An executive summary for

managers and executive Determinants of trust in a

readers can be found at the
end of this article service provider: the moderating
role of length of relationship
Keith S. Coulter
Assistant Professor of Marketing, Graduate School of Management,
Clark University, Worcester, Massachusetts, USA
Robin A. Coulter
Associate Professor, Department of Marketing, School of Business
Administration, University of Connecticut, Storrs, Connecticut, USA

Keywords Trust, Customer behaviour, Service, Service quality

Abstract Trust is a key factor in the establishment of long-term relationships between
service representatives and their customers. Prior research has documented that both
``person-related'' (e.g. empathy, politeness and customer/service representative
similarity) and ``offer-related'' (customization, competence, reliability and promptness)
service representative characteristics have an impact on trust. However, the relative
importance of these characteristics, and in some cases the direction of their relationships
with trust, has varied across studies. In this paper, we posit a contingency model of trust,
suggesting that the effects of the above variables on trust are moderated by length of the
customer/service provider relationship. Our model is tested in a business-to-business
context by means of a mail survey involving 677 small business owners. The small
business owners provided data about their relationships with their insurance industry
service providers. Our results demonstrate how service representatives and firms can
work toward the establishment of trust with their clients under varying market conditions.

Introduction
Service's inherent A service has been defined as, ``any act or performance that one party can
intangibility offer to another that is essentially intangible, and does not result in the
ownership of anything. . .'' (Kotler, 1997, p. 467). Unlike physical products,
service products cannot be seen, tasted, felt, heard, or smelled before they are
bought (Parasuraman et al., 1985; Lovelock, 1981). Because of a service's
inherent intangibility, consumers are often faced with not knowing what to
expect of a service until they have consumed it, and hence perceive services as
risky (Murray and Schlacter, 1990). Research has demonstrated that the need
for trust arises in any situation characterized by a high degree of risk,
uncertainty, and/or a lack of knowledge or information on the part of the
interaction participants (Mayer et al., 1995). Thus, customers have an inherent
need to trust in their service provider to deliver the desired service outcome.
A great deal of research in the services literature has documented the
importance of trust in maintaining satisfactory service provider/customer
relationships (e.g. Crosby et al., 1990; Doney and Cannon, 1997; Dorsch et
al., 1998). A focal issue of this research has been the effect of individual
service representative or salesperson characteristics on the establishment of
trust. Characteristics that have received considerable attention in the
literature include:
(1) competence;
(2) ability to customize solutions;

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 (3) promptness;
(4) reliability;
(5) empathy;
(6) politeness; and
(7) perceived similarity between service representative and customer (e.g.
Moorman et al., 1993).
The first four of these characteristics pertain to the service representative's
ability to deliver the service offer, whereas the latter three pertain to the
service representative's personal characteristics or manner of delivery.
Significant predictors Within the social and organizational psychology literature, the seven
aforementioned service provider characteristics appear to be quite robust as
significant predictors (i.e. antecedents) of trust (Mishra, 1995). Further, as a
set they ``appear to explain a major portion of trustworthiness'' (Mayer et al.,
1995, p. 717). Within the marketing literature, however, findings regarding
these characteristics have differed both in terms of importance, and in some
instances, the direction of their relationships with trust. For example,
Moorman et al. (1993) found a negative relationship between supplier
empathy and client trust, while Ganesan (1994) found no relationship
between empathy and long-term relationship orientation. Similarly, a number
of studies (e.g. Morgan and Hunt, 1994; Doney and Cannon, 1997) report a
positive relationship between similarity and trust, while Crosby et al. (1990)
found no relationship between similarity and relationship quality (defined in
terms of trust and satisfaction).
While these mixed results may be a function of several factors, including
different dependent measures (e.g. trust vs relationship quality) and/or
different operationalizations of the independent and dependent variables, we
argue that the findings may reflect the length of time that the customer and
service supplier have interacted. More specifically, we suggest that the
effects of the four ``offer-related'' service representative characteristics (i.e.
competence, customization, promptness and reliability) are increased as the
relationship continues over time, whereas the effects of the three ``person-
related'' service representative characteristics (i.e. empathy, politeness,
similarity) are diminished.
Nature of risk The varying effects are the result of the nature of risk that accompanies the
establishment of a ``relationship'' with a particular service provider. Initial
service encounters carry a certain degree of risk due to the intangible nature
of the service product and the customer not knowing what to expect in terms
of the service outcome. Uncertainty (and hence risk) is reduced as
knowledge is gained with repeat exposure to the service supplier over time.
However, at the same time risk is reduced due to increased familiarity, risk is
also increased because of the switching costs incurred as a result of
long-term service relationships (Keveaney, 1995; Porter, 1985).
Switching costs are defined as the customer's anticipated time and effort
associated with changing service providers (Keaveney, 1995; Porter, 1985).
Switching costs give firms the power to retain their customers, while
potentially raising prices and generating monopoly profits (Klemperer,
1987). The greater the power of service suppliers, the greater the likelihood
that they are able to dictate the terms of the service relationship, and hence
(from the customer's perspective) the greater the risk associated with
establishing long-term relationships. Because the need for trust arises in any

