Relationship benefits are proposed by Morgan and Hunt (1994) to be one of the three determinants of relationship commitment. This section explains the concept of relationship benefits, and explores how relationship benefits can increase levels of commitment.
According to Gwinner, Gremler and Bitner (1998, p.102), relationship benefits can be defined as ‘those benefits customers receive from long-term relationships above and beyond the core service performance (e.g. reduced anxiety as opposed to on-time package delivery)’. Obviously, it can be argued that this kind of benefit is only available to long-term customers, as a reward for being loyal to the firm (Gwinner, Gremler & Bitner 1998). The importance of relationship benefits has increased since the marketplace has become more competitive. In today’s competitive environment it is widely agreed that providing functional benefits (i.e. core services) is not enough to retain existing customers and that firms need to provide relationship benefits to
distinguish themselves from other providers. Relationship benefits are thought to provide substantial competitive advantages for businesses. For example, Morgan and Hunt (1994) assert that customers normally go to a service provider who will provide them with special benefits. Relationship benefits make committing to a relationship more valuable. Gwinner, Gremler and Bitner (1998) recommend that service providers build loyalty strategies around relationship benefits because there is a strong link between relationship benefits and commitment which in turn lead to loyalty. Bowen and Shoemaker (2003, p.36) state that ‘for a customer to enter into a relationship, the relationship must provide value for that customer’. This means that once relationship benefits are presented, customers are more likely to increase their intention to stay in the relationship. Relationship benefits are suggested to be amongst the most important motivators for customers to maintain relationships with service providers (Patterson & Smith 2001). In Morgan and Hunt’s (1994) study, the concept of relationship benefits is perceived as one-dimensional and to only concern economic benefits provided to customers by their suppliers. However, the more recent study by Gwinner, Gremler and Bitner (1998), which is more service-oriented, argues that there are three types of relationship benefits used by service providers to reward their loyal customers. These are confidence benefits, social benefits and special treatment benefits (Gwinner, Gremler & Bitner 1998).
Confidence benefits are ‘the reduction of uncertainty in transactions and the increase in realistic expectations for the service encounter’ (Yen & Gwinner 2003, p.485). These benefits are especially important for service businesses, where a product cannot be seen, touched, or tasted prior to consumption. When extrapolated to the context of the present investigation, this means that by revisiting the same resort, guests can be
confident about the quality of services they will receive, which reduces their perception of the risks involved during service encounters.
Social benefits are ‘… the emotional aspects of relationships and focus on personal recognition of customers by employees and the development of friendships between customers and employees’ (Yen & Gwinner 2003, p.485). In general, customers who develop a friendship with service staff are likely to feel committed to a service provider. Friendships between customers and service staff are likely to develop more often in an extended service encounter, rather than during a brief encounter. Resort service encounters are often extended, because most resort guests are holiday seekers who normally spend more time enjoying themselves within a resort compared to, for example, business travellers. In this context, the formation of relationships between guests and staff are more likely to be developed within a resort context than in business hotels.
Special treatment benefits involve both economic and other customisation advantages. These benefits include privileges received by loyal customers when contracting with a service provider. This treatment makes customers feel more important than other guests, and encourages them to become committed to the service provider. In a resort context, a loyalty program has become one of the most common ways used to repay loyal customers. This approach provides frequent customers with a special price as well as special treatment from the resort. For example, it takes frequent customers less time to check in, and they are more likely to receive complimentary items from the resort.
Although each type of relationship benefit has been found to have a positive impact on customer loyalty, in previous studies (Gwinner, Gremler & Bitner 1998; Hennig- Thurau, Gwinner & Gremler 2002), some relationship benefits have been found to have a greater impact on commitment than others. Gwinner, Gremler and Bitner (1998) suggest several factors that account for this, including the nature of the business and the characteristics of the customers.
Some researchers have found that different types of relationship benefits have a greater or lesser impact on commitment, depending on the nature of the service encounter. For example, Yen and Gwinner (2003) found that, in contexts where there is less direct contact between customers and staff, only confidence benefits and special treatment benefits have a significant impact on customer loyalty. Gwinner, Gremler and Bitner (1998) further find that social and special treatment benefits are more or less influential depending on the type of service. They suggest that social and special treatment benefits are likely to be much more important in high employee- customer contact service encounters, rather than in low employee-customer contact operations such as online shopping. It should be noted that service encounters within a resort context are an extended encounter, where there is a high degree of employee- customer contact. Consequently, social and special treatment benefits are expected to play an important part in influencing commitment.
Other researchers find that, not only does the nature of the service encounter impact the effect of each relationship benefit on commitment, the nationality of customers can also have an impact on how customers perceive the importance of each relationship benefit on commitment. Patterson and Smith (2001), for example, found
that people from different cultures put different emphases on relationship benefits. In their study they adapted the survey instrument used by Gwinner, Gremler and Bitner (1998) in order to identify how US and Thai customers respectively value each type of relationship benefit. They point out that confidence benefits are found to have the strongest impact on commitment in the USA, while special treatment benefits are found to have the strongest impact on commitment in Thailand.
In summary, relationship benefits can be conceptualised as providing customers with rewards for their loyalty. Relationship benefits can be classified into three different categories: confidence benefits, social benefits and special treatment benefits. It has been found that each category of relationship benefit has an impact on commitment, depending on the nature of the service encounter, as well as the cultural background of customers.