Customer advocacy
and loyalty
Drivers of customer advocacy and loyalty, and the
influence of extroversion and agreeableness
Customer advocacy
and loyalty
Drivers of customer advocacy and loyalty, and the
influence of extroversion and agreeableness
Author: Esther Oosterwegel Ewoltstede 4 7213 TD Gorssel 06-289 990 89 e.oosterwegel@gmail.com e.oosterwegel@st.rug.nl S2069725
Master Thesis Paleis Het Loo University of Groningen
Faculty of Economics and Business
Supervisor University of Groningen Dr. J.C. Hoekstra
Supervisor Paleis Het Loo Mw. S. te Riet
Abstract
The main goal of this study and its overall contribution to existing relationship marketing literature in a service setting, is that it will provide a better understanding about the drivers of customer advocacy and customer loyalty. Furthermore, the personality traits extroversion and agreeableness are taken into account to provide more insight in the different types of customers and in their moderating effect on customer advocacy and loyalty.
A review of existing literature has been conducted and several relational antecedents were derived expecting these will drive customer advocacy and/or customer loyalty: relational benefits, willingness to pay, relational investment and communication. Also two control variables had been taken into account: relationship duration and relationship quality. Based on the theoretical relationships between the proposed constructs in this study, 12 hypotheses were formulated and displayed in a conceptual model. The model was tested utilizing data from 120 respondents. These respondents were visitors of Paleis Het Loo and were asked to participate in the survey after visiting the museum. The survey consisted of a Dutch questionnaire with several open-ended and 5-point Likert scale questions.
The results of the data analysis revealed some interesting findings (a) relationship benefits will positively influence the level of customer loyalty towards a service provider, (b) informative communication will positively influence a customer becoming a customer advocate on behalf of the service provider, (c) relationship duration has a negative influence on both customer advocacy and customer loyalty, (d) relationship quality positively affects customer loyalty. Furthermore, (e) relationship benefits, relationship investment and persuasive communication will have a greater positive effect on customer advocacy when customers score high on extroversion, (f) willingness to pay and persuasive communication have a greater positive effect on customer loyalty when customers score high on extroversion. Finally (g) the effect of relationship investment on customer loyalty is positively moderated by agreeableness and (h) agreeableness positively influences the effect of relationship benefits and willingness to pay on customer loyalty. Based on these findings the theoretical and managerial implications are discussed.
Table of contents
1. Introduction ... 6
2. Literature review ... 8
2.1 Relationship marketing ... 8
2.2 Customer relationship antecedents ... 9
2.3 Relationship marketing outcomes ... 10
2.3.1 Customer advocacy ... 10
2.4 Personality traits... 11
3. Conceptual model and hypotheses ... 12
3.1 Conceptual model ... 13
3.2 Hypotheses ... 14
3.2.1 Relational antecedents ... 14
3.2.2 Relational moderators ... 17
4. Research design ... 18
4.1 Method and sample ... 18
4.2 Measures ... 19
4.2.1 Construct measures ... 19
4.2.2 List of scales ... 20
4.3 Data analysis ... 21
5. Results ... 22
5.1 Multiple regression analysis ... 22
5.2 Moderated regression analysis ... 23
6. Discussion ... 25
7. Managerial implications ... 27
8. Limitations and further research ... 27
9. Conclusion ... 28
References ... 29
Appendix 1a. Questionnaire English version ... 36
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1. Introduction
What drives people to give positive and enthusiastic recommendations about their service providers to their friends, relatives and colleagues? And what might be the cause to consider them as reliable advocates on behalf of the service firm? These are important questions that have received much attention in literature in the past years (Anderson, 1998; Hennig-Thurau et al., 2002). These are especially important topics in the service industry. According to Riley and Chernatony (2000) a service can be defined as “a holistic process which provides focus to the internal relationship between the service company and the employees, and comes alive in the external relationship between consumer and service provider”. Furthermore, services differ from products in a way that services include intangibility, inseparability, heterogeneity and perishability (Mortimer, 2002). In particular intangibility, which refers to the extent to which a service cannot provide a clear preview or concrete image is associated with uncertainty (Zeithaml and Bitner, 2000). Therefore the intangibility dimension of services leads to the suggestion that customer advocacy is a useful construct to provide inexperienced customers information for recognition and image creation to reduce uncertainty (Baek and King, 2011).
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Next, customer loyalty can be defined as a deeply held commitment to repurchase a certain product or service consistently in the future (Oliver, 1999). Low satisfied or dissatisfied customers engage in greater negative word of mouth than satisfied customers in positive word of mouth (Anderson, 1998). Customers will only enthusiastically praise and consistently repurchase a product or service when they have strong positive feelings about the entity in question (Mazzerol et al., 2007). A strategy suppliers can implement to create customer loyalty, a strong relationship with its customers and finally customer advocates on behalf of the supplier is relationship marketing (Reynolds and Beatty, 1999).
