What makes Industrial Buyers Loyal? : A Study of Loyal and Non-Loyal Aggregate Producing Customers in Sweden

Abstract: This thesis examines which factors affect successful customer retention in the aggregate crushing business in Sweden. This sector has a crucial role for the construction industry and other related industries according to SBMI (The Swedish Aggregates Producers Association, 2012). Specifically, SBMI estimate an annual value of production in Sweden to six billion SEK in revenues. This industry is heavily dependent on crushers that can crush larger rocks into the sizes needed by the construction industry (SBMI, 2012). This thesis studies these industrial buyers. The research method chosen is quantitative and questionnaires were sent out to the production managers of active aggregate producers in Sweden. The thesis proposes and test loyal customers’ perception of Original Equipment Manufacturers, OEMs and compares it to their perception of alternative suppliers, here called the SBs. This study finds that perceptions of true defectors (i.e. non-loyal customers) are different than the ones of loyal customers. As the products belong to conceptually complex industrial products with highly specified customer expectations, the findings have implications for sectors with these types of products. Firstly, to keep up with the production targets the aggregate industry is dependent on the availability and quality of the correct spare and wears parts. These factors together with brand, price, sales, service and overall satisfaction are, by the research literature, suggested to be important factors in the retention of customers. This probably also applies to the aggregate crushing business in Sweden. Secondly, both loyal and non-loyal customers agree that the brand recognition of the OEMs is superior despite being perceived as more expensive. Thirdly, loyal customers are convinced that they receive better quality and satisfaction from the OEMs compared to SBs, but the non-loyals do not perceive the OEMs to be better than SBs. The latter can be explained by the fact that knowledge communicated through well established relationships in delivering services also reflects their level of satisfaction while less loyal customers may have less perceived benefits from such a brand. Finally, this thesis states that important factors for loyal customers are quality and brand, as well as marketing activities, which lead to higher customer satisfaction. Thus, the conclusion for companies belonging to the industrial business-to-business sector is to concentrate on two things; their sales representatives and availability.