CHARLES E.

GENGLER
PETER T. L. POPKOWSKI LESZCZYC

Using Customer Satisfaction

Research for Relationship
Marketing: A Direct
Marketing Approach
CHARLES E. GENGLER is an Assistant Professor of Marketing at Rutgers University in Camden, New Jersey. He received his PhD
in Marketing in 1991 from the University of TexasDallas. Dr. Gengler has research and consulting interests in positioning
strategy, advertising and promotions, persuasion and motivation. He has published in a variety of academic journals including
Journal of Consumer Research, Journal of Advertising Research, and International Journal of Research in Marketing. PETER T. L.
POPKOWSKI LESZCZYC is Assistant Professor at the Department of Marketing and Business Economics and Law, University of
Alberta. He received his BS from State University of New York, Geneseo, an MBA from SUNY Buffalo, and a PhD in Marketing
from the University of Texas at Dallas. He is a member of the American Marketing Association, College on Marketing, INFORMS,
and Canadian Institute for Retail and Services Studies. His research interests include empirical and theoretical issues of consumer
brand and store choice behavior, price promotions, pricing and advertising issues, and short- and long-run effectiveness of
marketing mix variables. His research has appeared in Marketing Letters, Environment and Planning A, and Canadian Journal
of Economics.

CHARLES E. GENGLER PETER T. L. POPKOWSKI

LESZCZYC

ABSTRACT
Relationship marketing has become an important and necessary concept in todays business world. Due
to the importance of repeat business, it is in particular vital for retail businesses to focus on longer-term
relationships with customers. In this paper we demonstrate that customer satisfaction research is not only
a tool to measure consumer attitudes, but can also be a proactive tool for managing customer relations.

q 1997 John Wiley & Sons, Inc. and Direct Marketing Educational Foundation, Inc.
CCC 0892-0591/97/01023-07