The goal of this study and its overall contribution to the existing services marketing literature, is that it will provide a greater understanding about the drivers of customer advocacy and loyalty from a relationship marketing perspective. Furthermore, it will provide information about the moderating effect of personality traits, like extroversion and agreeableness of customers. Agreeableness and extroversion have been examined in many studies concerning consumer psychology exploring customer personality (Barrick and Mount, 1991; Eysenck, 1997; Lin, 2010; Thalmayer et al., 2011). However, no study investigated to what extent personality traits, such as extroversion and agreeableness, might influence the relationship between customer advocacy and its antecedents. Customers differ in their personalities according to Sternberg (2000), who states that customer traits differ from one person to another so that everyone has his or her own set of specific traits. Furthermore, McCrae et al. (1986) propose that the same traits exist in each consumer, but that consumers are different because the level of each trait is shown differently. Previous literature provides evidence for the notion that if customers have different personalities, they might respond more to what matches their particular needs and customers might purchase the same product or service for a different reason. According to this a marketing mix directed at the different segments would achieve stronger effects than those aimed at a mass market (Alpert, 1972). Therefore it might be useful to distinguish different types of customers, because not all customers may be equally eligible to become a qualified advocate on behalf of a service company. For example, one person might participate more in word of mouth compared to another customer. From a marketing perspective, focusing on those customers who have greater potential of becoming a qualified advocate on behalf of a service company, will save time and money and be more effective.
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discussion of these results and its contribution to existing theory and implications for management in chapter 6. Chapter 7 describes the managerial implementations, followed by the study limitations and suggestions for further research in chapter 8. Finally, a conclusion is presented in chapter 9.
2. Literature review
This chapter entails a review of existing relationship marketing literature and served as preparation for the upcoming empirical research. Section 2.1 describes the findings from previous literature regarding relationship marketing. Followed by customer relationship antecedents in section 2.2, relationship marketing outcomes in section 2.3 and personality traits in section 2.4.
2.1 Relationship marketing
Relationship marketing has been a widely examined topic in the service sector literature of the past years (Bowden, 2009; Hennig-Thurau et al., 2002; Morgan and Hunt, 1994; Palmatier et al, 2006). According to Ravald and Grönroos (1996), relationship marketing can be defined as “a process whereby organizations create, maintain and enhance relationships with their customers and other partners, so that the objectives of both parties involved are achieved by mutual exchange and fulfillment of promises”. This is in line with the definition of Berry and Parasuraman (1991) who propose that “relationship marketing concerns attracting, developing and retaining customer relationships”. The main objective of relationship marketing is creating and maintaining successful long-term relationships between the organization and its customers to increase the potential of creating customer satisfaction, loyalty, repurchase, positive referral and word of mouth (Hennig-Thurau et al., 2002; Moore and Bowden-Everson, 2012; Palmatier et al, 2006). Subsequently this will improve an organization’s economic and competitive position in the market place (Yang & Peterson, 2004). This corresponds with the Service-Profit Chain of Heskett et al. (1994) and the Satisfaction-Profit Chain according to Anderson and Mittal (2000), in order that in both chains customer satisfaction drives retention to the service supplier and subsequently leads to customer loyalty, which then is expected to lead to greater profitability.
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2.2 Customer relationship antecedents
Relationships between organizations and its customers do not totally develop naturally. Some effort, time and money from the service provider is required, so that customers may perceive value in a relationship when they receive advantages from the relationship. This will increase the customer’s willingness to develop and maintain relational bonds with an organization (Palmatier et al., 2006).
Relationship investments from the service provider point of view can be defined as the amount time, effort, money and resources spent focused on building a stronger relationship. Examples of these investments are gifts, loyalty programs and support (Palmatier et al, 2006).
On the other hand, the maximum price a customer is willing to pay for a certain service or product should also be taken into account as a factor influencing the strength of a relationship, this is also referred to as a customer’s willingness to pay (WTP) (Wertenbroch & Skiera, 2002; Franke & Schreier, 2008). Because the customer’s willingness to pay is related to the customer’s perception of a fair price for a service or product. When customers consider a price as fair, the relationship will be positively affected (Krishna, 1991).
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Communication encompasses the way, frequency, and quality or content of information sharing between the relational partners (Mohr and Nevin, 1990; Mohr et al., 1996). Information can be shared for example by direct mail and may take place several times a year. The amount of information shared may differ each time some information is shared. Communication builds stronger relationship in a way that it can help to resolve disputes and cover up new opportunities (Morgan and Hunt, 1994).
2.3 Relationship marketing outcomes
The most investigated outcomes of marketing relationships are customer advocacy and customer loyalty (Fullerton, 2011; Hennig-Thurau et al., 2002; Oliver, 1999).
2.3.1 Customer advocacy
Customer advocacy can be defined as the willingness of the customer to give strong recommendations and praise to other consumers, such as friends, colleagues and acquaintances, on behalf of a service provider (Harrison-Walker, 2001). Customers can become advocates if they are constantly pleased with the expected level of service performance provided by the service supplier (White and Schneider, 2000). Advocacy has duality in a way that the relationship created by advocacy is mutual and reciprocal (Urban, 2005). The service provider advocates for its customers by providing the best services. On the other hand these customers will tell other about the service provider and its outstanding services, which can lead to sales growth. Roy (2013) investigated the consequences of customer advocacy and found that a customer advocacy strategy appears to influence the relational orientation of customers in a way that it enhances customer satisfaction, customer behavioural loyalty and positive word of mouth. Advocacy has been examined in different areas. Besides relationship marketing it has also been studied in advertising in which ways messages in advertisements can influence customer advocacy in different buying situations (Lee et al, 2010; Sinclair and Irani, 2005).
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includes behaviors such as product degradation, communicating unpleasant experiences, rumor and complaining (Anderson, 1998). In this paper, the focus will be on positive word of mouth as an essential construct of customer advocacy, because it refers to giving recommendations and praise a service to other consumers in favor of the service provider.
