How Do Relationships Drive B2B Retail?

SMITH BRAIN TRUST – Janet Wagner knows firsthand the importance of building relationships with vendors as a buyer in the retail business. She started her career as a swimwear buyer at a New York City department store. Though she soon realized a long-term retail career wasn’t for her, the experience got her interested in studying marketing and customer service.

After earning her PhD,  Wagner has spent the bulk of her academic career as a marketing professor at the University of Maryland’s Robert H. Smith School of Business. Her latest research confirms just how much relationships play into the business-to-business side of retail.

Wagner, who spent eight years as director of Maryland Smith’s Center for Excellence in Service, worked with Sabine Benoit of the University of Roehampton, United Kingdom, to look at the relationship between retail buyers and the vendors from whom they buy products.

The co-authors were interested in the value those relationships create for both sides. They found that sales representatives play a critical role in maintaining lasting relationships between retailers and vendors to survive periods when the business takes a hit.

While a good relationship between a sales representative and buyer won’t always protect the vendor from being shut out of business, it may leave the door open for future business when the time is right, Wagner says.

She and Benoit analyzed survey data from retail buyers and their vendors. The results show brand equity – the weight a certain brand carries with consumers – is the most important resource in determining the health of a vendor’s long-term business-to-business relationship with retailers. But other factors matter, too.

They found that sales representatives play a very big role in driving the buyers’ overall perceptions of value. That perception of value was the major factor in a buyer’s intention to do more business with the vendor and to continue to maintain a relationship with the vendor. So how can sales representatives make sure their buyers perceive value in their relationship? That’s what Wagner and Benoit wanted to find out. 

The researchers looked at how four factors – merchandising support, margin maintenance, special treatment and customer advocacy – drove the buyer’s perception of how valuable the relationship with their sales representative was and whether they’d continue it even when they weren’t an active customer. 

Merchandising support is an important – but expected – offering, find the researchers. They also looked at margin maintenance, or the practice of offering compensation to retailers if merchandise does not sell as planned. Buyers may be in situations where they buy products from vendors and the products don’t sell at the price expected, says Wagner. If the vendor wants to maintain a good relationship with the buyer, the vendor has to move in and offer the buyer some kind of financial compensation for the money lost.

Additionally, the researchers looked at the extent to which sales representatives offered buyers some kind of special treatment. For example, if they had a very good relationship with a particular retail buyer, then the sales representative might be willing to, say, call the production facility to make sure their buyer gets the product first before the competition.

They also looked at what they call customer advocacy, or how much a sales rep was willing to speak up for the buyer’s interests in the event of some kind of a disagreement between the vendor and the retailer. 

Wagner’s own retail buyer experience sparked the research. 

“One thing I observed was that our business with vendors would sort of ebb and flow. We’d have some vendors who would have a couple of bad years and their products wouldn’t sell well,” Wagner says. “So we’d say OK, we’re not going to buy any more from you. But, we’re not going to cut off the relationship either. We’re willing to still entertain the possibility of buying your products if something changes.” 

“The sales representative plays an important role there,” Wagner continues, “because if the buyer has developed a working relationship with a sales representative, then chances are they’ll stay in touch.  That will give the vendor the opportunity to resume business again. Whereas, if the buyer believes the sales representative’s service is poor,  that’s just not going to happen.” 

A sales representative and the service they offer to clients play a very important role in building up the goodwill that can carry a business-to-business relationship through rough patches, says Wagner.

“The sales representative’s effort on behalf of the client creates value that’s like a reservoir of goodwill for the vendor,” she says. “If the business doesn’t go well for a year or two, then the vendor can essential tap that reservoir of goodwill to maintain a relationship with the buyer.  If at some point the product starts to sell better, there’s an opportunity to start the business dealings over again.”

Read more: Creating Value In Retail Buyer-Vendor Relationships: A Service-Centered Model, was featured in Industrial Marketing Management.

Janet Wagner is an associate professor of marketing and director of the Center for Excellence in Service at the University of Maryland’s Robert H. Smith School of Business. 

Research interests: Service marketing management, retailing, customer relationship and loyalty building, and survey research methods. Her research has been published in the Journal of Marketing Research, the Journal of Consumer Research, the Journal of Retailing, the Journal of Service Research, the Journal of Industrial Marketing Management, and the Journal of Consumer Affairs. 

Selected accomplishments: The Krowe Award for Teaching Excellence; Excellence Awards from the Smith M.B.A. Consulting Program; Reviewer of the Year for the Journal of Consumer Research; Finalist for the Best Services Article, 2003 American Marketing Association Services Special Interest Group; Outstanding Teaching Award, University of Maryland; Teaching Excellence Award, Center for Teaching Excellence, University of Maryland; and Honorable Mention in the Journal of Consumer Research’s Ferber Award competition. She is on the editorial board of the Journal of Service Research, the Journal of the Academy of Marketing Science, and the Journal of Service Theory and Practice.  She has served on the editorial boards of the Journal of Retailing and the Journal of Consumer Research.

About this series: Maryland Smith celebrates Women Leading Research during Women’s History Month. The initiative is organized in partnership with ADVANCE, an initiative to transform the University of Maryland by investing in a culture of inclusive excellence. Other Women's History Month activities include the eighth annual Women Leading Women forum on March 5, 2019.

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