Date of Award
Doctor of Philosophy (PhD)
Wesley J Johnston
Traditionally, marketers have assumed that investing in the quality of relationships with customers would generate superior profitability to the selling firm. The assumption is that coordination and collaboration between buyer and seller create value for both firms by reducing costs and expanding revenue opportunities. However, such value creation mechanism does not work every time. Closer relationships require customer specific investments and a higher level of service that may create more cost to the seller than the potential gain in revenue, negatively impacting profitability of the selling firm. This research explores the effect of buyer-seller relationship quality on value creation for the selling firm, emphasizing the understanding of costs associated with serving the relationship. Two studies were conducted: Study 1 qualitatively examines the cost associated with serving customers and estimates actual cost-to-serve for individual customers. Study 2 measures the quality of customer relationships, past customer profitability and customer lifetime value for each customer relationship in the proposed sample. Finally, the effect of RQ on customer lifetime value is evaluated. Results suggest that investing in customer relationships have an effect on the drivers of customer cost and profitability. However, the net effect on customer value is not as clear as it depends on the trade offs of the different drivers of cost and profit.
Piscopo, Maria G., "Effect of Relationship Quality and Cost to Serve on Customer Value in Business Market." Dissertation, Georgia State University, 2013.