion of online travel agencies, integration processes– both vertical and horizontal – as well as Europe’s economic crisis. In a situation like this, given the economic advantages of retaining existing customers as opposed to searching for potential customers, to establish and nourish a permanent relationship with clients can become the key that marks the difference between the survival or the disappearance of these companies. Therefore, there is an increasingly greater need for travel agencies to analyse the market from the perspective of customers to design a service which is capable of satisfying these customers’ expectations and needs. Loyalty is the most demanded outcome from an appropriate management of relationships with customers. Its precedents in consumer markets have been scarcely analysed by the scientific literature (Vesel and Zabkar, 2010) because most research in customer relationships has been carried out in the business-to-business sphere (Athanasopoulu, 2009). 2 Running head: RETAIL SERVICES SURVIVAL IN AN ECONOMIC CRISIS CONTEXT This has left the consumer markets largely unexplored. Furthermore, another outcome of the relationship quality (RQ) is also worthy of attention: purchase intention, a strong proxy of making an actual purchase (Hong and Cho, 2011). What stands out in contrast to the importance of the touristic industry is the scant research published about this industry and the role that travel agencies play in the commercialisation of its products and services. In the Customer Relationship Management (CRM) area there are still spheres in which it is necessary to carry out a greater research effort to unmistakably establish, in all the domains, the correspondence between the relationship which firms set up with their customers and the results expected. Relatively little research has been done on the CRM outcomes from the customer’s point of view and most of this research has been conducted using a qualitative approach (Sivaraks, Krairit and Tang, 2011). So, there is a lack of research about CRM, RQ: two crucial outcomes in the touristic sector in general and in the retail sector in particular. On the other hand, it is interesting to consider the quality of the relationship in the touristic context due to its potential capacity to reinforce the customers’ loyaltyan effect that has already been verified for tangible goods in different industries (Chiu, 2009). But in the case of touristic products this could play a different role. It is necessary to tackle this, given that its intangibility makes it difficult to evaluate the quality before, during and after consumption. This research analyses, from the customers’ perspective, the relationship between the CRM, RQ and two important results (loyalty and purchase intention) in retail travel agencies. The aim is a better understanding of the factors which lead to the long-term success of the relationships between customers and service firms. The results of this study will be useful for academicians and practitioners. From the theoretical point of view a sphere in the literature 3 Running head: RETAIL SERVICES SURVIVAL IN AN ECONOMIC CRISIS CONTEXT which has been scarcely analysed is tackled: retailers in the tourism sector. This is important if we take into account that within a retail context, it might seem less obvious that retail customers can actually form a genuine or quality relationship with their retailer. From a practical point of view, the results of this research will allow retailers to identify marketing strategies on how to foster positive relationships within which their customers remain in the transactions willingly because they perceive some obvious benefit. Customer Relationship Management and Relationship Quality Customer Relationship Management (CRM) can be defined as a strategic vision of the firm toward the management of the relationships with the customers via a set of marketing plans, activities and actions, along with sophisticated applications with professional support to attract, motivate and improve the relationships with current and potential customers, generating benefits both for the firm and for the customers (Alsmadi and Alnawas, 2011). CRM is a fundamental condition to maintain attention centred on customers’ needs as an element which can allow a competitive strategy of success to be achieved (Wu and Li, 2011). It also retains customers and reinforces continuous repurchasing patterns (CastellanosVerdugo, Oviedo-García, Roldán and Veerapermal, 2009). CRM is useful because it favours the reduction of the costs of achieving customers, lowers the costs of selling/promoting the service and the service time, improves the customer’s satisfaction , creates a sustainable competitive advantage, increases the number of consumers and the retention rate, helps the gathering of data which contribute to measuring the customer value and increases the customer loyalty due to a more personal and efficient service. The positive experiences in the buyer-seller relationship induce the maintaining of a constituted relationship. The positive effects of CRM come from an improvement