Enhancing customer loyalty: a research study investigating the client-agency relationship in the Australian advertising industry

Establishing and maintaining business relationships has been studied for some time by marketing researchers as continuing business relationships provide many benefits to both parties. Loyalty in the business-to-business professional services context has received scant empirical attention to date. The client-advertising agency relationship has been chosen as the context as this is an area where relationship management is highly relevant and easily applicable due to the ongoing and highly interactive nature of the service provision. Additionally, the advertising industry is facing several unique challenges including the increasing number of agencies, a trend by businesses to undertake promotional work in-house, a shift from traditional to digital media and changes in remuneration. The framework for the study is based on the cognitive-affective-conative pattern of loyalty development. Three key research issues form the focus of the research which draws upon literature from three key disciplines: service quality, relationship marketing and project management. The research issues are: the key drivers of client loyalty, the interrelationships between these drivers and the role of project management and project outcomes in relationship management. The applicability of traditional project management tools, techniques and literature is explored within this non-traditional context. A pragmatic ontology was used for this exploratory study which utilised a parallel mixed methods design. Study one involved a quantitative survey of clients of advertising agencies whilst study two involved a series of in-depth interviews with marketers. The data from the two studies were integrated to inform the findings and final enhanced model. The key drivers of loyalty were determined to be an advertising agency’s creative competence, project management processes, project performance including project outcome, client perceived value, interpersonal relationships between client and agency staff, satisfaction, trust and commitment. A structural equation model was developed that explained over 93% of variation in loyalty. Creative competence, including proactivity and implementation of campaigns, is the key driver of client loyalty, closely followed by client’s value perceptions. Value is created through creative prowess as well as project performance, that is, project outcomes, project delivery on time and budget. The keys to relationship management are open, honest relationships with consistently high service levels. The most effective client-agency relationships occur when there is an alliance or partnership between the client and their advertising agency. Agencies need to focus on key accounts and market themselves, showing how they create value for their clients. The role of the account managers is akin to the role of traditional project managers, and both can learn from one another. Agencies need to have efficient and effective project management processes in place. Project managers need to pay heed to how advertising projects are undertaken. In general, advertising projects are more efficiently and effectively completed than traditional projects.