Abstract
Efforts directed towards customer retention highly depend on the area in which company operates. Personalization is considered as one of the most effective means for service companies to develop long-term relationships with their customers. However, it still remains unclear how personalization should be expressed while developing long-term relationships with service customers. Thus, the aim of this study is to reason theoretically the effect of personalization on long-term relationships with service customers and to test it empirically on the example of high personal contact services. Theoretical studies reveal that personalized interaction between a service customer and a company is a three-dimensional construct, dimensions of which are personalized contact, personalized physical environment, and customer environment. Results of personalization in the context of the long-term relationships development are expressed through relationship quality (trust, satisfaction, and commitment) and customer loyalty (loyalty to a service company and loyalty to a certain employee). Hair salon services were chosen as a case for the empirical research. Results of the empirical research show that dimensions of personalized interaction influence both relationship quality dimensions and relationship results. The most significant dimension of personalized interaction while developing long-term relationships with customers of hair salons is personalized contact. The paper gives some practical insights for the development of long-term relationships with customers of hair salons.DOI: http://dx.doi.org/10.5755/j01.ee.27.4.14159
Highlights
Intensive competition, lower barriers to entering markets, growing uncertainties among limits of different markets, market fragmentation and shorter product life cycles oblige companies to search for new ways to gain competitive advantage, at the same time giving increased attention towards retention of customers
The ongoing discussions on personalization confirm the importance of the phenomenon, especially in the context of services
The essential reason to implement service personalization process via personalized interaction between the customer and the service company employee is related to the satisfaction of the individual customer needs
Summary
Lower barriers to entering markets, growing uncertainties among limits of different markets, market fragmentation and shorter product life cycles oblige companies to search for new ways to gain competitive advantage, at the same time giving increased attention towards retention of customers. The main strategic objectives in companies require searching for uniqueness and satisfaction of customer expectations (Hanzah, Othman & Hassan, 2016; Rod, Ashill & Gibbs, 2016) In such circumstances, personalized offers, which deliver value both for the customer and the company, become of the highest relevancy. Creation of personalized offer, which satisfies customer needs, requires companies to focus on the implementation of dynamic personalization process and getting feedback from all participants in it This is confirmed by insights of different researchers (Pierrakos, Paliouras, Papatheodorou & Spyropoulos, 2003; Adomavicius & Tuzhilin, 2005; Vesanen, 2007; Kwon & Kim, 2012; Wang & Kobsa, 2013) stating that in case of modern companies, which seek economic, social and emotional value for themselves and for customers, it is important to develop long-term relationships with customers. In this context works of Udorn, Bloom & Zeihaml (1998), Shamdasani & Balakrishnan (2000), Hennig-Thurau, Gwinner, & Gremler (2002), Ball, Coelho & Vilares (2006), Wall & Berry (2007), Shen & Ball (2009) should be mentioned, as they research relations between personalization, antecedents and results of long-term relationships with customers
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