Customer relationships have been increasingly studied
in the academic marketing literature (Berry 1995;
Dwyer, Schurr, and Oh 1987; Morgan and Hunt
1994; Sheth and Parvatiyar 1995). An intense interest in customer
relationships is also apparent in marketing practice
and is most evident in firms’ significant investments in customer
relationship management (CRM) systems (Kerstetter
2001; Reinartz and Kumar 2002; Winer 2001). Customer
retention rates and customer share are important metrics in
CRM (Hoekstra, Leeflang, and Wittink 1999; Reichheld
1996). Customer share is defined as the ratio of a customer’s
purchases of a particular category of products or services
from supplier X to the customer’s total purchases of that category
of products or services from all suppliers (Peppers and
Rogers 1999).
To maximize these metrics, firms use relationship marketing
instruments (RMIs), such as loyalty programs and
direct mailings (Hart et al. 1999; Roberts and Berger 1999).
Firms also aim to build close relationships with customers to
enhance customers’ relationship perceptions (CRPs).
Although the impact of these tactics on customer retention
has been reported (e.g., Bolton 1998; Bolton, Kannan, and
Bramlett 2000), there is skepticism about whether such tac