Services are very appropriate candidates for customer advocacy, because of the aspect of word of mouth communication among consumers. Because in general, compared to products services are difficult to evaluate before purchase (Harrison-Walker, 2001) and are therefore perceived as high-risk (Murray, 1991). Because of this, consumers engage more often in word of mouth communication for services to get information that will reduce the risk involved and it will also help consumers to make comparisons between different alternatives of a service (Bristor, 1990). This is in line with Brown and Reingen (1987) who proposed that word of mouth communication plays an important role in shaping consumer’s attitudes and behaviors. Several studies suggest that positive word of mouth is the ultimate product or service success factor, because it turned out that word of mouth is more effective than advertising (Day, 1971; Murray, 1991). Murray (1991), stated that this is due to the fact that personal sources are viewed as more trustworthy than written sources.
2.3.2 Customer loyalty
Customer loyalty according to Oliver (1999) can be defined as “a deeply held commitment to re-buy or re-patronize a preferred product of service consistently in the future, thereby causing repetitive same-brand or same brand-set purchasing, despite situational influence and marketing efforts having the potential to cause switching behavior”. This definition encompasses the two different conceptualizations of customer loyalty that have been described in previous studies; behavioral loyalty and attitudinal loyalty (Day, 1969; Oliver, 1999). Behavioral, or purchase, loyalty is related to repeated purchases of the product or service brand over time, whereas attitudinal brand loyalty includes a degree of positive attitudes and commitment towards that brand, in terms of unique value associated with the brand (Kaur and Soch, 2012) and it refers to the extent of a consumer’s psychological attachment and attitudinal advocacy towards the supplier (Chaudhuri and Holbrook, 2001). In this study, the focus will be on behavioral loyalty concerning customer loyalty as a relational marketing outcome.
2.4 Personality traits
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McCrae et al. (1986) proposes that the same traits exist in each consumer, but that consumers are different because the level of each trait is shown differently.
To describe human personality, five broad dimensions of personality are used. Also referred to as the big five personality traits. The theory based on the big five traits is called the Five Factor Model (FFM). The five personality traits classified by McCrae et al. (1986) are: extroversion, agreeableness, conscientiousness, neurotism and openness. In this study conscientiousness, neurotism and openness have not been taken into account, because of their lower extent of importance. Conscientiousness shows a preference for planned rather than spontaneous behavior, being organized and reserved. Furthermore, neurotsim is related to the notion of experiencing unpleasant feelings more easily and face less emotional stability. It is assumed that this will lead to rather negative word of mouth instead of positive and will not affect customer advocacy in a positive manner. Finally openness is related to curiosity and variety of experience by searching for novelty. It is expected that this will not lead to customer loyalty.
Extroversion assesses the quantity and intensity of an individual’s interpersonal interaction and activity level. They enjoy being with other people and are often perceived as full of energy and enthusiastic. The higher the score, the more sociable, active, talkative, person-oriented, optimistic and affectionate a person seems to be. On the other hand, introvert persons have lower social engagement and tend to be more quiet, less social and need more time spending alone.
Furthermore, agreeableness refers to a person’s quality of interpersonal orientation along a continuum from compassion to resistance in thoughts, feelings and actions. They value getting along with others, are friendly, helpful, generous and willing to compromise their interest with those of others. Higher scores on this trait, are likely to indicate the person as soft-heartened, good-natured, trusting, helpful, forgiving and straightforward. On the other hand, disagreeable persons place their self-interest above getting along with others and are generally unconcerned about the well-being of others. At last, openness refers to persons who are open to experience and have appreciation for emotion, adventure, novelty, curiosity and unusual ideas. A high score may indicate a person to be more curious, creative, original and untraditional. People with low scores on openness tend to be more conventional and traditional. They prefer familiarity over novelty and might be resistant to change (Costa and McCrae, 1985; McCrae et al.,1986).
3. Conceptual model and hypotheses
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Relational
Antecedents
- relationship benefits * price breaks -relationship investment *tangible rewards - willingness to pay - communication *content (persuasive vs. informative communication)Relational
Outcomes
- customer advocacy - customer loyaltyRelational
Moderator
- personality traits * extroversion * agreeablenessControl Variables
- relationship duration - relationship qualitypersonality traits extroversion an agreeableness on the relationship between the relational antecedents and the relational outcomes are discussed.
3.1 Conceptual model
Figure 1 represents the conceptual model. Based on previous literature it is expected that relationship benefits, willingness to pay, relationship investment and communication will positively influence both customer advocacy and customer loyalty. Relationship duration and relationship quality are also expected to positively influence both customer advocacy and loyalty (Hennig-Thurau et al., 2002; Palmatier et al., 2006; De Wulf et al., 2001), but to a less important extent. These variables are therefore included in the conceptual model as control variables. Furthermore, personality traits extroversion and agreeableness are expected to enhance the positive influence of the relational antecedents on both customer advocacy and customer loyalty.
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3.2 Hypotheses
In this section, the conceptual model is explained in more detail. It is specified how the relational antecedents influence the relational outcomes of customer advocacy and loyalty, and how this relation is moderated by the customer personality traits; extroversion and agreeableness..
3.2.1 Relational antecedents
Relational benefits
Relational benefits consist of three types of benefits; social benefits, confidence benefits, and special treatment benefits (Gwinner et al., 1998). Gwinner et al. (1998), showed that there is a strong positive relation between relational benefits and customer loyalty. Social benefits are more commonly present at service providers who provide a service with a high interpersonal communication level between customers and employees (Gwinner et al., 1998). In this study the focus will be on special treatment benefits, because this is considered as the basic motivation for customers to continue a relationship with a service provider.
