Service loyalty: accounting for social capital

Abstract

PurposeTo the extent that customer relationships with service providers provide value to service firms suggests that these relationships can be viewed as social capital. This paper seeks to use social capital as a theoretical framework to examine the effect of these relationships on customer loyalty.Design/methodology/approachData were collected using an online survey of 342 adult consumers of services.FindingsResults of structural equation modeling analyses indicate that social capital variables explain unique variance in customer responses. The effect of each of the three forms of social capital – structural, cognitive, and relational – are contingent on whether the service is personal (e.g. hairstylist, medical services) or non‐personal (e.g. mechanic, banker).Research limitations/implicationsThis research suggests that customer relationships can be viewed as social capital and that the form and content of such relationships are important in terms of influencing customer loyalty.Practical implicationsManagers can build “social capital” by focusing on its three forms – structural, cognitive, and relational social capital. The paper provides prescriptions for such relationship building activities. Such social capital translates into firm value/profits through customer loyalty.Originality/valueThis study uses a theoretical framework from research in social capital to help explain the value of customer relationships with individual service providers to the firm. The idea of social capital is compelling to service managers since it implies that investments in relationship building tactics have real results for firm profitability.