Subgroups of customer intimacy and their influence on customer loyalty : A structural equation modeling approach

Abstract: Background: The consulting industry’s growth has continuously outpaced the gen- eral economy, leading to more new entrants and increased intra-industry competition. Thus, competitive practices must be revised to ensure existing consultancies’ market position. Since customer loyalty is today’s most prominent success factor for con- sultancies, this is what to increase. Customer loyalty’s most influential factor is the competitive practice of customer intimacy, which in turn consists of subgroups. The investigated subgroups are employee and business specific traits. Objectives: This master thesis aims to uncover what direct and underlying factors of customer intimacy increase customer loyalty and how they compare to each other. Methods: This paper will take a quantitative approach by utilizing the concept of Structural Equation Modeling. Surveys will gather primary data for the model and consist of a questionnaire aiming to retrieve valid and reliable answers from people with experience working with consultants. Results: The results show that most direct factors used in customer intimacy have a positive influence on customer loyalty while the underlying factors thin out. Busi- ness specific traits showed to have a significant impact on customer intimacy while employee specific traits did not. Conclusions: This study concludes that direct and underlying factors of customer intimacy help consultancies improve their competitive practices to increase customer loyalty.