36 JOURNAL OF SERVICES MARKETING, VOL. 16 NO. 1 2002


Critical success factor
Competence is defined
JOURNAL OF SERVICES MARKETING, VOL. 16 NO. 1 2002
risky situation, and because the nature of risk is expected to vary over time,
we expect that the manner in which trust is established (i.e. the antecedents
of trust) will also vary over time. We empirically examine our contingency
model in a business-to-business context. Specifically, we compiled data from
677 small business owners who responded to mail questionnaires regarding
their interactions with insurance industry service representatives. Our
resultant ``contingency view'' of trust in the service representative provides
significant practical implications in terms of which service offer and delivery
features to emphasize depending on the length of the service relationship.
Background and theoretical development
Trust and its antecedents
The notion of trust as a critical success factor in service relationships was
introduced by Parasuraman et al. (1985), who suggested that customers
should be able to trust their service providers, feel safe in their dealings with
their service providers, and be assured that their dealings are confidential.
Many conceptualizations and operationalizations of trust in relationships
have been offered in the literature (e.g. Crosby et al., 1990; Doney and
Cannon, 1997; Moorman et al., 1993). Our conceptualization is consistent
with extant research in that we define trust in terms of a customer's
perceptions of service representative confidentiality, honesty, integrity and
high ethical standards.
The literature suggests that trust may emerge from repeated alliances
between the same partners (Gulati, 1995), or with increased length of
customer/service provider relationship (Ring and Van de Ven, 1989; Parkhe,
1993). The idea of trust emerging from prior contact or with increased length
of relationship is based on the premise that through ongoing interaction,
parties to a relationship learn about each other, and develop trust around
norms of equity (Shapiro et al., 1992; Bolton, 1998). The literature further
suggests that both ``offer-related'' (competence, customization, reliability,
promptness) and ``person-related'' (similarity, empathy, politeness)
characteristics of the individual service representative or salesperson can
affect the ongoing viability of a service relationship by contributing toward
the establishment of trust (GroÈnroos, 1990; Surprenant and Solomon, 1987).
Competence is defined as the degree to which customers perceive that the
service representative possesses the required skills and knowledge to supply
the basic service product. Reliability and promptness refer to the delivery of
that product in a dependable and timely manner (Parasuraman et al., 1985).
Customization is defined as the service representatives's ability (or
willingness) to vary the product offering in terms of specific service
attributes, in order to suit the individual customer's needs. Empathy is
defined as the degree to which the service representative possesses a ``warm,
considerate, and caring'' attitude (Parasuraman et al., 1988). Politeness
refers to the degree to which the service provider is perceived as being
considerate, tactful, deferent, or courteous. Finally, similarity is defined as
the degree to which a customer perceives himself/herself to be similar to the
service representative, based on comparable tastes, preferences, appearance,
lifestyles, etc. (Crosby et al., 1990).
The effects of length of relationship on the ``person-related'' antecedents of
trust
Research has documented that service relationships evolve during a specific
service encounter (Price et al., 1995) as well as over time (Crosby et al.,
1990) as customers ``get to know'' their service providers. ``Getting to
37

