International Journal of Bank Marketing, Vol 16 Issue 4 Date 1998 ISSN 0265-2323

Trust, ethics and relationship satisfaction

David Bejou

Professor of Marketing, Texas A&M University, Texarkana, Texas, USA

Christine T. Ennew

Professor of Marketing, School of Management and Finance, University of Nottingham, Nottingham, UK

Adrian Palmer

Professor of Marketing, University of Ulster, Northern Ireland, UK

Keywords: Customer loyalty, Customer satisfaction, Financial services, Marketing strategy, Relationship marketing,

Services marketing

Type of Article: Survey

The development of effective customer relationships is increasingly recognised as an important component of marketing strategies, particularly in the case of service

industries. Developing and maintaining satisfactory customer relationships can help to reduce perceived risk, reduce transactions costs, increase customer loyalty

and customer retention and thus impact on organisational performance. From the customer’s perspective, the determinants of relationship satisfaction are thought to

include factors such as customer orientation, trust, length of relationship, expertise and ethics. Provides further evidence on the cognitive antecedents of relationship

satisfaction based on evidence from the financial services sector.

Quality Indicators: Readability**, Practice Implications**, Originality*, Research Implications**

Introduction

Organisations are increasingly seeking to move their interaction with customers along what Grönroos (1991) has described

as a marketing strategy continuum. By moving away from traditional discrete exchange towards relational exchange, benefits

can accrue to both buyers and sellers (Berry, 1995). The benefits to buyers are particularly important in the case of highly

intangible services where there is heavy reliance on credence qualities, where information asymmetries are significant and

the perceived risk associated with the purchase is high. In such exchanges, an ongoing relationship can help to reduce risk

(Berry, 1983; Zeithaml, 1981), and also reduce transaction costs associated with repeat ordering (Marshall et al., 1979;

Williamson, 1975). To sellers, relationships help to create loyalty, and a number of studies have demonstrated their positive

effects on profitability (Reichheld and Sasser, 1990; Rust and Zahorik, 1993; Storbacka et al., 1994). Indeed it is

increasingly acknowledged that the concept of developing effective customer relationships is of importance in a variety (but

not all) of marketing situations (Barnes, 1994) and will contribute to a firm’s competitive advantage.

It is widely accepted that a customer-orientation rather than a sales-orientation is most conducive to the development of

buyer-seller relationships (Grönroos, 1995; Saxe and Weitz, 1982). Further research has sought to refine the elements which

contribute to relationship satisfaction as perceived by buyers. There has been much interest in the role of trust as a crucial

factor in the development of buyer-seller relationships (Morgan and Hunt, 1994; Sullivan and Peterson, 1982; Swan et al.,

1985). The development of trust has appeared to be closely related to the duration to date of a relationship (Swan and

Nolan, 1985). The concept of trust is also closely related to the ethical code by which sales personnel operate, and has

attracted much recent attention (Ebejer and Morden 1988; Whalen et al., 1991). Finally, sales personnel’s level of

knowledge has emerged as a contributing factor to the development of successful buyer-seller relationships (Hayes and

Hartley, 1989).

This paper examines the role of trust, ethics and knowledge in supplementing sales personnel’s level of customer orientation

and selling orientation as explanatory antecedents of buyers’ perceived relationship satisfaction in the context of financial

services. The following section explores the concept of relationship satisfaction and proposes a model of its antecedents,

based on a review of literature. This is followed by sections describing the data collection process used in this study and

operationalisation of various constructs used. The results of the empirical analysis are then presented. The final section

presents tentative conclusions.

Relationship quality and satisfaction

The development of customer relationships is being seen as increasingly important in a range of markets and particularly so

in organisational and service markets. Financial services is one such market. In addition to the obvious service

characteristics of intangibility and inseparability, there are other more market-specific factors which create a need for

relationship-based approaches to marketing. The presence of substantial information asymmetries, product complexity, the

long-term nature of many of the products and the relatively high degree of perceived risk together suggest that the

development of effective and satisfactory customer relationships is of particular importance in the marketing of financial

services both to personal and corporate clients.