of the relationship quality (RQ) with the customers with whom the long-term relationships of 4 Running head: RETAIL SERVICES SURVIVAL IN AN ECONOMIC CRISIS CONTEXT loyalty established allow the improvement of profits. Thus, the relationship with customers becomes an important intangible asset (Wu and Li, 2011). RQ is a general evaluation of the strength of the relationship and the degree to which this fulfills the needs and expectations of the parties involved, based on a history of encounters which have been a success or a failure (Chiu, 2009). RQ is defined as the degree of suitability of a relationship to satisfy the customer’s needs associated with this relationship (Hennig-Thurau and Klee, 1997). When there is a strong RQ, this indicates that the past behaviour of the supplier has satisfied the customer, that the latter trusts future performance and wishes to maintain the relationship. In services contexts, customers are faced with high degrees of uncertainty, perceived as a consequence of factors such as the intangibility, complexity or the lack of familiarity with the service. This can be reduced via RQ. In consumer markets it is accepted that RQ is a construct made up of customer satisfaction with the service provided, their trust in the service supplier and the commitment of the customers to the relationship established with the services firm (Athanasopoulou, 2009; Sivaraks et al., 2011; Vesel and Zabkar, 2010; Walsh Hennig-Thurau, Sassenberg and Bornemann et al., 2010). Satisfaction is a global evaluation based on the buying and global consumption experience with a specific supplier (De Cannière, De Pelsmacker, and Geuens, 2010), an affective response of the consumers who find the interactions to be satisfactory and stimulating. This conditions the customer’s decision to maintain the relationship with the service supplier or not because without customer satisfaction the relationship will not continue. Customer satisfaction is an essential component of RQ, a key determinant (Wu and Li, 2011), which is located at the heart of the exchange relationship (Vesel and Zabkar, 5 Running head: RETAIL SERVICES SURVIVAL IN AN ECONOMIC CRISIS CONTEXT 2010). This broad feeling is influenced by the service quality, the product quality, the price and both personal and contextual factors (Liu, Guo, and Lee, 2011). Trust in the reliability and integrity of the service supplier is also considered to be a fundamental component to achieve success in the relationship. Its importance stems from its capacity of influence in the organisations’ efficiency and effectiveness, thanks to the trust between the parties reducing the transaction risks and costs. When a customer trusts an organisation - that is, trusts this organisation’s product/service quality - a long-term loyalty is achieved and the relationships between both parties are strengthened. As trust proceeds from previous positive experiences with the service supplier, the consumer will tend to maintain the relationship. Trust plays an important role in people’s purchasing behaviour before and after the purchase (Liu et al., 2011). Commitment is related to the customer’s wish to continue and reinforce the relationship and it is the differentiating element of a successful relationship (Wu and Li, 2011). Commitment is defined as a long-lasting wish to maintain a valuable relationship (De Cannière et al., 2010) and represents the highest level of relational bonding, shown by strong feelings of union and obligation with the services organisation (Lin and Wu, 2011). Commitment can lead to short-term sacrifices in order to enjoy long-term benefits (Aurier and N’Goala, 2009). Commitment by both parties is a potent indicator of the relationship’s quality (Ou, Shih, Chen, and Wang, 2011; Sivaraks et al., 2011). This is very useful to determine the probability of the customer’s loyalty. The results of Wu and Li (2011) in the hospitality sector, in line with those of Chang and Ku (2009) in different sectors, indicate that when customers show a high level of awareness of the hotel’s CRM actions, the RQ recognised will be better and the RQ effect can be improved by implementing CRM. All this leads us to propose that the CRM actions 6 Running head: RETAIL SERVICES SURVIVAL IN AN ECONOMIC CRISIS CONTEXT perceived by the customers contribute to improving the quality of the relationship which they establish with the firm. We thus formulate the following hypothesis: H1. When customers recognise CRM actions carried out by the firm, they will have a more positive perception of RQ. Loyalty and Purchase Intention as Relationship Quality Outcomes The RQ model offers a theoretical framework that relates service relationships to organisation outcomes in which the customer’s valuing of the interpersonal relationships with the contact personnel has an important impact on the continued use of the service by this customer. The quality of the relationship plays an outstanding role in the success of relationships marketing (Hennig-Thurau, 2000; Hennig-Thurau et al., 2002) and in the customer’s loyalty (Walsh et al., 2010), as well as having