Similarity
Evidence of service quality
know'' a service representative implies acquiring information. The more
encounters one has with his/her service representative, the more information
is accumulated about that service rep, and the more knowledge is gained
about a particular service industry. Early in the service provider/customer
relationship, consumers are often faced with not knowing what to expect of
the service. Because of this intangibility, they perceive services as risky
(Brown and Fern, 1981), and consequently need to have initial confidence in
their service provider.
We expect that perceived ``similarity'' between customer and service
representative (i.e. in terms of lifestyle, social class, education level, etc.)
will contribute toward this feeling of confidence. Similarity allows
customers to ``identify'' with their service representatives on a personal
level. This identification reduces interpersonal barriers, raises comfort levels,
and contributes toward the establishment of trust. Research confirms that
salespeople or service representatives who are perceived as being similar to
their customers are more influential in changing attitudes and opinions than
dissimilar representatives (Woodside and Davenport, 1974). And the
willingness to change one's attitude (i.e. ``see another person's point of
view'') is an important component of a trusting relationship (Doney and
Cannon, 1997).
In addition, perceived similarity may facilitate communications regarding
specific service attributes (McGinnies and Ward, 1980), such that confidence
regarding specific service outcomes is increased, and consequently trust is
established. Thus, we expect that customer/service representative similarity
will be especially important when confidence levels are low, as might be the
case during initial encounters with service industry providers.
Because of the uncertainty and lack of knowledge associated with these early
service encounters, consumers may initially require more assistance in
understanding the attributes and benefits associated with their consumption.
We expect that personal attention and empathy on the part of the service
representative will facilitate the communication of service-related
information, thereby increasing consumers' understanding of how the service
operates. With increased understanding comes confidence, which in turn
may lead to a feeling of trust in the service representative.
In addition, to reduce the uncertainty associated with early service
encounters, buyers will look for signs or evidence of the service quality, and
will ``draw inferences about service quality from the place, people,
equipment, communication material, symbols, and price that they see''
(Kotler, 1997, p. 469, emphasis added). We expect that personal qualities
such as politeness and an empathetic attitude will facilitate the drawing of
more positive inferences. Further, these qualities should reduce interpersonal
barriers and raise comfort levels, thereby alleviating perceptions of
``riskiness'' and contributing toward the establishment of trust. In sum, we
expect that empathy and politeness are particularly important to the
establishment of trust in the early stages of a service relationship.
As knowledge is gained over the course of a relationship, the initial
uncertainty (and inherent risk) associated with a particular service provider
may be reduced. In addition, the increased familiarity associated with a
greater number of service encounters means that customers no longer have to
draw inferences about service quality from the personal qualities of their
service representative. In other words, as knowledge is gained over time, the
``person-related'' characteristics (similarity, politeness, and an empathetic

38 JOURNAL OF SERVICES MARKETING, VOL. 16 NO. 1 2002

 attitude) should become less important as ``surrogate cues'' on which to base
trust evaluations. Thus we expect that:
H1. As length of service relationship increases:
(a) the impact of similarity on trust will decrease;
(b) the impact of empathy on trust will decrease;
(c) the impact of politeness on trust will decrease.

The effects of length of relationship on the ``offer-related'' antecedents of

trust
Switching costs As we suggested earlier, perceived switching costs are the incremental fixed
costs that are incurred as a result of changing service suppliers (Porter,
1985). Research has shown that consumers' perceptions of switching costs
increase as customers remain with a particular service provider (Porter,
1985). Over the course of business-to-business relationships, customers often
make investments in terms of money, people (e.g. employee training),
equipment, and business procedures (e.g. inventory handling) (Jackson,
1985), all of which increase switching costs. Dwyer et al. (1987) suggest that
customers who perceive high switching costs are particularly interested in
maintaining a quality relationship with their service providers, because of the
time, effort and financial risk(s) associated with having to find another
provider.
As customers make a series of purchases over time, they face increasingly
high costs in switching to a new supplier, and come to view the commitment
to a particular supplier as relatively permanent (Jackson, 1985). Because of
the difficulty inherent in switching suppliers, customers perceive significant
risk in any type of long-term relationship. Thus they demand competence
and commitment from the selling organization, and are easily frightened by
even a hint of supplier inadequacy. In purchasing computer workstations, for
example, research confirms that switching costs and concerns for product
compatibility limit a buyer's consideration set (Heide and Weiss, 1995). This
suggests that suppliers should promote product-specific learning within the
buying organization as a value-added service. Such a service may strengthen
customer relationships by contributing to perceptions of competency. Thus
the competent delivery of the service package should be of primary concern
in terms of ``solidifying'' the customer/service supplier relationship (Heide
and Weiss, 1995).
Competitive markets Competence in terms of the basic service product offer may be of little value
in highly competitive markets, unless that product is somehow differentiated
from competitive offerings, and is delivered in a dependable and timely
manner (GroÈnroos 1990). As noted earlier, as customers make a series of
purchases over time, they come to view the commitment to a particular
supplier as relatively permanent. One way for the customer to ensure
permanence is to enter into strategic alliances with the supplier. These
alliances involve formal long-run linkages, which are often funded with
direct co-investments (Day, 1990). In the case of physical goods, such an
alliance might involve the establishment of a ``just-in-time'' (JIT) inventory
control system, where the supplying firm is expected to deliver defect-free
parts and materials to the production process just at the moment they are
needed.
In the case of services, the supplying firm is not providing a physical
product. However, service customers may still practice ``supply-chain
management'' (SCM), a technique for linking a manufacturer's operations
with those of all its strategic suppliers and its key intermediaries and