The underlying principle behind relationship marketing is that organisations can enhance customer satisfaction through a

relationship and in so doing can enhance their own performance. For such benefits to accrue, relationships must be

developed and managed to the customer’s satisfaction. Relationship satisfaction is a multi-dimensional construct which has

been conceptualised as a prerequisite for relationship quality. It has been attributed with three dimensions by Crosby and

Stevens (1987): satisfactory interactions with personnel; satisfaction with the core service (the extent to which a service

satisfies customers’ needs); and satisfaction with the organisation. In a study of life insurance customers, they found that

satisfaction with the core service had a significant effect on satisfaction with the contact person and the organisation. All

three contribute to overall satisfaction with the relationship.

In principle, the development of an effective relationship between buyers and sellers can involve a range of organisational

staff beyond those in the immediate marketing function. The behaviour and performance of any customer contact staff can

have a significant bearing on the quality of customer relationship through their impact on perceived service quality (Bowen

and Schneider, 1988; Lengnick-Hall, 1996). In practice, in many service companies, the most important interactions occur

with a company’s sales personnel. In the case of financial services, customers may have little reason to contact any

employees other than a company’s sales personnel, who, in addition to their sales role, frequently liaise with clients on

operational issues. Thus responsibility for the success or failure of the relationship may be heavily dependent on the

individual who manages a particular relationship.

Customers’ satisfaction with a relationship is important, but satisfaction per se does not automatically lead to repurchase

(Reichheld and Aspinall, 1993). Customers who are retained may not always be satisfied and satisfied customers may not

always be retained (Dick and Basu, 1994). However, although generating satisfied customers may not guarantee retention it

has been shown to influence loyalty and repurchase intentions for a range of consumer products (La Barbera and Mazursky,

1983); and in the case of a service, Bitner (1990) argues that satisfaction with a service encounter affects assessments of

service quality and subsequent loyalty and switching behaviour. The recognition that there are positive (although not perfect)

links between satisfaction in general, relationship satisfaction in particular and subsequent retention and repurchase

highlights the importance of identifying and explaining the conditions under which satisfaction develops.

A model of relationship quality in financial services

The previous discussion highlighted the particular relevance of relationship marketing in the financial services sector and

some of the previously cited antecedents to successful relationship marketing strategies. In this section, a model of

relationship satisfaction is proposed, drawing on the results of a range of empirical and theoretical studies. The focus in this

model is primarily on cognitive factors to address the impact of perceived characteristics of salespeople. Unlike more

effective aspects of interaction (Barnes and Howlett, 1998), these cognitive dimensions are potentially areas in which

training and organisational development can have an impact, and thus an analysis of this nature can provide guidance to

managers as well as insights for practitioners.

The nature of the antecedents to satisfactory customer relationships has been the subject of considerable discussion. A

consumer’s evaluation of the quality of a relationship will clearly be dependent on the quality of the interaction with a

salesperson, but may also reflect and be influenced by the quality of the core service or product. The relative roles of these

two components have been discussed in some detail by Crosby and Stevens (1987); the current paper focuses attention on

the salesperson interaction component of the relationship. Figure 1 Interactive dimensions of relationship quality presents the

basic outline of a proposed model for examining the interaction dimensions of relationship quality.

The approach adopted by the salesperson is seen as the key to understanding the degree of customer satisfaction with the

relationship. In particular, the degree to which a salesperson is customer-oriented will have a positive impact of

relationship satisfaction, not least because such sales people will be much more able to empathise with customers and

understand their needs (Saxe and Weitz, 1982). By contrast, the degree to which a salesperson is sales-oriented will have a

negative impact on relationship quality because the "hard sell" and pressure associated with such an approach may result in

consumer suspicion and thus inhibit the development of the relationship.

However, in addition to the direct impact of customer and selling orientations on relationship satisfaction, it seems likely

that such variables will also have an indirect effect through the medium of trust. Trust is seen as being of considerable

importance in the process of building and maintaining relationships (Lagace et al., 1991; Morgan and Hunt, 1994; Oakes,

1990), although it is also recognised as being difficult to manage. Indeed the perspective taken by Oakes (1990) suggests that

the act of selling destroys the conditions under which trust can develop. While this perspective may be rather extreme it does

highlight the intrinsic conflicts facing individuals who are endeavouring to build trust and at the same time sell products or

services. Customer orientation in the sales process may be of particular importance because it provides a means for

realigning the development of trust with the process of selling.