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Few companies have realized the opportunity to improve the
relationship with a customer while performing marketing re-
search. Any direct contact, including customer satisfaction sur-
veys, is an important opportunity to improve the relationship
with customers. In our paper we show that consumer re-
search and relationship marketing are integrated components
of an overall customer orientation, and that marketing re-
search can be used as a tool to perform relationship marketing.
A direct marketing approach is used, contacting customers by
telephone. Our results show an increase in repeat business
for automobile repair services with customers contacted by
phone in a customer satisfaction survey.
Personal relations are the important thing for ever
and ever, and not this outer life of telegrams and
anger. (E. M. Forster, Howards End, 1910)
Over the last decade, competitive forces have
prompted corporations to take an increased focus
on knowing their customers better through im-
proved consumer research (21). Better understand-
ing of what consumers perceive as quality and
value has been the key to the development of
successful corporate strategies for the 1980s and
early 1990s. In an age when competition has in-
creased, consumer research, and more specifically,
customer satisfaction research has become essential
for a companys survival (12). In many product cate-
gories, where consumer research was once thought
to be simply a source of competitive advantage, it
has now become a necessity (7).
Concurrent with this intensified focus on the
consumer, a relationship marketing orientation is
emerging as central to designing organizational
structure and strategy. Relationship marketing is be-
coming pervasive in both industrial and consumer
markets (11,16,17,22), including automotive (15,25),
banking (6,18,20,24,28), and a multitude of others
(26). Under the relationship marketing perspective,
firms view themselves as having an ongoing rela-
tionship with their customers, aimed at delivering
extra value and generating multiple transactions
over time. This is in contrast with a transaction orien-
tationfocusing on a single sale at a time (9,29).
Consumer research and relationship marketing
are inseparably intertwined aspects of an overall
customer orientation. However, it is seldom recog-
nized that research is part of the relationship. In fact,
a major difference between relationship-oriented
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marketing organizations and transaction-oriented
organizations is the content and maintenance of a
customer information system (12). In a relationship
marketing environment, the whole corporate culture
must be devoted to serving the customer. Every cus-
tomer contact is an opportunity to enhance (or dam-
age) a customers perception of the firm. Although
this concept is broadly acknowledged by many
firms, it is regularly forgotten when performing cus-
tomer survey research. A properly executed cus-
tomer survey interaction not only provides manage-
ment with valuable information, but can leave cus-
tomers with the sense that the company really cares
about them. This both increases the loyalty of
happy customers and can make the difference in
keeping disgruntled customers from switching to an-
other brand. On the other hand, a cold, impersonal
market research interview can leave a customer feel-
ing alienated and even defensive. This can have di-
sastrous effects on customer loyalty (14,27). As trade
barriers are lowered, consumer choices and brand
competition will multiply. In this environment, no
organization can afford to miss any opportunity to
strengthen relationships with customers.
In this paper, we briefly review the use of rela-
tionship marketing. Then, a study of whether cus-
tomer satisfaction research through telephone calls
has an impact on subsequent repurchase behavior
(loyalty) is presented. The main emphasis of this
paper is to demonstrate how customer satisfaction
research can become a proactive tool for relation-
ship marketing.
RELATIONSHIP MARKETING
The term relationship marketing was introduced by
Berry (1). Relationship marketing is simply an orien-
tation of treating all customer interactions as part of
an ongoing stream of interactions, rather than treat-
ing each customer interaction as an isolated incident.
Relationship marketing focuses on a long-term rela-
tionship and series of transactions with the cus-
tomer. Many feel that this is so important that it
redefines the marketing concept itself (19). Gron-
roos (10:53) states: The most important issue in
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marketing is to establish, strengthen, and develop
customer relations where they can be commercial-
ized at a profit and where individual and organiza-
tional objectives are met.
The relationship marketing concept has contin-
ued to develop (2). Calonius (5) dicusses the prom-
ise concept in terms of relationship marketing. Un-
like transaction orientation, which would focus on
making promises, relationship marketing must focus
not only on making but on keeping promises made
to the customer, ideally developing trust and loyalty
between customer and supplier. Loyal customers are
of obvious benefit to sellers (3,22,23). The trust in a
relationship has value to the buyer in terms of re-
duced risk, reduced stress, reduced search costs, and
a generally simpler life (2,4). This component of
relationship marketing is particularly important to
direct marketers.
Implementation of a successful relationship mar-
keting orientation requires that personnel working
within the firm are sold on the concept themselves
(11,13). Service quality cannot be treated as just a
program or special campaign (6). It requires a
continuous commitment from the entire organiza-
tion. Furthermore, it requires a commitment from all
of the third-party vendors who support the organiza-
tion (30). In an age where firms are increasing their
use of outside services for many functions, they must
continuously take measures to ensure that these
firms share a common vision of customer relation-
ships. Anything less can cause serious damage to
the firms reputation (30). Therefore, many firms are
placing an intensified focus on the implementation
of full relationship marketing programs both within
their firms and within the service firms they employ.
The Lexus Customer First Program
For example, in the auto industry Toyotas Lexus
operation prides itself on customer-relationship
management according to J. D. Illingsworth, group
vice president of Toyota Motor Division in the U.S.
(15). Toyotas creed is customer first, dealer sec-
ond, and Toyota third. This illustrates Toyotas ob-
servation that all members of the channel must be
involved and committed to the relationship orienta-
tion. Illingsworth (15) states that the company went
through a very careful dealer selection process, ini-
tially allowing only about 7 percent of the candidates
that applied to actually become dealers. In addition,
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Lexus stresses that telephone follow-ups be made
by sales staff shortly after delivery, by the service
department after service visits, and even by employ-
ees at corporate headquarters. Illingsworth com-
ments, Every employee, from the newest secretary
to the vice-president, calls one owner a week, just
to touch base and see if theres anything the com-
pany can do for them. (15:51)
Alamos Best Friends Program
In another example, Alamo Rent-A-Car implemented