JOURNAL OF SERVICES MARKETING, VOL. 16 NO. 1 2002 39

 customers. These linkages cannot be achieved unless the service offering is
customized to meet the particular needs of the individual client company.
The goal of SCM is to improve timing and costs in manufacturing and
delivery through strong vendor relationships (Mullin, 1996). To the extent
that the service representative is able to bundle/unbundle the product to exact
customer specifications, timing and costs are improved. In addition, timing
and costs are improved if the supplier is able to match his/her delivery
schedules to specific customer requirements. Finally, the ability of the
service representative to meet these schedules, and to deliver the service
offer in a reliable, dependable, and punctual manner, will further serve to
reduce costs and solidify supplier/customer relationships.
A second factor A second factor contributing to the increased impact of the ``offer-related''
characteristics on trust over time is the fact that early in a relationship,
customers may not have any real basis on which to judge these factors.
``Person-related'' characteristics may be the only available cues on which to
base perceptions of trust. The influence of these person-related cues
diminishes when other, more diagnostic cues (e.g. the offer-related
characteristics) begin to manifest themselves as the service rep establishes a
``record'' over the course of a relationship. Thus, the importance of the offer-
related characteristics on perceptions of trust increases as customers gain the
experience on which to judge them. We expect that:
H2. As the length of the service relationship increases:
(a) the impact of competence on trust will increase;
(b) the impact of customization on trust will increase;
(c) the impact of reliability on trust will increase;
(d) the impact of promptness on trust will increase.

Method
Sample
Small business Our sample included 677 randomly selected small business owners from
throughout the USA who responded to a mail survey regarding their dealings
with health insurance providers. A ``small business'' was defined as an
organization employing less than 150 persons. This type of business was
chosen because typically only one person is involved in the client-service
provider interactions. Subjects were clients of a financial services firm, and
represented a wide variety of business types. They were each paid $50 to
participate in our study.
We chose to investigate subjects' dealings with health insurance providers
because of the importance of this particular service to small business owners,
the relatively high switching costs, and the consequent need for trust in the
service provider (Schlesinger and von der Schulenburg, 1991, 1993). In
addition, there are a range of factors impacting on trust within the health
insurance industry. According to Standard & Poors' RatingsDirect
(Standard & Poors, 2000), health coverage providers have ``outgrown their
earlier emphasis on traditional price competition . . . and turned their
competitive efforts towards product differentiation with increased quality
[competence] and reliability of care, a broader range of choices regarding
types of treatment and selection of practitioners and hospitals
[customization], and improved customer service [politeness; empathy].'' As
noted earlier, all of these factors are expected to affect the degree to which
trust is developed in a service relationship.

40 JOURNAL OF SERVICES MARKETING, VOL. 16 NO. 1 2002

 Variables
Operationalizations of The operationalizations of the variables used in this study were derived
variables from past research (e.g. Parasuramet et al., 1985; Surprenant and
Solomon, 1987). The items used to measure the dependent and
independent variables as well as corresponding reliability measures are
provided in Table I. Cronbach's alphas and Pearson product moment
correlations were computed based on the unweighted sum of the items.
Length of relationship was measured by a single item question, which
asked respondents to indicate the amount of time that they had been
associated with their insurance service provider (range = 1-240 months;
mean = 16.39 months).