Special treatment benefits such as price breaks, might influence the customer’s emotional and/or cognitive barriers of switching to another company (Fornell, 1992) and subsequently can result in increased customer loyalty towards the company (Selnes, 1993). Price breaks can be defined as discounts. Furthermore, according to Reynolds and Beatty (1999), who argue that special treatment offers delivered by the firm may be perceived as part of the service performance itself. Correspondingly the benefits customers receive from these special treatments, may also influence the customer’s satisfaction with the service. This corresponds with Morgan and Hunt (1994), who state that organizations that deliver superior benefits will be highly valued by its customers. In return customers who highly value an organization will be satisfied and might participate in positive referral and word of mouth and therefore become an advocate on behalf of a service provider (Palmatier et al., 2006). It is argued that highly satisfied customers are also loyal customers (Fornell, 1992; Parasuraman et al., 1991; Reicheld and Sasser, 1990). Furthermore, there is considerable support for the notion that customer satisfaction will lead also to word of mouth and customer advocacy (Bitner, 1995; Brown et al., 2005). Therefore it is suggested that a relationship benefit such as price breaks is positively related to customer advocacy and customer loyalty.
H1a: Price breaks positively influence customer advocacy with a service provider
15 Relationship investment
Blau (1964) and De Wulf et al. (2001) state that investment of time, effort and other irretrievable resources in a relationship leads to psychological bonding that creates an expectation of reciprocation, in order that both the customer and organization are motivated to maintain the relationship. Correspondingly, it is argued that customers feel some level of obligation to do something in return towards the effort and “friendliness” of the organization (Kang and Ridgway, 1996), and that customers demonstrate loyalty to the organization, because of the perceived extra tangible and/or intangible goods or services they receive (Bagozzi, 1995).
Relationship investments can be defined in terms of relationship marketing tactics such as tangible rewards or gifts, loyalty programs and support. In this study, only relationship investments in terms of tangible rewards will be examined. Because, this is one of the most unpretentious tactics for an organization to use for investment in a relationship with its customers. Several studies have found evidence for the fact that customers will become loyal to an organization, due to the expectation of reciprocation to do something in return to the organization, because of receiving tangible rewards such as gifts (Bagozzi, 1995; Blau, 1964; De Wulf et al., 2001; Kang and Ridgway, 1996). Furthermore, it is argued that receiving tangible rewards also leads to a high valuation of the organization by its customers because of customer satisfaction (Morgan and Hunt, 1994), and subsequently lead to positive word of mouth and becoming an advocate on behalf of an organization (Palmatier et al., 2006). On the other hand, Crosby et al. (1990) state that the importance of strengthening and maintaining a relationship with an organization increases when the organization is highly valuated by its customers. According to this it can be hypothesized that:
H2a: Relationship investments, like tangible rewards, will positively affect customer advocacy
H2b: Relationship investments, like tangible rewards, will positively affect customer loyalty
Willingness to pay
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customer is likely to buy or visit more frequently and correspondingly lead to customer loyalty. Moreover, because of the understanding that customer satisfaction will also lead to word of mouth and therefore customer advocacy (Bitner, 1995; Brown et al., 2005), it can be assumed that the more a customer is willing to pay a premium price, the more likely this customer will engage in positive word of mouth and become a customer advocate on behalf of the organization and become loyal.
H3a: Greater customer willingness to pay a premium price will result in customer advocacy
H3b: Greater customer willingness to pay a premium price will result in customer loyalty
Communication
Communication can be considered as the human activity that brings people together and creates relationships (Duncan and Moriarty, 1998). Intensive two-way communication between a service provider and its customers can help to prevent misunderstandings and conflicts from arising, because intensive communication should lead to better informed parties, which in turn should make both the service provider and customer more confident to engage in a relationship and increase the willingness to maintain the relationship (Anderson and Weitz, 1989). Halimi et al. (2011), found a positive relationship between communication and customer satisfaction, and subsequently has a significant effect on customer loyalty.
Communication content refers to the message that is transmitted or what is communicated and two communication strategies can be distinguished: persuasive and informative communication (Kotler and Armstrong, 2014). Persuasive communication includes messages or special offers in order to influence the behavior of the customer. On the other hand, informative communication refers to information exchange and aims at changing the customer’s beliefs and attitudes, no specific actions are requested directly. In the case of persuasive communication some extent of reciprocation of doing something in return might occur because of higher valuation of the organization. Subsequently, high customer valuation will lead to customer satisfaction (Morgan and Hunt, 1994), that will eventually lead to positive word of and mouth and therefore to customer advocacy (Palmatier et al., 2006). Furthermore, persuasive communication aims at changing the behavior of a customer and is therefore expected to have a positive influence on customer behavioral loyalty. Informative communication influences the customer’s beliefs and attitudes, which is closer related to word of mouth and therefore expected to have a positive influence on customer advocacy.
H4a: Informative communication will have a positive influence on customer advocacy
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3.2.2 Relational moderators
Existing literature states that consumers differ based on their personalities (McCrae et al., 1986; Sternberg, 2000). Because people differ in personality, it can be suggested that they might also differ in terms of how they will respond towards a relationship with a service provider. Not every person is equal when it comes to being talkative, extravert or involved with others. Therefore, it might be useful to investigate whether a customer is willing to become an advocate on behalf of the service provider, is affected by the customer’s set of personality traits. In this study, two of the five personality traits will be taken into account; extroversion and agreeableness. These traits are most commonly examined and used in empirical research, and most suitable for this study.