what it refers to as a Best Friends Program. Chair-
man Michael Egan described the program as fol-
lows (25:43):
Make your customers your best friends; treat
them that way all the time, and they will always be
your customers. And, they will always be your best
friends. Extend this concept to your fellow Alamo
family members. Make each one with whom you
come in contact your best friend. What happens
then? Our work environment becomes a happy
place with a caring, family atmosphere. It becomes
a pleasure to come to work every day. Moreover,
because you have a caring attitude, because you
have created a family atmosphere, the customer
senses it and responds accordingly.
The program results were impressive and imme-
diate (25). Between 1989 and 1990, business transac-
tions increased 30 percent. At the same time sales
complaints went down 15 percent and rudeness
complaints went down 50 percent.
These examples illustrate that companies are
adopting relationship marketing philosophies based
on interpersonal contact. Furthermore, the Alamo
example cites increased business transactions and
reduced complaint behavior, attributing this activity
to the relationship marketing program they have
adopted. Asking customers what can be done for
them or how they can be helped are ways of letting
customers know the company cares, and they are
also informal forms of customer satisfaction re-
search.
If communication techniques can be incorporated
into traditional customer satisfaction research to
achieve the same caring effect, then two important
research issues must be addressed. First, it is im-
portant to know if this interaction translates into cus-
tomer behavior, i.e., whether customer satisfaction
surveys conducted by telephone have an impact on
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customer behavior. Secondly, it is important to as-
sess whether interacting with customers to maintain
a relationship will bias responses to customer satis-
faction survey data. Basically we are looking at the
extent to which a direct marketing approach can be
used to perform relationship marketing while col-
lecting survey data.
STUDY: DOES CUSTOMER
SATISFACTION RESEARCH AFFECT
REPURCHASE?
A Study of Automobile Dealer Service
Repurchases
Here, we analyze the effects of a telephone customer
satisfaction survey upon subsequent customer re-
purchase behavior for automobile dealer service. It
must be emphasized that the telephone survey was
conducted by professional interviewers specifically
trained in relationship marketing techniques. As
with Lexus and Alamo, the techniques are designed
to communicate the perception of caring about the
customer. This means that rather than maintaining
a strict script in the interview process, which can
seem cold and uncaring to customers, the interview-
ers are trained to respond sympathetically and reas-
suringly to customer concerns and complaints.
For example, when customers responded particu-
larly negatively to any of the questions, the inter-
viewer would respond with apologetic comments
such as I am sorry to hear that, or other similar
statements as appropriate. At the end of the survey,
separate closing statements were used for satisfied
and dissatisfied customers. Satisfied customers were
simply told, . . . thank you for your answers and
for coming to [dealership name]. Goodbye. Dissat-
isfied customers were told, . . . let me apologize
for the problem(s) youve had and the inconve-
nience youve been caused. Ill make sure this infor-
mation gets back to the dealership management.
In cases of a serious complaint, subjects are asked
for their daytime phone number so that the dealer-
ship can contact them. There was no corporate pol-
icy of incentives to promote repurchases for dissatis-
fied customers. Each individual dealership handled
customer problems individually as appropriate to
the level of severity.
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Sample
In this study, only customers who had visited a
dealer for service in the first quarter of 1992 were
included in the sample. A total of 124,195 subjects
were identified nationwide. Telephone contact was
made within two weeks after a service visit. A total
of 64% of the subjects were contacted, and the re-
mainder were used as a control group. At the end
of the year, customers were then cross-referenced
with service visits made throughout the rest of the
year to assess postcontact behavior and determine
the impact of telephone contact.
It is to be expected that some of the 36% who were
not contacted may have moved during the time period
between service and contact, thereby impacting their
ability to return for future service. Analysis of demo-
graphic and model ownership data indicated no sig-
nificant difference between those contacted and not
contacted. Although within the not-contacted group
there may have been some sample attrition from those
who had a service visit in the first quarter of the year,
this could not reasonably account for the large differ-
ences found between the groups. According to DeAre
(8), 18.1% of the population moved residences be-
tween March 1985 and March 1986. Using this figure,
and assuming a uniform distribution of moves across
the year, we estimate that 0.70% of the population
may move within a given two-week period. (After
the two-week period, we expect that those who were
surveyed and those that were not would move at the
same rate.) Adjusting the 36% figure by 99.3% gives
us a control group size of 35.74% of the population.
Hence, comparisons of behavior are based upon a
64% group that was contacted, a 35.74% group that
was not contacted, and a 0.26% group of the popula-
tion that could not repurchase because they had
moved. If anything, this adjustment is overly cautious,
since many of these moves may have been local rather
than inhibiting the individuals from revisiting the
dealer.
Results
Table 1 shows that telephone contact significantly
improved customer loyalty; 55.6% of those who
were contacted after their first visit returned for addi-
tional service visits, whereas only 48.7% of those not
contacted returned for visits. A chi-square test of
whether the patterns in Table 1 differed from what
would be expected as random chance was signifi-
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TABLE 1 with greater frequency; however, for both those
Impact of Customer Contact on Repurchase Behavior for with and without warranty coverage, contact by tele-
Dealer Automobile Service phone substantially increased the likelihood of sub-
sequent visits. The increase for those not on war-
Total ranty is especially important, since these customers
Number Customers Average
of Who Number of
will naturally be the most profitable segment.
Customers Repurchased Repeat Visits The bottom line in this study is how the increased
customer repurchase frequency translated into in-
100% satisfied 48,779 28,077 1.14 creased profits. According to the research firm, an-
customers (39.8%) (57.6%)
nual parts profit was $21.17 higher for contacted
Medium- 18,755 9,582 0.94 customers than for noncontacted customers. Annual
Satisfied (15.3%) (51.1%)
Customers service profit was $38.11 higher for contacted cus-
At-risk or 10,309 5,599 1.04
tomers than for noncontacted customers. Given that
dissatisfied (8.4%) (54.3%) the telephone contacts cost $8 per year (for two
customers service visit follow-ups), this is approximately a
Total contacted 77,843 43,258 1.08 741% return on investment!
(63.5%) (55.6%)
Not contacted 44,757 21,785 0.93
(36.5%) (48.7%) SUMMARY