Reliability
Variable and scale itemsa measure
Trust  = 0.91
My service providerb . . .
is trustworthy; keeps my dealings with him confidential
is honest; has a great deal of integrity; brings high standards to
his/her work; is a person with principles
Empathy  = 0.92
My service provider . . .
is caring
is warm
is friendly
Similarity  = 0.94
My service provider . . .
has values and beliefs similar to mine
has tastes and preferences similar to mine
is quite a bit like me
Politeness  = 0.96
My service provider . . .
is polite
treats me with respect
is courteous
Competence r = 0.86
My service provider . . .
is an expert in his/her field
is extremely experienced in this business
Reliability r = 0.85
My service provider . . .
provides promised service
is dependable
Promptness  = 0.93
My service provider . . .
deals promptly with my needs
deals with me in a timely manner
is punctual
Customization  = 0.95
My service provider . . .
provides me with well thought out alternatives suited to my
unique needs; provides extremely customized services
works with me to define my particular needs
Notes: a All items were ten-point Likert scales
b
In the questionnaire, the term ``health insurance provider'' was used in the items

Table I. Scales and reliabilities of independent and dependent variables

JOURNAL OF SERVICES MARKETING, VOL. 16 NO. 1 2002 41

 In order to examine individual moderating effects (H1-H2), interaction terms
were created by first, mean-centering the data, and then multiplying length of
relationship by each of the independent variables.

Results
Descriptive statistics and analysis of the measurement model
Table II presents the correlation matrix for all variables. The average
correlation between ``offer-related'' service characteristics was 0.23, and the
average correlation between ``person-related'' service characteristics was
0.20 (see Table II). Conversely, the average correlation across offer vs
person-related characteristics was 0.08 (see Table II), which gave indication
that discriminant validity had been achieved (Carmines and Zeller, 1979).
Confirmatory factor To substantiate the efficacy of our measurement model further, we
analysis conducted two confirmatory factor analyses (CFAs) using AMOS 4.0
(Arbuckle, 1997). In our first CFA, we combined the person-related
characteristics and offer-related characteristics to confirm the second-order
factor model of the two primary sets of independent variables. Each
characteristic served as an indicator for the corresponding second order
factor. The model provided a relatively good fit to the data (chi sq (6) =
11.49, p > 0.05, GFI = 0.919, AIC = 34.85), and the covariance between
factors (cov = 0.46) did not give indication of excessive multicollinearity
(Loehlin, 1987).
In our second CFA we utilized all (nine) independent, dependent, and
moderator variables, with the 26 individual measurement items (see Table I)
serving as variable (construct) indicators. All (26) unstandardized factor
loadings fell in an acceptable range (0.59-1.09), and the mean covariance
across constructs (cov = 0.38) did not give indication of excessive
multicollinearity (Loehlin, 1987). The latter CFA also revealed a relatively
good fit to the data (chi sq (263) = 164.21, p = 0.387, GFI = 0.924,
AIC = 30.22). Thus, CFA results confirmed the efficacy of our measurement
model.

Hierarchical regression analytic procedures

As a preliminary step in our analysis, we first examined the impact of the
independent variables on trust utilizing OLS regression. The overall
regression equation (R2 = 0.12; F(7,668) = 17.26, p < 0.01) as well as all
independent variables (i.e. customization ( = 0.26, t = 5.22, p < 0.001),
empathy ( = 0.09, t = 2.39, p < 0.05), similarity ( = 0.11, t = 2.74,

a b c d e f g h i j k
a. Trust 1.00
b. Customization 0.35 1.00
c. Competence 0.15 0.19 1.00
d. Reliability 0.24 0.25 0.18 1.00
e. Promptness 0.29 0.27 0.16 0.33 1.00
f. Empathy 0.13 0.13 0.11 0.02 0.14 1.00
g. Similarity 0.16 ±0.11 0.05 ±0.09 0.11 0.28 1.00
h. Politeness 0.11 0.17 0.02 0.18 0.19 0.18 0.13 1.00
i. Length of
relationship 0.19 0.14 0.23 0.12 0.33 ±0.21 ±0.16 ±0.24 1.00 0.36 1.00
Notes: Correlations > 0.10 are significant at p = 0.005; correlations > 0.07 are
significant at p = 0.05; n = 677