The role of trust in the development and maintenance of successful relationships is likely to be of particular significance in

the financial services sector because of the complexity of many of the products (Diacon and Ennew, 1996). The degree to

which a customer trusts a particular salesperson will be positively influenced by the belief that the salesperson is operating

in the customer’s best interests (customer-oriented), and negatively influenced by the belief that the salesperson is operating

in their own best interests (sales-oriented).

There is also evidence to suggest that ethics may play a role in the evaluation of relationship quality. Certainly, there are

many important ethical issues pertaining to financial services, many of which relate to the disclosure of information

(McAlexander and Scammon, 1988). Given such concerns it seems likely that the degree to which a salesperson is seen as

being ethical will affect a customer’s assessment of the quality of the relationship (Ebejer and Morden, 1988; Lagace et al.,

1991). Whether the impact of ethics on relationship quality is a direct effect or an indirect effect (via trust) is more

debatable. The conditions under which trust is built are such that is seems plausible that ethics should affect perceptions of

trust, but it is also possible that ethics may also affect relationship quality directly.

Finally, two additional factors are identified which may affect customer perceptions of relationship quality, namely the

length of the relationship and the degree of expertise or knowledge which the salesperson possesses. In the case of

relationship duration, this has been shown to be closely related to the development of trust (Swan and Nolan, 1985) and may

also directly affect the overall assessment of relationship satisfaction. It has also been suggested that buyer-seller

relationships go through some form of life cycle (Dwyer et al., 1987; Palmer and Bejou, 1994). Finally, given the

importance of credence qualities (Zeithaml, 1981) in the purchasing of financial services and the extensive information

asymmetry in the market, the technical capabilities and knowledge possessed by the salesperson might be expected to have

an important and positive impact on relationship quality.

Data collection

In order to test the model outlined in the previous section, data were collected relating to customers’ perceptions of their

relationship with their financial adviser. A questionnaire was developed which comprised three sections. The first section

consisted of questions designed to collect factual information relating to the types of financial services which had been

purchased during the past several years, and the length of the customers’ relationship with their advisers. The second section

of the questionnaire contained several scale items, derived from the SOCO scale (Saxe and Weitz, 1982) which has been

used to identify the underlying factors in buyer-seller relationships. It has been used to measure the degree of selling

orientation and customer orientation of sales personnel, and several studies have replicated it and found it to be reliable

(e.g. Kelly, 1990; Michaels and Day, 1985). Response categories ranged from (7) "strongly agree" to (1) "strongly

disagree". Some of the items were worded negatively to reduce response bias and the scores of these items reversed in the

data analysis. Finally, the third section contained several demographic and socio-economic statements.

Following piloting, the questionnaire was administered by telephone, using a team of trained interviewers selected for their

telephone communication skills. A pilot survey had achieved an acceptable standard of response. A two-stage area

telephone survey was conducted in 1992 in six south-eastern cities of the USA. In the first stage, the three-digit prefix of the

telephone numbers was used. The second stage generated the last four digits of respondents’ phone numbers by means of a

random number table. People who had previously purchased financial services constituted the population from which the

sample was drawn. Interviewers were instructed to interview the adult member of the household who was responsible for

financial investment and planning decisions. A total of 1994 consumers qualified but only 568 usable questionnaires were

completed (a response rate of 29 per cent). A total of 280 call-backs were made for verification.

The variables to be used for the empirical work were operationalised as follows. Satisfaction, trust and knowledge were all

measured using single items on the questionnaire, scored on a 1-7 scale. While single-item measurement may not be ideal for

relatively complex constructs, this approach was preferred in order to keep the questionnaire to manageable proportions and

maximise response rates. Length of relationship was measured as a four-element ordinal scale.

Variables relating to the approach adopted by the salesperson were measured using a modified version of the SOCO scale.

The scale items were analysed using an exploratory factor analysis with a principal component extraction and varimax

rotation. The initial factor solution did not reveal a simple structure of underlying constructs about customer and selling

orientation; thus items with low commonalities were deleted from the scale, and the analysis repeated on the remaining

items. This second solution yielded three factors which accounted for 51 per cent of the variance in the original data set. The

results of the factor analysis are shown in Table I Factor analysis . In general, each variable loaded significantly on only one

factor. The three factors describing the perceived characteristics of the salesperson were labelled customer orientation,

sales orientation and ethics. The wording of items relating to ethical behaviour was such that the scale effectively measured

the perceived lack of ethics in the salesperson’s approach. Values of Cronbach’s alpha were 0.83, 0.76 and 0.75

respectively, indicating that the three scales could be considered reliable.

