Customer Defection and Value in Business-to-Business Relationships

University essay from Linnéuniversitetet/Institutionen för marknadsföring (MF)

Abstract: In order for firms to be able to compete on the market, it is of importance for them to create value for their customers. Value is not only the outcome from providing the customer with a product of high quality, since value co-creation can occur when firms interact with their customers and create strong relationships with them. Therefore, relationship quality is of interest for any firm that want to succeed with their sales proposals. However, although firms work with value creation for their customers, there is always a risk for the defection of customers. Firms need to gain knowledge about the reasons why customers decide to switch to another supplier. The aim of this study is to investigate why Swedish firms that operate in the industrial business-to-business (B2B) sector’s customers switch to another supplier, despite the supplying firms’ efforts in working with value creation. This is a qualitative study, where in-depth interviews have been conducted with employees at two different industrial, manufacturing companies. It was found that the aspects that have been stated as valuable for customers in business relationships; product quality, delivery, service, price, communication and distance, are also reasons why customers decide to leave a cooperation. Meaning that these aspects can create value for customers, however, when it is not managed properly there is a high risk that customers will switch suppliers since the value the firm created for the customer is not enough. In addition to this, factors that can be hard for firms to control, such as distance, time differences and language can have a great impact on customer value and retention. 

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