The first personality trait is extroversion, which refers to active people who are sociable, talkative, assertive and have positive emotions (Costa and McCrae, 1985; McCrae et al., 1986). Extroversion consists of several subcomponents to help clarifying the broader concept of the core personality trait; talkative, bold, spontaneous, sociable, dominant and energetic (McCabe and Fleeson, 2012; Saucier and Ostendorf, 1999). According to these components it can be assumed that consumers who are more extravert and in turn considered to be talkative, spontaneous, sociable etc., are expected to talk to other consumers and engage in word of mouth more easily. Furthermore, extravert consumers have a higher level of positive affect and are happier than introvert consumers (McNiel and Fleeson, 2006). Accordingly, it can be assumed that extravert consumers, because of greater happiness, are more satisfied and become loyal more easily and are therefore great potential advocates on behalf of a service provider.
H5a: Extroversion of customers strengthens the positive relationship between relational antecedents and customer advocacy
H5b Extroversion of customers strengthens the positive relationship between relational antecedents and customer loyalty
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According to this it can be assumed that consumers who score high on extroversion are more willing to be a loyal consumer, engage in positive word of mouth and therefore becoming an advocate on behalf of a service provider.
H6a: Agreeableness of customers enhances the relationship between relational antecedents and becoming a customer advocate on behalf of a service provider
H6b: Agreeableness of customers enhances the relationship between relational antecedents and becoming loyal to a service provider
4. Research design
4.1 Method and sample
To test the hypothesis, a survey is conducted in the service setting of museum Paleis Het Loo. Based on the fact that services have been evaluated as a natural setting to study relational phenomena. Because of the nature of services due to the aspects of intangibility, perishability etc., it is possible and necessary for marketers to think in relational terms to create and maintain relationships with their customers to ensure customer focused outcomes such as satisfaction, loyalty and therefore advocacy and positive word of mouth (Bitner, 1995).
Paleis Het Loo is a former royal Palace and is nowadays a national museum, located just outside the city of Apeldoorn. Around 400.000 people visit Paleis Het Loo each year. This type of service setting has been chosen because of the standardized service delivery and the moderate level of contact with the customer. The standardized services limits Paleis Het Loo to serve customers differently based on their needs and should explore other facets to create a competitive advantage in order to create customer loyalty and advocacy. Furthermore, the low extent of direct contact with their customers exacerbates the possibility of getting to know the customer, like its personality or drivers for becoming loyal or an advocate. By knowing your customer, marketers are more able to create and maintain sustainable relationships in order to create loyal customers and subsequently becoming a company advocate.
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of the visitors this was their first visit, followed by 20% visiting Paleis Het Loo for the second time. , 36,7% has visited Paleis Het Loo more than twice and 16,6 % has visited Paleis Het Loo more than 10 times.
Table 1. Demographic characteristics
Gender N %
Man 52 43.3
Woman 86 56.7
Total 120 100
Age Minimum Maximum Mean
49.0 80.0 63.4
4.2 Measures
4.2.1 Construct measures
To measure the questionnaire constructs, several multi item 5-point Likert scales have been used. The relationship benefit scale about the special treatment benefit price breaks, was cited from Martínez and Montaner (2006) and ranges from totally agree to totally disagree. Next the relationship investment scale about tangible rewards was based on the measurement scale of de Wulf et al. (2001), also ranging from totally agree to totally disagree. Willingness to pay has been measured according to the open-ended method, where respondents are asked how much they are willing to pay for a certain product or service. Communication content, both persuasive and informative communication are measured on a self-developed scale.
The dependent variables; customer advocacy and customer loyalty were also measured on 5-point Likert scales, ranging from definitely to definitely not . The customer advocacy scale was borrowed from the study of Fullerton (2011). The study of Lacey (2012) has been used as example for the word of mouth scale. For the customer loyalty construct, measurement scales of Hennig-Thurau et al. (2002) and Zeithaml et al. (1996) have been used.
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constructs; commitment and satisfaction. Relationship duration is based on how long the customer has been visiting the service provider.
4.2.2 List of scales
Table 2 shows all the constructs and its items examined in this study. A reliability coefficient (Cronbach's Alpha) was computed for all multi-item constructs to estimate the reliability of each scale. All factors with a reliability coefficient above 0.6 were considered to be acceptable in this study. All factors had relatively high reliability coefficients above 0.6, ranging from 0.729 to 0.934 (table 2).
Table 2. Results Cronbach’s Alpha analysis
Construct Items Source Cronbach's
alpha
Relationship benefits (price breaks)
I appreciate Paleis Het Loo offering discounts to regular customer
I would like to receive discounts when being a regular customer
I think it is important that Paleis Het Loo should be rewarded
Gwinner et al. (1998) and partly self-developed scale
0.876
Relationship investment (tangible rewards)
Paleis Het Loo rewards regular customers for their patronage
Paleis Het Loo offers regular customer something extra
Paleis Het Loo offers discounts to regular customers for their patronage
Paleis Het Loo makes efforts to increase regular customers’ loyalty
Paleis Het Loo makes various efforts to improve its tie with regular customers
De Wulf et al. (2001) 0.809
Willingness to pay What kind of amount would you be willing to donate to support Paleis Het Loo and to receive free entrance for 1 year
Which of the following 3 “Vrienden van Het Loo” options would you be willing to choose Self-developed scale - Communication (informative) Communication (persuasive)
As a regular customer I would like to receive information about new exhibitions
As a regular customer I would like to receive the magazine “Passade” of Paleis Het Loo
As a regular customer I would like to receive the annual report
As a regular customer I would like to receive information about discounts
Self-developed scale 0.777
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Advocacy I will say positive things about Paleis
Het Loo to others
I will recommend Paleis Het Loo to others I will encourage others to visit Paleis Het Loo
Fullerton (2011) 0.934
Customer loyalty I will visit Paleis Het Loo again in the future
Zeithaml et al. (1996) -
Relationship duration How long have you been a visitor of Paleis Het Loo
How often do you visit Paleis Het Loo
Self-developed scale -
Relationship quality I rate my relationship with Paleis Het Loo as
I am satisfied with the relationship I have with Paleis Het Loo
De Wulf et al. (2001) -
Extroversion I consider myself as someone who….