Relationship marketing is one of the most important

cant at the .001 level. Further analysis broke the
surveyed customers down into three categories
based upon their satisfaction level. The majority of
customers surveyed (63%) were 100% satisfied with
the service visit, 24% were not 100% satisfied, but
were not strongly dissatisfied either, and the re-
maining 13% were dissatisfied and designated as at
risk of taking their business elsewhere. For the at-
risk customers, an alert notice was sent to the dealer
so that any corrective action necessary could be
taken. After being contacted by telephone, the 100%
satisfied customers returned at a rate of 57.6%, the
midrange satisfied customers returned at a rate of
51.1%, and the at-risk customers returned at a rate
of 54.3%. It seems that the contact with the at-risk
customers was particularly effective, since one
would a priori expect them to be least likely to re-
turn, yet they returned at a rate significantly larger
than the uncontacted groups rate of 48.7%.
Another issue analyzed was whether there was a
difference in response between customers whose
purchases were in warranty and those not on war-
ranty. For those on warranty who were contacted,
62.9% returned for additional service, whereas those
on warranty who were not contacted returned at a
rate of only 55.7%. For those not on warranty, 51.5%
of those contacted returned for a second visit, com-
pared with only 44.8% of those not contacted. As
one would expect, customers on warranty return
competitive trends in business today. It requires a
commitment to delivering quality to the customer
from the entire organization, not just from the sales
staff or customer phone representatives. Carrying
this philosophy through, it also requires that a firm
ensure that other service firms which interact with
customers also keep the same commitment. This in-
cludes marketing research firms. In this paper we
have demonstrated that telephone surveys are more
than just data collection, they are opportunities to
strengthen relationships with customers.
Therefore, customer satisfaction research is one
area where this philosophy can be successfully em-
ployed to turn a mundane data collection process
into a proactive promotional tool. All customer con-
tacts are opportunities to make an impression on
the customer, and are part of the relationship with
that customer. The important point is not merely
that contacting customers after the purchase has a
positive effect, but that this effect can be achieved
simultaneously with customer satisfaction data col-
lection.
The fastest-growing companies of the next de-
cade will be those who establish and maintain a
loyal base of customers. Any company that only fo-
cuses on new customers may lose customers as fast
as it gains them. Relationship management firms are
a new form of specialized business destined to grow
in the future. Research firms that emphasize quality

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customer contact and support will displace those
firms which do not. This is not only true for con-
sumer product firms, but also for the third-party ser-
vice firms working for them. Any customer contact
is perceived as reflecting on the original firm,
whether it is marketing research, an outside firm
managing frequent-flyer programs, a data pro-
cessing firm responsible for issuing monthly state-
ments to customers, or even the landscape service
hired to maintain the exterior of a retail location.
A strong commitment to customer orientation
means one thing: the relationship comes firstal-
ways. The first plateau of customer orientation is
caring about the firms customers and their needs.
The second plateau can be characterized as the mar-
ket research era, when companies put a focus on
gathering information about their customers. Yet,
caring only through marketing research may often
seem to customers like the attention a small fish
receives as a larger predator eyes it over carefully.
To avoid creating this sensation, the third plateau
takes the customer orientation one step further, put-
ting a focus on a two-way ongoing communication
process between the customer and the firm: i.e.,
the relationship. Companies must still care about
their customers needs. They must still use market-
ing research to track and understand those needs.
But they must recognize that a relationship is more
than just mechanically collecting data, diagnosing
it, and gradually responding. A relationship means
putting a focus on caring about customers and
letting them know it. It means establishing and
maintaining channels of ongoing two-way com-
munication.
Future research can progress in several directions.
The study presents evidence that customer survey
research can enhance repurchase behavior, but does
not address whether telephone or mail or a combi-
nation of the two is best for relationship marketing.
This is an important topic for future research. An
investigation of the optimal timing and frequency
of customer contact would benefit management
decision-making. Qualitative research on how
customers perceive marketing research, or partic-
ularly customer satisfaction research, is needed to
understand the effects of this activity more fully.
Furthermore, future research needs to understand
what activities have effects on the firms image,
and how negative effects can be avoided. Finally,
a study of the variation in responses across market
28 JOURNAL OF DIRECT MARKETING
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segments would significantly improve relationship
management. j
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