Table II. Correlations for independent, dependent, and moderator variables

42 JOURNAL OF SERVICES MARKETING, VOL. 16 NO. 1 2002

 p < 0.05), competence ( = 0.13, t = 2.91, p < 0.01), reliability ( = 0.22,
t = 4.93, p < 0.001), promptness ( = 0.15, t = 3.74, p < 0.001), and
Length of relationship
politeness ( = 0.10, t = 2.69, p < 0.05)) were significant.
Next we used hierarchical regression to examine whether the impact of the
independent variables on trust was moderated by length of relationship. Our
hierarchical regression procedure involved constructing a regression model
that included main effect terms for all independent variables, as well as
product terms representing each moderator effect (Cohen and Cohen, 1983).
After calculating a model containing only the main effects of the
independent variables, each product term (i.e. moderator effect) was entered
individually. The key test was whether the product term accounted for a
significant amount of incremental variance. For our hypotheses to be
supported, the sign of the interaction terms also needed to be in the predicted
direction (i.e. negative for H1 and positive for H2). We used F-tests to assess
the significance level of the incremental variance accounted for by each new
variable.
Tests of hypotheses
H1 posited that the impact of the three ``person-related'' characteristics
(similarity (H1a), empathy (H1b), and politeness (H1c)) on trust would
decrease as length of relationship increased. The significant incremental R2
results indicated that length of relationship significantly moderates the
effects of each of these factors (see Table III). In addition, the signs of the
Offer-related factors
interaction terms ( = ± 0.23,  = ± 0.12, and  = ± 0.14 respectively) were
in the predicted (negative) direction. Thus, H1a, H1b, and H1c are
supported.
H2 posited that the impact of the four ``offer-related'' factors (competence
(H2a), customization (H2b), reliability (H2c), and promptness (H2d)) on
trust would increase as length of relationship increased. The significant
incremental R2 results indicated that length of relationship moderated the
effects of competence, customization, and reliability (see Table III). Further,
the signs of the interaction terms ( = 0.15,  = 0.09, and  = 0.18
respectively) were in the predicted (positive) direction, thus lending support
to H2a, H2b, and H2c. The length of relationship  promptness interaction
was in the predicted direction, however incremental R2 was non-significant
(p > 0.05). The three person-related and three offer-related interaction terms
accounted for nearly 9 percent incremental variance, an amount that has
significant practical as well as theoretical implications.

Variable(s) R2 R2 diff. Beta F-value

All independent variables 0.117 ± ± 15.21*
Length of relationship 0.125 0.008 0.10 11.16*
H1a ± similarity  LR 0.136 0.011 ±0.23 21.35**
H1b ± empathy  LR 0.147 0.011 ±0.12 28.92*
H1c ± politeness  LR 0.154 0.007 ±0.14 9.26**
H2a ± competence  LR 0.174 0.020 0.15 94.39**
H2b ± customization  LR 0.183 0.009 0.09 16.17*
H2c ± reliability  LR 0.202 0.019 0.18 42.44*
H2d ± promptness  LR 0.203 0.001 0.02 1.14
Notes: Dependent variable = trust; n = 677; * p < 0.01; **
p < 0.001;
LR = length of relationship

Table III. Regression results for hypothesized relationships

JOURNAL OF SERVICES MARKETING, VOL. 16 NO. 1 2002 43

 Summary and discussion
During the past decade, the contribution of the service sector to the USA's
GNP has increased dramatically. Clearly, in today's environment, it is
increasingly important that service firms and their representatives understand
the ingredients that will transform service encounters into service
relationships. In this regard, a great deal of research on trust, an important
component of service relationships, has been conducted. Most of the studies,
however, have reported mixed findings regarding the service provider
characteristics influencing trust.
Contingency perspective Our contingency perspective suggests that these mixed results may be due to
the length of the service relationship. As hypothesized, we found that
``person-related'' service provider characteristics (i.e. similarity, empathy,
and politeness) have a greater effect on trust when customers are in the early
stages of a particular service relationship. Our finding in regard to the first of
these independent variables lends support to our argument that similarity
between the service representative and the consumer contains information
about the service provider's tastes and preferences, which in turn are
perceived to be indicative of the representative's ability to deliver the desired
combination of attributes and benefits (i.e. the service outcome).
Likewise, personal qualities such as politeness and an empathetic attitude
may be interpreted as ``peripheral cues'' related to service quality (Petty and
Cacioppo, 1986), that have a greater effect on trust in the absence of direct
experience with more concrete aspects of the service offer (e.g. reliable or
prompt delivery). Uncertainty regarding the service outcome is directly
related to the degree of familiarity one has with a particular service industry.
During the early stages of a service relationship when the customer is
unfamiliar with the service provider, personal delivery factors such as
similarity, empathy, and politeness become important cues on which
inferences of trust are made. As customers gain more direct product
experience, similarity, politeness, and an empathetic attitude become less
important as ``surrogate cues'' on which to base trust evaluations. Because
empathy and politeness are ancillary attributes relative to basic product
expectations, their importance in creating trust appears to diminish over time
as customers come to expect a certain degree of competence.
Reliability Also as hypothesized, we found that the impact of the ``offer-related'' service
representative characteristics (i.e. customization, competence, reliability, and
promptness) on trust was greater as length of relationship increased. As
customers become more and more tied to a particular service provider over
time, service representatives need to be perceived as extremely competent in
their ability to deliver the basic service package. Because customers perceive
significant risk in switching to a different provider, they demand competence
and commitment from the selling organization, and are easily frightened by
supplier inadequacy (Jackson, 1985). Especially in highly competitive
markets, this competence must be accompanied by timely and dependable
(reliable) delivery of the service product, as well as customization of that
product to meet the individual client's needs. SCM techniques require the
supplying firm to deliver its customized service offer in a dependable and
punctual manner in order to improve timing and costs. SCM techniques are
often employed in conjunction with the long-term strategic alliances that
evolve over the course of a relationship.