an influence on the customers’ future behaviour intentions (Garbarino and Johnson, 1999). Two of the more important consequences of the relationship established with the service supplier are purchase intention and customer loyalty (Kim, Lee, and Yoo, 2006). As this work analyses RQ from the customer’s perspective, it is appropriate to use in the research how the RQ affects both variables. The customers’ loyalty is their intention to remain with an organisation, “a deeply held commitment to rebuy or repatronise a preferred product or service consistently in the future, thereby causing repetitive same brand or same brand-set purchasing, despite situational factors that may cause switching behavior” (Oliver, 1999, p. 34). It therefore represents the customer’s commitment to buy more and in a more varied way from the organisation and help it to, whenever possible, achieve success (through, for example, word of mouth). The growing competitiveness in the services industry has made firms become very 7 Running head: RETAIL SERVICES SURVIVAL IN AN ECONOMIC CRISIS CONTEXT concerned in maintaining long-term relationships with their current customers (Jamil and Aryaty, 2010). Research in different areas has empirically established the relation between RQ and its components and customer loyalty (Sivaraks et al., 2011), although differences have been identified based on the type of hotel establishment (Wu and Li, 2011) or type of service considered (Walsh et al., 2010). As a whole, the results of previous research (Sivaraks et al., 2011; Walsh et al., 2010) indicate that high levels of RQ (or its components) generate loyalty. This leads us to formulate the second hypothesis. H2. When customers perceive that they have a positive RQ with the service supplier, they will establish a relationship of loyalty with them. Purchase intention refers to the degree of perceptual conviction of a customer to repurchase a particular product/service or to repurchase any product/service from a particular organisation (Rajaobelina and Bergeron, 2009). It is a question, then, of a possibility of a future purchase. This is a useful indicator to estimate the consumer’s behaviour. When consumers have a positive purchase intention they are driven to finally carry out a purchase through the forming of a commitment with the brand. In financial services, Wong et al. (2007) state that the best predictor of the likelihood of a customer seeking future contact with a financial services provider is the quality of the relationship to date. Rajaobelina and Bergeron (2009) found a positive relation between RQ and purchase intention. In recent research, De Cannière et al. (2010) stated that a better RQ led to a stronger purchase intention for customers with a weaker relation with the retailer, whereas a stronger intention led to a firmer purchase behaviour for customers with a stronger relation with the retailer. We propose as a hypothesis: 8 Running head: RETAIL SERVICES SURVIVAL IN AN ECONOMIC CRISIS CONTEXT H3. When customers perceive that they have a positive RQ with the service supplier, they will maintain a purchase intention with this supplier. Some previous studies have analysed the impact of consumers’ attitudes on their buying behaviour (Allen et al., 1992; Westbrook and Oliver, 1991). It seems plausible that customer loyalty to a retailer - a positive long term attitude (Espejel, Fandos, and Flavián , 2007) - would have a positive influence on the consumer’s predisposition to repeat the purchase with that specific retailer. Espejel et al. (2007; 2008) and Fandos and Flavián (2006) have established a positive and significant effect of loyalty on purchase intention in food products with a protected designation of origin (PDO). In a different area, e-marketplaces, there is also evidence of a positive relationship between loyalty and purchase intention (Hong and Cho, 2011). In the banking sector it has been found that customer loyalty has a positive influence on cross-buying intention (Tung and Carlson, 2013). Souiden and Pons (2009) showed a direct positive impact of loyalty on purchase intention in the case of vehicle users and Kim et al. (2011) in the online shopping of tourism products and services. Nevertheless, to the best of our knowledge, this relationship has not been checked out in retail travel agencies. H4. Customer loyalty has a positive impact on purchase intention. The relationship between the hypotheses of this research is shown in Figure 1. --Insert figure 1 about here— Methodology To measure the relationship between the constructs proposed in the hypotheses (CRM, RQ, loyalty and purchase intention), a set of items validated in previous research was generated ( Liu et al., 2011; Walsh et al., 2010; Wu and Li, 2011). From this initial set of items, a refining process of the sales took place in two phases. Face validity was verified 15 Running head: RETAIL SERVICES SURVIVAL IN AN ECONOMIC CRISIS CONTEXT perceived by the travel agencies’ customers is influenced by the CRM actions, travel agencies must make an effort to reinforce their actions in this area as they will have an impact