Ethical Sales Behavior, Relationship Quality, and Customer Loyalty
Literature Review
Ethical Sales Behavior
According to Román and Ruiz, ethical behavior in the sales relationship context denotes behaviors on the
part of the salesperson that promote the welfare of the customer. Nevertheless, Román and Munuera
defined ethical sales behavior as fair and honest actions that enable the salesperson to foster long-term
relationships with customers based on customer satisfaction and trust. Salespersons typically have personal
interactions with the customer and their actions are more readily visible, and unethical behavior can have a
profound effect on the public opinion of the company. Definitions of ethical behavior versus
unethical behavior are based upon the degree to which a proposed act is perceived as right versus wrong, good
versus evil, fair versus unfair, or just versus unjust. Ethical sales behavior is a highly elusive
construct and is often situation-specific. However, unethical sales behavior as perceived by
the customer is defined as a short-run salesperson's conduct that enables him/her to gain at the expense of the
customer. Examples of such activities include: lying or exaggerating about the benefits of a product/service,
availability, the competition, selling products/services that people do not need, giving answers when the answer
is not really known, and implementing manipulative influence tactics or high-pressure selling techniques. A salesperson's unethical behavior may negatively impact customer
satisfaction and retention. Dubinsky et al. contends that unethical salesperson behaviors may result in
customer dissatisfaction, poor word-of-mouth, lost customers, reduced sales and profits.
Therefore, the study focuses on salespeople's ethical behavior as perceived by customer who takes place during
the interaction between them and the bank's salespeople.
Relationship Quality
Relationship quality has been originally termed as a bundle of intangible value that augments products or services and result in an expected interchange between buyers and sellers. Relationship marketing quality can be considered as an overall assessment of the strength of a relationship. Relationship marketing theory suggests that successful relationship marketing results from certain aspects of cooperative relationships that characterize successful relational exchanges. Relationship quality is a higher order construct depicting the value customers attach to their relationship with the service provider.
According to Hennig-Thurau and Klee, relationship quality can be seen as the degree of appropriateness of a relationship to fulfill the needs of the customer associated with that relationship. However, Berry perceived relationship marketing as a tool from which customer loyalty can be secured and, as a result, the attainment of higher competitiveness and enhanced customer satisfaction can be achieved. Relationship marketing represents a strategic response by firms to gain competitive advantage. This response is based on the theory that appreciation of the interdependence of market players, and mutual effort based on trust and commitment, would allow firms to remain competitive.
Research suggests that the benefits of relationship marketing are many, including improvements in competitive advantages in the marketplace superior financial performance and increased levels of customer satisfaction. According to Arnett and Badrinarayanan studies suggest numerous factors that influence relationship marketing success i.e. relationship quality, even though three factors consistently identified as important are trust, commitment and communication. Nevertheless, most research has conceptualized the effects of relationship marketing on outcomes as fully mediated by one or more of the relational constructs of trust, commitment, satisfaction, communication and/or relationship quality. It has been conceptualized as a higher-order construct consisting of several distinct, though related dimensions, with critical importance of relationship satisfaction, trust and relationship commitment. Researchers have suggested that these components are merely indicators of the global mediator relationship quality, which is an overall assessment of the strength of a relationship and is conceptualized as a multidimensional construct that captures the many different facets of an exchange relationship. Its structure and underlying dimensions vary across empirical studies, but central to the conceptualization is the belief that no single dimension or relational construct can fully define the overall depth or climate of an exchange relationship.
For example, Morgan and Hunt propose that trust and commitment are both key to predicting exchange performance, whereas some
others suggest that either trust or commitment alone is the critical relational construct.
Another school of thought suggests that the global construct of relationship quality, as reflected by a
combination of commitment, trust, and relationship satisfaction, offers the best assessment of relationship
strength and provides the most insight into exchange performance. However, the study
conceptualizes a relationship quality as a bank's ability to identify, develop, and manage cooperative
relationships with key customers characterized by trust and commitment. Therefore, the development of a
relationship quality is important to develop long-term relationships with key customers.
Trust
One of the goals in the regulation and supervision of financial markets is to enhance trust in financial institutions and in the financial system. The objective of financial institutions is, therefore, to convey trust to their customers so as to comply with regulatory standards. The majority of definitions for trust describe it as the belief by one firm that a partner will perform actions producing positive results for the former. As Sirdeshmukh et al., stated trust is the expectations held by the consumer that the service provider "can be relied on to deliver on its promises". Hall explains that those who trust have an expectation that the trusted person will behave with goodwill towards them and with competence in the domain in which he or she is trusted (or in caring for that with which he/she is entrusted).