44 JOURNAL OF SERVICES MARKETING, VOL. 16 NO. 1 2002


Practical perspective
Health insurance industry
JOURNAL OF SERVICES MARKETING, VOL. 16 NO. 1 2002
Managerial implications
Our contingency perspective and results suggest a number of important
practical implications for service firms and their representatives. All
seven of the antecedents examined had significant effects on trust. Thus,
given unlimited resources and the ability to provide the entire range of
service attributes/benefits desired by the customer, these characteristics
might be desirable service features in nearly all cases. If, however, the
service provider must make trade-offs among service features, our
findings have important implications in terms of which service
representative characteristics to emphasize at particular points in the
relationship.
Early in a service relationship or when prospecting for new clients, service
providers may need to emphasize their employees' interpersonal skills and
concentrate on the service ``extras'' that allow them to differentiate
themselves from competitors. From a practical perspective, the degree of
similarity with existing customers is, to some extent, beyond the control of
the firm. However, it can be enhanced (vis-aÁ -vis new customers) by
choosing specific demographic and/or socioeconomic groups when
initially defining target markets, or by matching the demographic,
sociographic, and/or psychographic characteristics of the salesforce to
those of the target market. Additionally, initial marketing communication
efforts could make reference to sociocultural similitudes that link the
principals or their employees to the target customers. These strategies not
only facilitate the establishment of trust, but also enhance the marketer's
ability to understand the needs of a particular group of people due to
personal familiarity.
Once service relationships have been established, the customer's need to
make inferences regarding a service provider based on cues such as
similarity, empathy, or politeness is diminished. At this point, it is up to the
service provider to deliver in a way that distinguishes him/her from others.
Consistent with our results, the ability to deliver a customized service
competently in a reliable and prompt manner becomes particularly
important. Thus, it is not personal attention, but a demonstration of
commitment and resources to the customer's individual needs that should be
stressed in the latter stages of a service relationship.
This type of commitment is particularly important in the health insurance
industry, the service on which our sample data was based. According to a
recent study survey conducted by CustomerStance, a customer-focused
research service for small business commercial insurance carriers, an
estimated 80 percent of small businesses would consider changing their
property-casualty carrier unless they were completely satisfied with their
business insurance. The survey of 1,821 small businesses found that most
small business insurance buyers would accept no less than the best from their
providers. More than three of every four customers who are ``completely
satisfied'' with their business insurance would definitely renew their
coverage with their present carrier. In contrast, only about one in every four
``very satisfied'' customers and only one in 20 ``somewhat satisfied''
customers would stay with the same carrier. This leaves roughly 75 percent
of ``very satisfied'' customers and 95 percent of ``somewhat satisfied''
customers at risk of defecting to another provider. Obviously, the
development of trust is extremely critical to survival in this type of
environment.
45
 Limitations and future research
While our research investigated the client side of one particular type of
business-to-business service relationship, future research might seek to
assess both the client and service provider perspectives (e.g. Ganesan, 1994)
to ascertain the consistency across both parties in the dyad. In addition, our
research focused on small business owners, and responses were garnered
regarding their interactions with insurance industry representatives. It is
possible that the observed impact of our offer and/or person-related
characteristics on trust may be unique to the health insurance industry.
Additional research might investigate our contingency model in other
domains, involving other types of business-to-business relationships,
consumer contexts and/or other service industries.
Longitudinal design Finally, a longitudinal design would afford the ability to more directly track
the evolution of the determinants of trust over time. Because our sample was
somewhat skewed toward businesses that had been involved in relatively
short-term relationships x = 16.4 months; s.d. = 7 months), the variable
measures associated with those businesses that had been involved in
long-term relationships involved relatively few data points. Thus, we are
unable to assess with certainty whether the impact of the ``offer-related''
characteristics on trust increases for all service clients, or whether it
increases only for those clients who choose to remain in a relationship.
Likewise, the study of individual clients over time might reveal that the
person-related characteristics only diminish to a certain extent, or that they
diminish in importance as a trust determinant, but remain important in terms
of maintaining a relationship. These and other questions require further
study.

