From customer value to repurchase intentions and recommendations

Purpose – The paper aims to fill a gap in the literature in relation to the determinants of customer value within the research and development (R&D) industry and word‐of‐mouth. It investigates whether context specific variables, such as organizational type and contract length, change customer value evaluations and the value – intention to repurchase – recommend system. Design/methodology/approach – A survey of Australian customers of a research and development service organization was conducted. Structural equation modelling was used to develop a model investigating factors that affect customer value, intent to re‐purchase, and word‐of‐mouth/recommendation. Findings – Relationship benefits, service benefits and sacrifice all had a significant influence on customer value. Efficient use of time is crucial for sacrifice evaluation. Relationship benefits were larger for government organizations than private organizations. Importance of value to recommend the organization to others was higher for longer contracts and government customers. Research limitation/implications – Results show that R&D organizations need to concentrate on both the technical service/science aspects and the relationship aspects in their contracts. Government institutions tended to emphasize the relationship benefits while private businesses considered service benefits, relationship benefits and sacrifice nearly equal in their determination of value. Intent to contract R&D organization for further work and the willingness to recommend it to others as a highly specialized and competent service provider seem to be higher for government customers and longer contracts. Originality/value – This paper investigates customer value in a little researched industry, R&D. The findings are relevant for similar professional business‐to‐business services.