Quantity or Quality? How the Firm-Customer Dialog Influences Customer Relationships

One of the main goals for companies in establishing long-term profitable customer relationships is the creation of a firm- customer dialog. However, it is unclear how interaction processes should be designed in order to achieve positive effects on customer loyalty. On the operational level, for instance, the question remains how the intensity and the quality of a firm- customer dialog influence the relationship. Moreover, it is important to understand whether this influence differs across industries and consumption contexts. The aim of the present study is therefore to investigate the influence of a firm-customer dialog on customer relationships. Our paper contributes to the existing literature by specifically considering the design of firm-customer interactions, thereby extending the more general perspective on interaction research. Based on signaling theory we consider the role of dialog intensity and dialog quality—as two operational components of a firm-customer dialog—in the context of a product-focused consumption setting (cars) and a services setting (financial services). Four hypotheses on the influences of dialog intensity and dialog quality on customer satisfaction and repeat patronage intention, dialog intensity on dialog quality, and customer satisfaction on repeat patronage intention, are derived and empirically tested. We use data from a large scale customer survey with over two thousand German consumers that we analyze using structural equation modeling. The results reveal that dialog quality has a stronger effect and mediates the influence of dialog intensity on customer relationships. In a product-focused setting (cars) dialog intensity also directly influences repeat patronage intention but not customer satisfaction, whereas in a pure services setting (banking) intensity directly affects satisfaction but not repeat patronage intention. Our study allows for drawing important implications for managers implementing a relationship marketing strategy. First, increasing the amount of signals sent to customers appears to be reasonable for relationship marketing across industries. However, the mere quantity of firm-customer interactions is not a sufficient lever. Second, marketers should not lose track of customers’ perceived dialog quality, as this is by itself a strong direct antecedent of attitudinal and behavioral customer loyalty, and additionally mediates the positive influence of dialog intensity.