A Study On The Customer Loyalty In Labor Dispatching Industry

Since early1990s, with the increasing maturation of China’s market economy, the dominant position of labor market has been reinforced; the types and forms of employment have been gradually diversified. Under market economy conditions, the labor dispatching industry has been created as a result of free selection of market entities. According to the statistics of Ministry of Human Resources and Social Security in2010, the number of employees in this industry is about38millions, accounting for around13%of the total number of employees.Along with the rapid growth of this industry comes a series of problem. As the rapid increase in the number of labor dispatch companies, competition becomes more intense. With the number of labor dispatch companies (suppliers) promptly increasing, customers change their suppliers more frequently, which significantly increase the costs for labor dispatch companies. Business managers have tried to set a number of switching barriers to prevent this from happening, but failed to reduce their "job-hopping" frequency effectively. On the other hand, the price competition between companies has resulted in a significant decline in profits or even losses for most service companies.In order to reduce the losses, many companies have to downsize or employ people with a lower education level to reduce labor costs, which have led to a further decline in the service level, and service quality is also compromised. Because of dissatisfaction, customers "switch" more frequently, which creates a vicious cycle and makes market condition even worse. The competition among enterprises is a competition of customer resources, and the level of market share is decided by the number of customers. According to the80-20rule,80%of corporate profits are created by20%of loyal customers. Therefore, the proportion of loyal customers is the key to determine the fate of the enterprise. However, the research on the customer relationship management for dispatch industry in China is quite scarce, there are almost no practitioners ever invest in manpower, material and time to research carefully in accordance with the industry background, characteristics, development status, and problems, etc., data collection and analysis are scarce, some of conclusions are made based on simple assumptions and cannot be verified due to the lack of data. Hence, it is essential to explore and research the customer loyalty for this particular industry.Through an in-depth exploration and analysis of the customer loyalty in labor dispatch industry, we are expecting to provide managerial implications and theoretical support for the labor dispatch industry. Combining related theory and industry practice, we first build a model of customer loyalty in labor dispatch industry, then analyze and discuss the effect of three variables---customer satisfaction, relationship quality, and switching costs on customer loyalty. Meanwhile, we include the scenario regulating variable-enterprises scale, as a moderating variable of the relationship between switching costs and customer loyalty to analyze the moderating effect of enterprises scale.This paper collects data through questionnaire survey and tests the relation between variables using SAS software. The study shows that the relation quality, customer satisfaction and switching costs have significant impact on customer loyalty, in which relation quality has the greatest impact on customer loyalty, customer satisfaction follows, and switching costs have the weakest impact on customer loyalty. In addition, we find that when the scale of enterprises becomes larger, the switching of program-relationship has greater impact on the customer loyalty. Higher the cost of program-relationship switching, lower the possibility that customers change their service provider. However, when the scale of enterprise becomes larger, the impact of financial switching costs on the customer loyalty does not change significantly, i.e., when customers consider changing service providers, the enterprise scale will not have a significant impact on the decision of whether to replace its service providers based on the financial switching costs.The innovation aspect of this study is to consider the labor dispatch industry as the research object.In this industry, research on customer relationship management is scarce. By separating the enterprises with different labor dispatching numbers into different groups and conducting analysis comparatively, this paper sums up the moderating effect of two dimensions (financial switching costs, the relationship between program-relationship switching costs and customer loyalty) in switching costs, explores and establishes a customer loyalty model in labor dispatch companies.Contribution of this study:First, to theory, we build a customer loyalty model for labor dispatch industry, and verify that customer loyalty can be predicted by the switching costs, customer satisfaction, and relationship quality. For enterprises with different sizes, there are differences in the degree of prediction of switching costs on customer loyalty. Scale of enterprise has greater effect on the relationship between program-relationship switching costs and customer loyalty, while has little effect on the relationship between financial costs and customer loyalty. Second, to practice, the findings of this research paper provide some insightful implication to help service companies decide which operational measures should be adopted to improve and optimize the current management, and how to be more effective in promoting the establishment of customer loyalty and the maintenance of customer relationships.