on an improvement of the RQ. Although it is true that, to be carried out, CRM actions must be supported by a strong technological foundation - which means that selecting the technology is an important factor -, other elements, such as a rigorous analysis of the CRM actions, an internal reorganisation and learning are the most important determinants of success in the implementation of a CRM strategy. The role that contact personnel play in the customer’s evaluation of RQ is crucial, as is the maintaining of the relationship in the long-term once the transaction has been concluded. The contact personnel are the vehicle of fundamental communication with the customers and are, indeed, the way in which the organisation shows its business orientation toward the customers. If the travel agencies seek the loyalty of their customers through the RQ they establish with them, this will then become a decisive factor providing the contact personnel with the learning and the tools necessary to achieve satisfaction, trust and commitment, as well as developing a CRM strategy. From the point of view of the RQ between the travel agencies and their customers, the results have confirmed that it is made up of satisfaction, trust and commitment. Previous research has shown the importance of trust in employees for trust in the travel agency, as the interaction with the employees allows the evaluating of their competitiveness and good intentions (Vázquez-Casielles et al., 2005). In the retail context, it could seem less evident that customers generate an RQ with the supplier, thus proposing the challenge of how to create circumstances which lead to establishing positive relationships that bring about the customers remaining with this retailer because they perceive some benefit. In the case of travel agencies, it can be difficult to set up 16 Running head: RETAIL SERVICES SURVIVAL IN AN ECONOMIC CRISIS CONTEXT committed relationships with their customers, contrary to services in the sphere of industrial marketing. This is because the services of travel agencies are very dependent on credibility and customers cannot easily evaluate the result of the service provision until sometime after the date of the transaction. The asymmetry of the information (Howden and Pressey, 2008) hinders the customer’s objective valuing of the service’s quality (Johnson and Grayson, 2005). In general, touristic services are supported to a great extent by credibility (Spielmann et al., 2012) and, specifically, by the travel agency-customer relationship. Hence, the service provider must be aware of the importance of personal interaction in the customer’s perception. To set up strong communication lines with customers (Al-Hawari, 2011; Walsh et al., 2010) about aspects such as their satisfaction with the service, the punctuality of the service, attention to inconveniences during the enjoyment of the vacations, etc., will contribute to increasing the commitment of the relationship established with the travel agency. Moliner et al. (2007a, 2007b) recommend that care be taken with both emotional aspects - related to the enjoyment of the product and the time customers spend in the agency during the purchase decision process - and cognitive aspects, such as the price or the personnel’s professionalism. However, online travel agencies cannot offer contact personnel able to develop RQ with the customers. Its impact on desirable outcomes for the agencies (loyalty and purchase intention) have been corroborated in this research. Due to travel sales requiring intense collaborative interaction between the travel agent and the customer, many customers attach high importance to the agent’s recommendations when booking their travel plans. If retailer travel agencies wish to achieve RQ outcomes, they should concentrate their efforts on selecting, motivating and training their contact personnel. An important element in the social interaction between employee and customer is empathy. This plays two simultaneous roles: it 17 Running head: RETAIL SERVICES SURVIVAL IN AN ECONOMIC CRISIS CONTEXT fosters successful interactions (symbiosis) and mitigates the effects of negative experiences in service interaction (forgiveness) (Wieseke, Geigenmüler, and Kraus, 2012). The research results make clear the possibility of travel agencies carrying out CRM with their customers. This improves the RQ that they establish with them and results in, finally, loyalty, and purchase intention. However, this is not an obstacle to using the possibilities that Internet offers. For example, a corporative web page which serves as a complement to the travel agency’s activity of assessing, in order to improve satisfaction, to reinforce the commitment with the customers and to increase their trust in the travel agency, using the net to provide value to the customer in all the travel cycle - before, during and after it and not only when booking and purchasing. In this way a response would be given to a part of the increasingly more digital, technified demand which chooses the purchasing channel based on the destination or experience desired. To compete