Self-Disclosure

and Customer Retention Rate 1

Self-Disclosure & Customer Retention Rate:

Social Exchange Theory

Jillian Ma

Introduction to Communication Research

Rutgers University

Summer 2016
Self-Disclosure and Customer Retention Rate 2

Abstract:

The theory I wanted to focus on for this study is the Social Exchange Theory. Social

Exchange Theory explains a social psychological and sociological perspective that explains

social change and stability as a process of negotiated exchanges between parties. This theory is

the exchange of cost and benefits of a transaction of physical things or even emotions and values.

These ideas are very prevalent in any relationship but I want to focus on professional business

relations and how they can be improved. The articles that I found were about how Social

Exchange Theory helps explain good business practice by incorporating the need for

interpersonal relations. My study will look into good employee relations achieved through self-

disclosure and how these relations can lead to successful practice with the ideas of social

exchange theory. Social Exchange Theory distinguishes what makes a good business relationship

between all parties in a typical business transaction. In order to maintain good business relations

employers must guide their employees to maintain relationships with customers. Retention rate

deals with the level of comfort between these relationships. I will test these ideas on blind

installers, as they are also a service transaction type of business. In this study, I want to focus on

how these practices in a business can help their employees to attain a good Customer Retention

Rate, which ultimately leads to more profit for the company.

Self-Disclosure and Customer Retention Rate 3

Introduction:

Social Exchange Theory is a broad theory on what can exactly be exchanged and how it

affects people. It can be positive or negative but ultimately it is for self-interest and to gain a

worthy interpersonal connection. I want to focus on how people can exchange emotions and

values within a relationship even professional ones for not only self-interest but also to enhance

the relationship. I believe this is a very important topic given how bad the economy is and how

we should really be treating others. With more people being more connected, we can accomplish

more tasks and become more unified. I believe that self-disclosure does help alleviate some

uncertainty in new relationship and this also reflects on the Social Penetration Theory. At first

there are superficial relationships, but it takes a lot of different factors to make it more intimate

and comfortable; especially in a professional situations like business transactions. There has to

be an exchange of ideas or emotions to further a conversation let alone a relationship. Exchanges

of emotions, values, or etc. can really put others in different perspectives. It allows people to

understand people better based on their self-interest. Knowing what people are interested in is a

good indication of how a person is or maybe its a hint of their personality. As employers can

know more about their employees, it would be easier for the employers to gain an accurate sense

of the workforce and fully utilize all the potential qualities given. I will test this study on blind

installers employees and customers to see if they do exercise self-disclosure and its effect on

customer retention rate. For any thriving business, customer retention rate is very crucial to

surviving the competition of other companies. I want to emphasize on good ethics in business

behavior and how interpersonal relations aid this practice.

Self-Disclosure and Customer Retention Rate 4

Literature Review

By textbook definition from West & Turner (2014), Social Exchange Theory posits that

the major force in interpersonal relationships is the satisfaction of both peoples self-interest.

Self-interest is not considered necessarily bad and can be used to enhance relationships (p. 166).

It is already known that satisfaction is a major force in interpersonal relationships. This means

that when people want something they will communicate and communicating creates a more in

depth relationship. Social Exchange theory is the exchanging of social behaviors so I wanted to

focus on self-disclosure in the business aspect. This concept of costs and rewards is very

important to the study I conducted about Blind Installers. Although, none of the found articles

directly state self-disclosure, Mason & Simmons (2013) emphasizes that ethical business practice

relies on how things are communicated, if the employees are comfortable with the information,

and if they are committed enough. This clearly shows how important it is for employers to make

sure they have a healthy workforce. Like explained above, I believe they can achieve this by

really connecting with their employees and this will ultimately lead to a great customer retention

rate. I found that these articles did not specify how these ideas could be communicated and none

of them really studied self-disclosure within a business. For this study, I hypothesized, If more

information is disclosed between the employees to the employer, then the more the employer can

fully utilize their workforce and have a higher customer retention rate. My study will look into

good employee relations achieved through self-disclosure and how it can lead to successful

practice with the ideas of social exchange theory. Distinguish what makes a good business

relationship between all parties in a typical business transaction. Retention rate deals with the

level of comfort between these relationships.