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&

48 JOURNAL OF SERVICES MARKETING, VOL. 16 NO. 1 2002

 This summary has been
provided to allow managers
and executives a rapid
appreciation of the content
of this article. Those with a
particular interest in the
topic covered may then read
the article in toto to take
advantage of the more
comprehensive description
of the research undertaken
and its results to get the full
benefit of the material
present
JOURNAL OF SERVICES MARKETING, VOL. 16 NO. 1 2002
Executive summary and implications for managers and
executives
Factors affecting trust
Trust is a key factor in establishing long-term relationships between service
representatives and their customers. Prior research has highlighted the
impact on trust of two sets of service representative characteristics. The first
deals with the salesperson's ability to deliver the service offer, and covers
competence, the ability to customize solutions, promptness and reliability.
The second relates to the service representative's personal characteristics or
manner of delivery, and covers empathy, politeness and the perceived
similarity between salesperson and customer. However, the relative
importance of these characteristics, and in some cases the direction of their
relationships with trust, has varied across studies.
The importance of length of relationship
Research by Coulter and Coulter demonstrates that these variations may
arise from the length of the relationship between customer and service
provider. From the results of a mail survey of 677 small-business owners,
who provided information about their relationships with their insurance
providers, the authors show that the effects of the ``offer related'' service
representative characteristics (customization, competence, promptness and
reliability) increase as the relationship continues over time, whereas the
effects of the ``person related'' salesperson characteristics (empathy,
politeness and similarity) diminish.
Initial service encounters carry a degree of risk because of the intangible
nature of the service product and the customer not knowing what to expect in
terms of the service outcome. Uncertainty, and hence risk, is reduced as
knowledge is gained with repeat exposure to the service provider over time.
But at the same time that risk is reduced because of increased familiarity,
risk is also increased because of the switching costs ± the time and effort
involved for the customer in changing service providers ± incurred as a
result of long-term service relationships.
How managers should allocate their resources
Coulter and Coulter demonstrate that all seven of the characteristics
examined have significant effects on trust. But service providers might have
to make trade-offs among the different service features, because of lack of
resources. If so, early in the service relationship or when prospecting for
new clients, service providers should emphasize their employees'
interpersonal skills and concentrate on the service ``extras'' that allow them
to differentiate themselves from competitors.
From a practical perspective, the similarity between sales force members
and existing customers is, to some extent, beyond the control of the firm. But
it can be enhanced with regard to new customers by choosing specific
demographic or socio-economic groups when defining target markets, or by
matching the characteristics of the sales force to those of the target market.
Initial marketing communication efforts could refer to the similarities
between the company's employees and its target customers.
Once service relationships have been established, the service provider's
ability competently to deliver a customized service, reliably and promptly,
becomes particularly important. The service provider should, at this stage,
demonstrate commitment and resources to the customer's individual needs.
49
 Survival in the business-insurance industry
This type of commitment is particularly important in business insurance.
Recent figures reveal that more than three out of every four customers who
are ``completely satisfied'' with their business insurance would definitely
renew their coverage with their current provider. But only about one in four
``very satisfied'' customers and only one in 20 ``somewhat satisfied'' clients
would stay with the same firm. This leaves around three-quarters of ``very
satisfied'' customers and 95 percent of ``somewhat satisfied'' customers at
risk of defecting to another provider. The development of trust is clearly
critical to survival in this type of environment.

(A preÂcis of the article ``Determinants of trust in a service provider: the

moderating role of length of relationship''. Supplied by Marketing
Consultants for Emerald.)

50 JOURNAL OF SERVICES MARKETING, VOL. 16 NO. 1 2002