Is considerate and kind to almost everyone
Has a forgiving nature
Is helpful and unselfish with others Starts quarrels with others (r) Is sometimes rude to others (r) Can be cold and aloof (r) Is generally trusting
Tends to find fault with others (r) Likes to cooperate with others
Benet-Martínez and John, (1998); John et al. (2008)
0.883
Agreeableness I consider myself as someone who…
Is talkative
Tends to be quiet (r)
Generates a lot of enthusiasm Is outgoing, sociable
Is reserved (r)
Is sometimes shy, inhibited (r) Is full of energy
Has an assertive personality
Benet-Martínez and John, (1998); John et al. (2008)
0.729
4.3 Data analysis
The data was analyzed by performing a multiple regression analysis. The data has been tested for multicollinearity by looking at the variance inflation factor (VIF) where multicollinearity is acceptable when VIF < 10. In the multiple regression analysis multicollinearity is not a problem, because all constructs had a VIF < 10, ranging from 1.188 to 6.590 (table 3).
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Table 3. Results multicollinearity
Construct VIF Relationship benefits 5.493 Relationship investment 3.648 Willingness to pay 1.426 Communication Informative communication 4.713 Persuasive communication 6.590 Relationship duration 1.188 Relationship quality 1.866
5. Results
5.1 Multiple regression analysis
A multiple regression analysis was used to estimate the association between relational antecedents and the relational outcomes customer advocacy and customer loyalty. The relational antecedents and the control variables predicted customer advocacy with a statistic significance of 95%, F(7,112)=3.726,
p<.05,R2=.138. This is also applicable to customer loyalty F(7,112)=13.998, P<.001, R2=.433 (table 4).
Table 4. Results multiple regression analysis
23 * P<0.10
** P<0.05 *** P<0.001
Hypothesis 1 suggests that relationship benefits as price breaks positively influence customer advocacy and customer loyalty. As shown in table 4, no significant support is found for H1a . On the
other hand H1b (t=2.470,P<.05) is supported, which indicates that price breaks will positively
influence customer loyalty.
Furthermore, no support is found for both H2a as H2b, which suggest that relationship
investments positively affects respectively customer advocacy and customer loyalty.
Also no support has been found for hypothesis 3 which suggests that greater willingness to pay (WTP) will result in customer advocacy and customer loyalty; H3a (t=.478,P>.05) and H3b
(t=.047,P>.05).
H4a predicts that informative communication will have a positive influence on customer
advocacy. On the other hand H4b predicts persuasive communication to have a positive influence on
customer loyalty.Statistically significant support has only been found for H4a (t=2.013,P<.05).
Also the control variables relationship duration and relationship quality have been tested on their influence on advocacy and loyalty. Statistically significant support is found for relationship duration having a effect on both customer advocacy (t=-2.218, P<.05) and customer loyalty (t=-2.768, P<.05). However, these effects turned out to be negative effects. On the other hand, statistically significant support has only been found for relationship quality (t=3.863, P<.01) positively affecting customer loyalty. No significant effect is found for relationship quality affecting customer loyalty.
5.2 Moderated regression analysis
Hypothesis 5 and 6 suggest a moderating effect of respectively the personality traits extroversion and agreeableness. A moderated regression analysis has been performed to test this moderating effect on both relational outcomes; customer advocacy and customer loyalty. The moderated regression analysis statistically significant predicts the moderating effect of extroversion and agreeableness on customer advocacy F(19,100)=9.824, P<.001, R2=.585 as well as customer loyalty
F(19,100)=12.095, P<.001, R2=.639. The findings of the moderated regression analysis are presented in
table 5.
H5a suggests that extroversion of customers will enhance the relationship between the
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score high on extroversion. No significant support has been found for willingness to pay and informative communication. H5b on the other hand suggests that extroversion will also positively
influence the relationship between the relational antecedents and customer loyalty. Significant support has been found for WTP (t=2.029,P<.05) and persuasive communication (t=2.441,P<.05). Relationship benefits, relationship investment and informative communication were not found significant and will therefore not enhance the influence on customer loyalty when customers score high on extroversion.
Next H6a suggests that agreeableness of customers will enhance the relationship between
the relational antecedents and customer advocacy. Only for relationship investment (t=.308, P<.05) some significant support has been found. Which provides prove for the notion that the effect of relationship investment on customer advocacy will be enhanced by high level of agreeableness among customers. Finally H6b, suggesting that agreeableness of customers will enhance the
relationship between the relational antecedents and becoming a loyal customer, is partially supported. Significant support has been found for relationship benefits (t=2.866, P<.05) and willingness to pay (t=3.131, P<.05).