with purely online agencies – which base their strategy on low prices – is not possible for offline retail agencies, but to combine both forms of action is. This could give them a competitive advantage compared to purely online travel agencies. New media provide ample opportunities for growth through new adaptative strategies (Hennig-Thurau et al., 2010). Although this research fills a research gap – as empirical research about the perceptions customers have of their travel agency and how they respond to the actions undertaken by the travel agency is scant – it has some limitations, such as its transversality. It would therefore be very interesting to tackle the analysis of the relationships proposed from a longitudinal perspective as well as in other research contexts. Moreover, advancing a step further, new research must establish the relationship between RQ outcomes and a real repeat purchase behaviour in retail environments (De Cannière et al., 2010). This has not been done in the case of touristic products/services. 18 Running head: RETAIL SERVICES SURVIVAL IN AN ECONOMIC CRISIS CONTEXT Lastly, the research has taken place in a retail setting. This is a specific context, and different relationships might emerge in other contexts, such as the role that RQ has or loses in online travel agencies. This is because if the customer of this type of travel agencies is exclusively motivated by attaining the lowest price, the role performed by the RQ in this type of travel agencies could even disappear. 19 Running head: RETAIL SERVICES SURVIVAL IN AN ECONOMIC CRISIS CONTEXT References Al-Hawari, M.A. (2011). Automated service quality as a predictor of customers' commitment. Asia Pacific Journal of Marketing and Logistics, 23(3), 346-366. Allen, C.T., Machelit, K.A., & Kleine, S.S. (1992). A comparison of attitudes and emotions as predictors of behavior at diverse levels of behavioral experience. Journal of Consumer Research, 18(4), 493-504. 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Economic impact 2013. Retrieved March20, 2013, from http://www.wttc.org/research/economic-impactresearch/. Wu, S., & Li, P. (2011). The relationships between CRM, RQ, and CLV based on different hotel preferences. International Journal of Hospitality Management, 30(2), 262-271. 24 Running head: RETAIL SERVICES SURVIVAL IN AN ECONOMIC CRISIS CONTEXT Table 1. Analysis and items of the refined measurement scales / Average/ Standard deviation (SD)/standardised loads Sacles/items Average SD Est. loadings CRM – adapted from Wu and Li (2011). Cronbach’s α = 0.872 The agency’s opening hours satisfy my demands as a customer 4.04 0.874 0.757 The agency provides an appropriate information and booking service 4.02 0.981 0.753 The agency is concerned about its customers’ needs 3.76 1.070 0.812 The agency responds to the opinions of its customers 2.84 1.355 0.822 Relationship Quality (RQ) Satisfaction – adapted from Moliner et al. (2007), Walsh et al. (2010) and Wu and Li (2011). Cronbach’s α = 0.881 The surroundings of the agency satisfies me 3.76 0.947 0.784 The service attitude of the agency’s employees satisfies me 3.79 0.976 0.795 The professional knowledge of the firm’s employees satisfies me 3.71 0.984 0.828 The agency has never annoyed me 3.68 0.955 0.820 My experiences with the agency are excellent 3.71 0.994 0.777 My expectations have always been satisfied 3.77 0.963 0.787 Trust – adapted from Moliner et al. (2007), Liu et al. (2011), Walsh et al. (2010) and Wu and Li (2011). Cronbach’s α = 0.879 The service supplied by the agency is trustworthy 3.85 0.886 0.814 The information supplied by the agency is accurate 3.80 0.921 0.746 The agency treats its customers honestly 3.86 0.896 0.780 You can trust in the travel agency fulfilling its promises 3.79 0.923 0.783 I have always had positive experiences 3.77 0.945 0.738 The agency is able to supply its customers with what they are looking for 3.83 0.907 0.722 I have always been able to count on their support and help 3.60 1.007 0.784 They have been concerned about my wellbeing at all times 3.39 1.004 0.711 I fully trust this travel agency 3.58 1.013 0.818 Commitment – adapted from Moliner et al. (2007), Walsh et al. (2010) and Wu and Li (2011). Cronbach’s α = 0.801 I am very committed to agency X 2.52 1.204 0.900 Agency X means a lot to me 2.36 1.154 0.896 If the agency were to disappear, it would mean a great loss for me 2.29 1.150 0.799 Purchasing intentionadapted from Wu and Li (2011), Walsh et al. (2010) Cronbach’s α = 0.853 In the future, I will repeat my purchase of products/services in this travel agency 3.38 0.982 0.785 I would consume a new product of the agency if the agency suggested this to me 3.04 0.969 0.771 I maintain a positive attitude toward the agency 3.49 0.951 0.779 My next purchase of travel/tickets will be in this agency 3.15 1.022 0.737 Loyalty – adapted from Liu et al. (2011). Cronbach’s α = 0.871 I mean to remain with this travel agency 3.27 1.019 0.900 I mean to recommend this agency to others 3.45 1.015 0.776 I am a loyal customer of this travel agency * 3.02 1.153 0.765 Source: Own elaboration. *New item