Since Berry (1983) introduced the concept of relationship marketing, many scholars and researchers (e.g. Gronroos, 1990, 1994; Gordon et al. 2008; Palmatier, et al. 2009) have theorized and empirically tested the underlying principles of relationship marketing theory. Building a profitable and sustainable long term relationship with customers (De Wulf et al. 2001), increasing customers retention, developing and maintaining trust and commitment between sellers and customers (Gaur & Xu, 2009), achieving more customers satisfaction and high customers loyalty (Gaurav, 2008), and cost reduction due to the better understanding of customers needs (Ndubisi, 2004) are central to the relationship marketing theory. The application of relationship marketing theory has even extended into financial services, due to the deregulation policy (Yavas & Yasin, 2001), the removal of restrictions between banks, building societies and insurance companies (Speed and Smith , 1992), and the vast expansion in the adoption and use of information technologies (Bergeron et al, 2008).
However, although previous literature has stressed the importance of relationship marketing particularly in financial sector, it seems to be that the perception of how both financial institutions and clients perceive relationship marketing is quite different (The Point Staff, 2005). While clients view relationships as the financial institution is acting for their favor based on confidence and trust, financial institutions view relationships marketing in terms of the number of accounts they have. Such observation requires further investigation on the marketing activities of banking sector as a form of financial institutions, and to evaluate the effect of such activities on relationship quality between financial service providers and their clients. Moreover, while a large body of literature in business to business (B-2-B) and business to consumer(B-2-C) market emphasizes the role and the importance of relationship marketing, no studies have been done on testing the cause-effect model of relationship quality in the banking sector in the Arab world (as far as the current researchers knowledge is concerned). Therefore, the primary purpose of this paper is to conduct an investigation in the marketing actions (antecedents) affecting relationship quality between Jordanian banks employees and their clients, and the performances (consequences) influenced by relationship quality. It is expected that the higher the bank's relationship marketing efforts such as client orientation, relational orientation, mutual disclosure, and financial service providers' attributes, the higher the relationship quality between financial service providers and clients. As the relationship quality increases, it is likely to have a significant influence on the clients' behavior demonstrated through increased relationship continuity, and word of mouth.
2. Literature review
2.1 Relationship marketing and financial sector
Morgan and Hunt (1994) defined relationship marketing as all marketing activities directed toward establishing, developing, and maintaining successful relational exchange. Veloutsou et al. (2002) demonstrated that relationship marketing is based upon an ongoing multi-transactional relationship with customers, as opposed to a series of single transactions as in traditional marketing. Moreover, the time consuming process and the huge amount of resources which are allocated for attracting and acquiring customers, have shifted the emphasis of many firms into building and sustaining long-term customer relationships (Ennew and Binks, 1996). Previous literature showed that in order to achieve profitability up to 85%, firms need to improve their customers retentions by 5%. (Reichheld and Sasser, 1990). Hence, the longer a customer stays in the relationship with a company the more profitable will that be to the company (Al-alak, 2006). Therefore, when firms allocate more of their resources on retaining customers under the relationship marketing strategy, this is likely to make marketing more efficient (Kotler, 2003). In addition, Lovelock (2002) argues that firms need to do a continuous assessment and screening for their entire customers base, since not all existing customer relationships are worth keeping Therefore, relationship marketing aims to establish and maintain a solid base of loyal customers who are profitable for the firm (Peppard, 2000). It is argued that as the number of these relationships grows, the loyal customers themselves will frequently help to attract (through word of mouth) new customers with similar relationship potential (Sheth, 2000).
As related to the above argument, it has been suggested that firms' offering can be customized through a mutual relationship of communication and learning process between firms and their customers (Eisingerich & Bell, 2006). In the financial sector, where some clients have rejected the use of information technology as an alternative approach for personal contact (Prendergast & Marr, 1994), the role of clients have become more active in the service production/delivery process (Prahalad and Ramaswamy, 2000). It has also been concluded that the more the client participates in the financial institution service delivery process, the higher the opportunity to use cross selling and up selling with the client effectively (Salazar et al. 2007). Moreover, as financial service offerings are hard to be distinguished among competitors, clients have become more price conscious (Claik and Balta, 2006), therefore, it is argued that relationship marketing could mediate such effect (Jham and Khan, 2008). However, it has been suggested that the financial service sector, particularly banking is not well trusted (Taylor, 2007). On one hand, it is hard for such financial products to be evaluated before receiving and actually trying the service; on the other hand, clients in most cases are unfamiliar with the financial products. As a result of that, sales banking staff may exploit their clients, leading to a rise in client-service provider switching. Such switching process might be associated with some incurred transaction costs, which may influence the image of that financial institution negatively due to the bad word of mouth [Heffernan, 1993]. Furthermore, since most services are delivered from frontline employees, then the quality of interaction which Craig and Ramaseshan, (1994) called 'the moment of the truth' becomes very important. Relationship qualitymoment of truth- refers to customer perceptions and evaluations of individual service employees' communication and behavior, such as respect, courtesy, warmth, empathy, and helpfulness (Al-alak, 2006). This involves inducing feelings and emotional states through customer- employee interactions (or service encounters in the services sector). In the financial sector, whenever clients interact personally with financial service providers- that is 'moment of truth'-, they have the opportunity to evaluate, reevaluate or confirm previously held perceptions of their relationships with the service provider (Menon and O ' Connor, 2007).
2.2 Previous Research
Crosby et al. (1990) studied the relationship quality in services selling and found that a strong buyer-seller relationship is contingent upon cooperative intentions, mutual disclosure and intensive follow up contact. Bergeron et al. (2001) investigated the role of client knowledge, service quality and expertise. The results of the study showed that the relationship between expertise and satisfaction was insignificant. Satisfied customers were less likely to purchase financial products in the future compared with trusting customers, while trusting customers were found to be generating less positive word of mouth in terms of recommending the bank to other people compared with satisfied customers. Eisingerich and Bell (2006) reported that clients' involvement in service delivery process means that clients would shoulder responsibility of both 'blame" and "credits" of the negative/positive service outcome and this in return could lead to a decrease in clients switching. Clients' involvement helped in developing a social relationship with financial service providers which resulted in reduced service failure. Finally, an educated client who is knowledgeable about financial institution offerings helped in improving service quality and increased client loyalty. Bergeron et al. (2008) found that a financial institution with a strong customer orientation had a strong effect on "clients' experience of pleasant surprise". In addition, the familiarity (i.e. knowing his/her birthday) with a client was found to have a strong impact on client pleasant. Continuous innovative practices that are not easily copied by other financial services providers had led to higher client satisfaction. Finally, …