As table 5 shows, a lot of multicollinearity exists among the constructs and interaction terms. Therefore it is difficult to determine which values have the most influence on the dependent variables.
Table 5. Results moderated regression analysis
Constructs beta VIF
Advocacy Loyalty Constant .106 1.257 Relationship Benefits .113 .236 9.925 Relationship Investment .488** .008 5.629 Communication Informative Communication .480** .104 7.543 Persuasive Communication 1.329*** .519* 23.545 Willingness to Pay -.200** .137 2.319 Relationship Duration -.372*** -.265** 1.896 Relationship Quality -.437*** .098 3.688 Extroversion .578*** .439** 5.813 Agreeableness -.288 -.570** 8.591 Interaction term
Relationship Benefits * Extroversion
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WTP * Extroversion -.016 .252** 5.107
Relationship Investment * Extroversion .951** -.150 20.433 Informative Communication * Extroversion -.050 .120 18.379 Persuasive Communication * Extroversion 2.594*** 1.014** 56.930 Relationship Benefits * Agreeableness -.310 .606** 14.734
WTP * Agreeableness -.158 .501** 8.446
Relationship Investment * Agreeableness .308** .203 5.657 Informative Communication * Agreeableness -.587 .139 44.867 Persuasive Communication * Agreeableness .026** -.141 62.301
Adjusted R2 .585 .639 F-value 9.824 12.095 * P<0.10 ** P<0.05 *** P<0.001
6. Discussion
The objective of this study was to provide a greater understanding about the drivers of customer advocacy from a marketing relationship perspective and examine the moderating effect of personality traits like extroversion and agreeableness. This study provides some good support for the notion that relationship benefits like price breaks is an important determinant of customer loyalty. This corresponds with the study of Morgan and Hunt (1994) who state that customers highly value organizations delivering superior benefits and subsequently with Fornell (1992), Parasuraman et al. (1991), and Reicheld and Sasser (1990) who argue that highly satisfied customers are also loyal customers.
Second, no significant support has been found for relationship benefits such as price breaks affecting customer advocacy. Furthermore, also no significant support has been found for relationship investment, like tangible rewards, positively affecting customer advocacy nor customer loyalty. An explanation for these unsupported findings might be that the study has been tested within an environment of a service provider to which customers are not restricted of visiting solely this particular museum. Most customers do not visit the same museum quite often in the same year and therefore relationship benefits and relationship investment might not have such a great influence on these customers.
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explain the unsupported findings. Another explanation might be the economic recession, serving as a reason for spending less money on cultural trips.
Fourth, the findings concerning informative communication having a positive influence on customer advocacy is supported and is consistent with the assumption that informative communication aims at influencing customer's perceptions and attitudes and might therefore be an important antecedent of customer advocacy. Yet this is the first time that this is confirmed in the context of customer advocacy in a service setting.
The effect of relationship duration on customer advocacy as well as on customer loyalty turned out to be negative. This might be explained by the fact that the majority of the respondents were visiting Paleis Het Loo for the first time when participating in the survey. Because these people did not have build a longterm relationship with Paleis Het Loo (yet) which might have influenced their responses.
Extroversion seems to positively influence the relationship between relationship benefits and customer advocacy, which means that price breaks will have a greater positive influence on customer advocacy when customers score high on extroversion. No support has been found for extroversion positively influencing the effect of price breaks on customer loyalty. This can be explained by the fact that extroversion encompasses subcomponents like being talkative and sociable (McCabe and Fleeson, 2012; Saucier and Ostendorf, 1999) which are more closely aligned with customer advocacy than loyalty. Loyalty rather includes behavioral actions. On the other hand, agreeableness does positively affect the relationship between price breaks and customer loyalty. The fact that agreeableness can be described in terms of customers who are trusting, sincere and loyal (McCrae and John, 1992; Winter, 2003), might explain this effect.
Furthermore, willingness to pay had a greater positive effect on customer loyalty when extroversion as well as agreeableness is high. This is not the case for customer advocacy. Aaker (1991) and Netemeyer et al. (2004) stated that customer’s willingness to pay is one of the strongest indicators of loyalty. Both extroversion and agreeableness do enhance the effect.
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Finally, extroversion nor agreeableness does affect the relationship between informative communication and customer advocacy nor customer loyalty. On the other hand the effect of persuasive communication on customer advocacy is being enhanced by both extroversion and agreeableness. Also extroversion moderates the effect on customer loyalty.
7. Managerial implications
The key goal of this study was to examine the relationship between several relationship antecedents; relationship benefits, WTP, relationship investment and communication, and the relational outcomes customer advocacy and customer loyalty. This study contributes to existing relationship marketing literature in way that it provides information for marketers in a museum service industry, about those terms which are important to create and maintain relationships with its customers. Creating and maintaining relationships helps to ensure customer satisfaction, loyalty, advocacy and word of mouth.
This study provides some interesting information. Not all relational antecedents appeared to have a significant effect on either customer advocacy or customer loyalty. One interesting finding is that marketers should take relationship benefits like special treatment benefits as price breaks into account when they want to create strong customer loyalty. Furthermore, when marketers want customers to become strong advocates on behalf of the service provider they should focus their communicative expression rather on informative communication than persuasive communication.
Furthermore, if customers are extrovert and/or highly agreeable their WTP will positively influence their loyalty. So for markets who want to create strong relationships and ensure customer loyalty, they should focus on extrovert and agreeable customers.