Results

The correlations between the various constructs used in the research are presented in Table II Correlation coefficients for

main constructs . All the estimated correlations were statistically significant at p < 0.05 with signs as expected. The patterns

and significance of these coefficients lends some support to the model proposed in Figure 1 Interactive dimensions of

relationship quality . Sales and customer orientations, and to a lesser degree, ethics, are strongly correlated with both trust

and with satisfaction. Expertise shows a strong correlation with satisfaction, as does trust and it is only in the case of the

length of relationship variable that the correlations are weak, although even these are still significant.

The relationships specified in the model were tested more formally using causal path analysis (Davis, 1985). Specifically,

the following equations were estimated:

Trust = F (customer orientation, sales orientation, ethics, expertise)

Satisfaction = F (customer orientation, sales orientation, ethics, trust, length, expertise)

The models were estimated using stepwise OLS regression and the standardised regression coefficients are shown in Table

III Standardised regression coefficients . The explanatory power of both models is adequate with the relevant error terms

(calculated as Ö(1-r2) being 0.84 for the trust equation and 0.72 for the satisfaction equation.

The signs on the estimated coefficients are as expected, although the ethics variable and the relationship duration variable

are insignificant in both equations. In the case of the trust equation, ethics and relationship duration are only marginally

insignificant while in the satisfaction equation, relationship duration is clearly insignificant. This latter result is interesting,

given other evidence concerning the importance of length of relationship, especially its close correlation with the

development of trust (Swan and Nolan, 1985). It may be that in this instance, the trust variable acts as a proxy for length of

relationship given that trust will tend to develop over time. However, the evidence of the correlations presented in Table II

Correlation coefficients for main constructs suggests that support for this interpretation of the role of relationship duration is

weak. Regarding the ethics variable, evidence is rather more ambiguous; ethics appears to be correlated with trust, but is

also correlated with sales and customer orientation, and a possible explanation for the absence of a significant relationship

between ethics and trust may be that assessments of the ethical behaviour of salespeople are reflected in and may even

determine perceptions of the extent to which a salesperson is seen as customer or sales oriented.

Customer orientation and selling orientation are both shown to have a significant impact of the development of trust and the

degree of satisfaction with the relationship, and these results are consistent with existing research in the areas. Equally, both

trust and expertise are seen as important influences on overall satisfaction with the relationship.

Conclusions

The first conclusion of this paper is to confirm previous research that has identified the importance of sales personnel’s

level of customer orientation on customers’ perceived relationship satisfaction. Similarly, the negative influence of a selling

orientation has been confirmed. Previous research identifying the development of trust as an important factor contributing to

relationship development is also confirmed. However, the ethics of sales personnel as an issue, distinct from their customer

orientation did not appear to contribute significantly to customers’ perceived relationship satisfaction. By contrast, their

perceived knowledge of financial services did contribute significantly towards customers’ perceptions of relationship

satisfaction. One explanation for this could be that in an increasingly regulated financial services market, the danger which

customers perceive in losing their investment through unethical activities of sales personnel is declining. Conversely,

financial services products are becoming increasingly sophisticated and customers may attach particular importance to the

knowledge base that a salesperson can use to find the most appropriate investment for themselves. Another significant

finding of this research is the absence of any link between relationship duration and satisfaction. While it has been

hypothesized that buyer-seller relationships - like other human relationships - go through some form of life cycle, this study

has shown that relationship satisfaction did not increase in a straightforward linear manner with respect to relationship

duration. The insignificance of relationship duration as a predictor of relationship satisfaction may be indicative of low

satisfaction levels being recorded both by new customers who had not had a chance to form an opinion of their salesperson

and longer established customers whose changed circumstances or attitudes no longer led them to regard the relationship

with their salesperson as satisfactory. The relatively high levels of satisfaction during the intervening stages may account for

the lack of correlation, when measured using linear scales. Further research to explore this possibility would be useful.

Figure 1 Interactive dimensions of relationship quality

Table I Factor analysis

Table III Standardised regression coefficients

Table II Correlation coefficients for main constructs

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