Self-Disclosure and Customer Retention Rate 5

A key concept about Social Exchange Theory is that relationships are thought about in

economic terms and that people assess their relationship in terms of costs and rewards (165).

Some common costs in relationships are the time and effort people put into them. Relationships

can cause conflict if one person or both people in the relationship do not like spending time with

one another. Time spent with that person is thought of as time wasted, which is a negative

element in a relationship. On the other hand, rewards are elements of relationships that hold

positive value and make the time spend with one another worth it. Due to the time being thought

of as worthwhile, the time being spent is not a cost to either person in the relationship and

actually is a reward to both. The perspective of Social Exchange Theory, argues that people

calculate the overall worth of a particular relationship by subtracting its costs from the rewards it

provides (165). In order for a business relationship between a customer and a company to

remain worthwhile, the customer must feel that the relationship provides more rewards than

costs.

Social Exchange Theory goes more in depth in relationships and claims that the

worth of a relationship influences its outcome (166). Therefore, if a person feels that they

are receiving rewards from a relationship, they will continue with the positive benefits and

the relationship will endure. Same goes with a negative relationship as if someone feels there

are more costs than rewards then he or she will feel the need to terminate that relationship. In

Kumars study titled, Regaining Lost Customers, (2015) he talks about the importance of

keeping customer relationships tight-knit because if they are not, the customer base can

shrink and along with it profits would decrease too. Customer retention is an important

element to the success of a business and if companies cannot retain customers it will be

difficult for companies to maintain their overall income. According to Russell, just a 5%
Self-Disclosure and Customer Retention Rate 6

increase in retention can lead to an 80% increase in profit and this is a drastic increase

that proves the importance of customer relations (2014).

In order for customer relations to be positive and have the rewards outweigh the

costs, the employees must feel comfortable enough in their respected workplace so they can

make the customer feel comfortable as well. In order for an employee to feel comfortable in

his or her workplace, he must be able to disclose information about his or herself to his

fellow employees. Employers should fully be able to utilize the workforce and this

incorporates the communication of ideas and expressions of the employees. If employees

cannot express themselves to appeal to their own self-interests, then it will be more difficult

for the employees to be motivated to work for their employer. The employees must maintain

positive relationship with their fellow employees and employers if they want their positivity

to translate to good customer relations where the employees keep the ideas of the success of

the business in mind while communicating with customers. The Social Exchange Theory

predicts that the future success of all business relations revolves around appealing to the self-

interest of all parties involved. Relationships are enhanced when self-interest is enhanced.

According to Self-Disclosure in Chinese Micro-blogging, the study talked about

relationship building and how enjoyment and trust in service providers are positively related

to self-disclosure (2016). On a level of intimacy, the more that communication between

employees and customers appeals to self-interest, the more enjoyment people will attain from

these relationships and will want to remain in them.

Customer retention is directly related to how comfortable employees can make their

customers feel when they provide a service. Blind installers were the selected group for

research because customers will remain loyal to the blinds company if the blinds employees
Self-Disclosure and Customer Retention Rate 7

do a good job with their provided service. A job well done would be categorized by

involving, a level of comfort between the employee and customer where the employee brings

more rewards than costs to the table and appeals to the customers self-interest. If the

employee satisfies the customer with the provided service and communicates on a

comfortable level with the customer, the customer will rationally want to use the companys

service again. This sequence of events between the customer and employee is fundamental to

having a good customer retention rate. It all begins with the companys employer providing a

workplace where employees can exchange personal interest ideas so that employees can feel

good enough to represent the company when appealing to the desires of a customer.

Communication is absolutely key to maintaining relationships especially amongst fellow

employees and this can be seen in the article Isolating Trust Outcomes from Exchange

Relationships, by how trust developed between two employees is important to business

predictions (2015). Trust enables employees to know more about one another and allows for

the company to better understand all employees anticipated behavioral patterns which

affects how to coordinate and assign tasks to employees. Developed trust by means of self-

disclosure also helps a business understand when self-interest can get in the ways of the

growth of the business. Therefore, it is recommended that employees maintain comfortable

trustworthy relationships amongst each other. According to another article written by

Change, the interactions and the quality of the partnership between partners should be well

maintained because the smoother it runs the higher the quality of the relationship will

improve (2015). A good relation between business partners translates to good relations

between the customer and the business.