8. Limitations and further research
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Second, customer’s willingness to pay has been measured using the open-ended format, asking respondents to fill in the amount of money they would be willing to pay for one year of free entrance to the museum. The open-ended method is a relatively easy method, and the external validity could be limited. On the opposite, this method is rather simple and quick to employ.
Next, the data of the questionnaires have been collected during the summer holidays. It appeared that a lot of the visitors were visiting Paleis Het Loo for the first or second time, in the context of spending their holidays actively. This might have been influenced the results of the study. So future research might be necessary to perform the same survey outside the holidays and compare the results. Also weather conditions and day type might be important factors to take into account to exclude selection bias.
Furthermore, another limitation that appeared afterwards was that a lot of visitors possessed a museum card and had free entrance to the museum. Therefore they were not willing to pay money for one year free entrance to Paleis Het Loo because of this card. Future research should take the existence of this museum card into account to prevent measurements like willingness to pay being influenced.
Finally, a lot of multicollinearity has been detected. Collecting more data in future research might show whether this can be lessened.
9. Conclusion
In summary, this study provides insight in the drivers of customer advocacy and customer loyalty and the conditions that moderate these relationships. The results of the data revealed some interesting findings, in a way that relationship benefits have significant positive effect on customer loyalty and informative communication positively influences advocacy.
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Appendix 1a. Questionnaire English version
Questionnaire Paleis Het Loo
First I would like to thank you for participating in this survey. Next I will shortly describe the purpose of this questionnaire. If you are not interested in reading this, you can start filling the questionnaire right away on the next page.
This questionnaire has been formulated for Paleis Het Loo as part of my Master Thesis of the study Marketing Management at the University of Groningen. By means of this questionnaire we hope to get a better understanding of the visitors of Paleis Het Loo. Participation in this survey is on a complete voluntary and anonymous base.
In this questionnaire you will come across questions regarding different aspects of Paleis Het Loo. In the end you will be inquired to answer some statements regarding personality characteristics. For statements one of the following 1 to 5 Likert-scales are applicable (these scales will be mentioned at each question when necessary):
1 = totally agree, 2 = agree, 3 = neutral, 4 = disagree, 5 = totally disagree 1 = very strong, 2 = strong, 3 = neutral, 4 = weak, 5 = very weak
1 = very likely2 = likely, 3 = neutral, 4 = unlikely, 5 = very unlikely
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1. How many years have you been a visitor of Paleis Het Loo? Please disregard your childhood and take into account those from 18 an up.
- How long have you ben a visitor of Paleis Het Loo? ………… year(s) - How many time have you visited Paleis het Loo? ………… time(s) - How often do you visit Paleis Het Loo
0 This is the first time 0 6-9 times a year 0 < 1 time a year 0 10-12 times a year 0 1-2 times a year 0 >12 times a year 0 3-5 times a year 0 That is strongly variable
(1 = very strong, 2 = strong, 3 = neutral, 4 = weak, 5 = very weak)
- I consider my relationship with Paleis Het Loo as 1 2 3 4 5 (1 = totally agree, 2 = agree, 3 = neutral, 4 = disagree, 5 = totally disagree)
- I am satisfied with the relationship I have with Paleis Het Loo 1 2 3 4 5 2. To what extent do you agree with the following statements
(1 = totally agree, 2 = agree, 3 = neutral, 4 = disagree, 5 = totally disagree)
- Paleis Het Loo rewards regular customers for their patronage 1 2 3 4 5 - Paleis Het Loo offers regular visitors something extra 1 2 3 4 5 - Paleis Het Loo offers discounts to regular customers for 1 2 3 4 5 their patronage
- Paleis Het Loo makes effort to increase customer loyalty 1 2 3 4 5 - Paleis Het Loo makes effort to increase the relationship 1 2 3 4 5 with its customers
- I would appreciate Paleis Het Loo offering discounts to 1 2 3 4 5 regular visitors
- As a regular customer I would like to receive discount 1 2 3 4 5 - I find it impotant that Paleis Het Loo offers discounts to 1 2 3 4 5 regular customers
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3. To be able to preserve the cultural heritage of Paleis Het Loo, customers are offered to become “Vriend van Het Loo” (friend of Het Loo). This membership supports Paleis Het Loo financially. In exchange members receive several privileges, like one year of free entrance.
What would you be wiling tp pay to support Paleis Het Loo and receive free entrance for one year? €………..
4. Paleis Het Loo offers 3 different classifications of becoming a "Friend of Het Loo". Which of these 3 would you prefer (see tabel 1)
0 Option A (Paleisvriend) 0 Option B (Oranjevriend)
0 Option C (Kroonvriend) 0 None of these options
Tabel 1. Privileges Option A Per year €37,50 (1 pers.)/€50 (2 pers at 1 adress) Option B Per year €250 Option C Per year €1000
One year free entrance √ √ √
2 x per year the magazine Passade √ √ √
1 x per year a members' meeting (eg. a reading, preview of an exhibition, incl. a drink).
√ √ √
One free guest √ √
1 x per year a Oranjevriend meeting including a reading by one of the staff members
√ √
Access to the annual report √ √
An invitation for a sepcial meeting, like a diner at Paleis Het Loo
√
5. To what extent do you agree with the following statements
(1 = totally agree, 2 = agree, 3 = neutral, 4 = disagree, 5 = totally disagree)
- As a regular customer I would like to receive information 1 2 3 4 5 about discounts
- As a regular customer I would like to receive information 1 2 3 4 5 new exhibitions
- As a regular customer I would like to receive the Passade 1 2 3 4 5 magazine
