Returns on Business-to-Business Relationship Marketing Investments: Strategies for Leveraging Profits

Authors:
Robert W. Palmatier;Srinath Gopalakrishna;Mark B. Houston
Affiliations:
University of Cincinnati, 422 Carl Linder Hall, P.O. Box 210145, Cincinnati, Ohio 45221;University of Missouri--Columbia, 434 Cornell Hall, Columbia, Missouri 65211;University of Missouri--Columbia, 339 Cornell Hall, Columbia, Missouri 65211
Venue:
Marketing Science
Year:
2006

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Abstract

Firms invest heavily in different types of business-to-business relationship marketing activities in the belief that such programs bolster their bottom line. In this study, we develop and test a conceptual model that links customer-specific relationship marketing investments to short-term, customer-specific financial outcomes. Data from a matched set of 313 business customers covered by 143 salespeople of 34 selling firms indicate that investments in social relationship marketing pay off handsomely, financial relationship marketing investments do not, and structural relationship marketing investments are economically viable for customers serviced frequently. We conceptualize relationship marketing in a context involving nested participants (customers, salespeople, selling firms) and employ a hierarchical linear modeling approach to account for observations that are not independent. Across the three hierarchical levels, the impact of the financial, social, and structural components of relationship marketing investments and the potential moderating factors offer valuable insights into contextual factors and managerial strategies for leveraging relationship marketing investments. In an attempt to suggest normative guidelines to managers, we extend our analysis to a simple resource allocation model that describes the optimal mix of relationship marketing resources based on firm strategies.