What is the source of trust in a buyer-seller relationship? if you're a supplier selling to a manufacturer, they may agree to, for example, pay you in 90 days. tionship profiles for more than buyer-seller relationships sampled from a wide array of For example, efforts to implement total quality management or. Buyer Supplier Relationship. and collaboration Supplier overview and rating Strategic Alliance Top industry examples Role of IT; 3.
And you would think that that would lead to greater sales. And as a result of learning about those things, the sales person can use information asymmetry to their advantage. Related to that, there is another string of research that has looked at contexts where trust is going to be more or less influential.
One example of a great paper that looks at that is a paper by Garbarino and Johnson. And what they did is, they looked at relationships between people who buy tickets for a theater company and how their experience at the theater company influences their likelihood of buying another ticket.
But the interesting thing that they did is that they divided the people they surveyed into two groups.
One group are people who are subscribers; people who have bought a subscription and who go to the theater a lot. But they found that trust is a key mediator only for the subscription holders.
And the interesting thing about that is that for subscription holders, satisfaction was not a key mediator for future intent, or for likelihood of buying another ticket. In other words, as a subscriber, you could be a little bit less satisfied with the performance and still have the intention of buying another ticket as long as you trust the theater company. If you think about the theater company, they could have slightly worse performances and still have those subscription holders.
So, this theater company could do an experimental production that might not go over very well, but might not also lose their customers. So, rather than just saying that trust has a dark side and people can take advantage of it in bad ways, it also suggests that trust has a side where people can take advantage of it in good ways. One example of an influential paper that takes more of an economic perspective is by Brown, D.
They studied the hotel industry, and in particular, relationships between the corporate office and the people who own or run individual hotels. And what they looked at is what safeguards the corporate office can put in place so that the individual hotels are less likely to take advantage of information asymmetry. Now, what do I mean by safeguards? One safeguard that can be put in place is that the corporate office can actually own the hotel. Another safeguard that people can put in place is to monitor, is to put monitoring mechanisms or have people on the property monitoring what is going on and reporting back to the head office.
What this paper did is, it distinguished between two types of safeguards. One is more economic, like the ownership one. The other kind of safeguard is a little bit more social. They are things like acculturating people to a particular corporate culture, which means more training sessions or more corporate events that help people to understand what the norms and values of the corporation are. So, what this suggests is that safeguards are, first of all, not always going to universally minimize opportunism, even though they might rationally seem like they do, but also that people can resent safeguards; they can feel bad about safeguards, and they can actually have the opposite effect that the company may intend.
Do I trust this organization? Do I trust this brand? This is what he dubbed the "all at once" approach.
Building a Better Buyer-Seller Relationship
Or better, the supplier can attempt a "foot-in-the-door" approach, by skillfully managing the relationship. For a foot-in-the-door product to be successful, it should boast five qualities, he said: There has to be a natural progression from one part to another—some connection.
It has to solve an important, visible customer pain. The supplier must be confident of its performance; there can be no problem. First impressions are the last impressions if they're not good ones, he said.
The customer has to be able to evaluate the product. Even if you're sure of the quality, if the customer doesn't understand what you're doing it's not going to work.
Trust in Buyer-Seller Relationships | The Trust Project
It must not be too expensive for the customer. I think the most underestimated factor in industrial or business marketing is buyer behavior. The customer calls you and wants to place an order. If you do it right, you also increase the scope of the relationship. But does it work all the time? The answer is no," he said. Sometimes the all-at-once approach is the only way to jump-start from zero, he observed. From Transaction To Commitment To explain how he has come to answer question three—how to convert a customer from a transactional to a relationship orientation—Narayandas answered with a case and a research project.
The Wesco case is about a company whose business was very transaction-oriented—dealing in bulbs, wires, and connectors for contractors and industrial customers. Yet it managed to shepherd about a third of its customers into a relationship.
As he learned in the Wesco experience, the road is bumpy at first. The distributor tells the customer, "I want to give you lower prices, which will come at the expense of my markets.
What I want you to do is give me higher volumes. The suppliers' costs, meanwhile, just go up. While the customer is getting more value, only one party—the distributor—is actually working at the relationship. Even the slightest effort they put in will lead to much more value for themselves. At some point, the customers begin to give more volumes.
For the customers, value increased, thanks to price reduction and the fact that the customers began to see the value of collaboration. Trust forms between people, between individuals.