Customer trust in the relational sales context can be defined as a confident belief that the salesperson can be relied upon to behave in such a manner that the long-term interest of the customer will be served. According to Morgan and Hunt describes trust as" when one party has confidence in an exchange partner's reliability and integrity," is a central component in all relational exchanges. Trust regarded as a key ingredient for the development of long-term business and has been recognized as a highly significant tool for enhancing company relationships.
Speckman posited that trust is central relationship construct; it has been referred to as "the cornerstone of the strategic partnership". According to Cater and Zabkar trust is belief, feeling or expectation about an exchange partner which can be judged from the partner's expertise, reliability and intentions. Mishra et al. posited that there are four dimensions of trust (i.e., reliability, openness, competence, and concern). Studies in the financial services industry revealed that trust is one of the most significant attributes valued by customers.
Commitment
In the relationship marketing literature the concept of commitment plays a central role, as it is a major characteristic of relationship marketing models. Research suggests that relationship commitment is at the core of all successful working relationships and that it is an essential ingredient in successful long-term relationships.
Relationship Commitment refers to an implicit
or explicit pledge of the continuity of a relationship between exchange partners. It has served as the dependent
variable in several relationship marketing models including those describing buyer-seller relationships and
channel behavior; it is a good indicator of long-term relationships and is thought to
represent the peak in relational bonding. Commitment has been operationalized in several
ways, including desire to continue the relationship, willingness to make short-term sacrifices, confidence in the
stability of the relationship, and investments in the relationship.
Customer Loyalty
Customer loyalty is defined by Oliver as a deeply held commitment to re buy or re patronize a preferred
product or service in the future despite there are situational influence and marketing efforts having the potential
to cause switching behavior ". Fornell thinks that loyalty is the function of satisfaction,
switching barriers and voice. Loyal customers may not be always satisfied, but satisfied customers are apt to be
loyal. Bitner describes loyalty as a process. At the end of the process, satisfaction has
effects to perceived quality, which could cause loyalty and intention to certain behavior. An expectation of continuity reflects the customer's intention to maintain the relationship in the future
and captures the likelihood of continued purchases. Increased customer loyalty is one of
the most common outcomes expected from relationship marketing efforts.
Relationship Among Study Variables
Researches indicate that successful relationship marketing efforts, i.e. relationship quality, improve customer loyalty and firm performance through stronger relational bonds. Trust and commitment are often jointly examined in relationship marketing research. Many researchers regard trust as an antecedent of both commitment and successful relationships. However, studies suggest that trust as one of the prominent behavioral determinants of commitment.
Trust has a direct positive impact on commitment. Trust diminishes the perceived risk and vulnerability in a relationship and thus leads to a higher commitment to the relationship. Trusted parties can be relied upon to fulfill their expectations, which results in greater commitment. If a supplier is not perceived to be benevolent, honest or competent enough to show useful behavior regarding the relationship in question, the customer cannot rely on this supplier and thus will show no commitment towards the relationship. Cater& Zabkar, thus, suggests that in relationships where trust is high, it is more likely that clients will continue the relationship because they like the provider and enjoy working with him. Therefore, several studies have found empirical evidence about the positive influence of trust on commitment. Alrubaiee & Alnaze study provides initial empirical evidence of the impact of relationship marketing on bank customer loyalty. Holden suggests that the salesperson's ethical sales behavior is positively related to customer trust.
The results of Chen and Mau, studies show that ethical sales behavior plays a major role in affecting customer trust. Moreover, customer trust is an important mediating determinant between the salesperson's ethical sales behavior and customer loyalty. In addition, Sanzo et al. found that, trust and commitment directly affect loyalty to supplier. On the other side, Wray et al. had suggested, that ethical sales practices, as perceived by financial services customers, increased customer trust in the salesperson. Likewise, different exploratory studies have shown that customer trust in the salesperson can be earned by the honest actions of sales representatives, as well as low-pressure selling techniques. Consistent with previous studies,
Roman had investigated the direct consequences of ethical sales behavior. The study indicates that, this behavior had a positive impact on customer satisfaction with the core service, trust and loyalty to the company. Furthermore, Hansen and Riggle indicated that the relationship between ethical sales behavior and buyer commitment to the salesperson is completely mediated by buyer trust in the salesperson. Their finding revealed that the effect of ethical sales behavior on buyer commitment to the salesperson flow only through buyer trust in the salesperson.