Self-Disclosure and Customer Retention Rate 8

Previous research has not directly states anything about self-disclosure from a social

exchange theory point of view in a business sense. They had articles on self-disclosure and

how it makes interpersonal relationships more meaningful but they did not get into the idea

of how to make relationships more meaningful. My study connects self-disclosure to the

customer retention rate which is a way to quantify how meaningful customer relationships

truly are to the companys success. It all begins with self-disclosure amongst the employees

in the workplace and this is not something commonly talked about in relation to how

employees treat their customers. The employers must make employees comfortable enough

to treat their customers with the respected values of the business practice.

Previous research did not specify how exactly to go about more in depth with

communication. Most of previous research is done superficially on the surface. Personal details

are not always easy to obtain and can be seen as intrusive so these details are often difficult to

study. Another gap in other previous research is the lack of dedication to employee moral. Good

employee moral is fundamental to the workings of the business practice because if employees

dont feel good about themselves, it is difficult for them to feel good about the business and thus

translate the ideas of the business to the customers in a proper way. Translating the ideas of the

business to the customers is vital to keep a high customer retention rate. The idea of self-interest

lacking in the workplace leading to poor customer relations is not seen in previous research and

is the main idea of my study.

My study emphasizes on how businesses can practice good ethics and communication

skills. While other studies did not specify on how to communicate well professionally, this

study shows one important way to do so. From this study, I believe that the idea that personal

interaction is a successful and necessary process in a business in order to keep customers

Self-Disclosure and Customer Retention Rate 9

coming back. Self- disclosure is correlated to how one is comfortable and employer want happy

employees who are motivated to get the job done well. Thus, it is safe to say that self-disclosure

does result or at least aid a higher customer retention rate.

This study would greatly affect our understanding of human communication and the

theory, Social Exchange Theory. It exercises the exchange of values, emotions, and other

communicative gestures. I believe that self-disclosure is a very important tactic on how to better

communicate. It develops more meaningful relationships and by doing so it lead to more positive

attributes. In my study, the more companies have employees who are comfortable and really

understood correlates to a healthy business practice. However, for this study, I do believe there

would be some limitations. For example, Employees place customer satisfaction before self-

disclosure (i.e. If they do not feel comfortable in their workplace but still perform excellent

service to the customer). Also, The employee does not think he had enough self-disclosure in the

workplace but the customer still agrees that he or she would use the service again because they

liked the product or any other human errors.

Conclusion:

Good employee relations achieved through self-disclosure can lead to successful

practices. With the ideas of social exchange theory, it distinguishes what makes a good business

relationship between all parties in a typical business transaction. Customer retention rate deals

with the level of comfort between these relationships. The Social Exchange Theory helps us

combine the ideas of self-disclosure in the workplace and a companys customer retention rate. It

is important to keep in mind that in business everything is related so how employers handle

employees is directly related to how employees handle their customers. If my findings are

supported, future studies related to this should go and test it for other companies then blind
Self-Disclosure and Customer Retention Rate 10

installations. Also, if there are other factors besides self-disclosure that can help raise customer

retention rate. If employers let employees express their self-interest, then employees will be

more willing to let customers experience the approval of their own self-interest. This is seen in

how positive relationships persist when rewards outweigh the costs. If customers are satisfied by

the service, then they will likely be using the service again because they saw the service

performed as a reward rather than a cost. Making sure customers are happy is important to

businesses but most business dont realize that happy employees make for satisfied customers.

Businesses can improve their customer retention rate and thus their profits if they abide by the

rules of the Social Exchange Theory.

Self-Disclosure and Customer Retention Rate 11

Works Cited

Birtch, T. A., Chiang, F. F., & Van Esch, E. (2016). A social exchange theory framework for

understanding the job characteristicsjob outcomes relationship: the mediating role of

psychological contract fulfillment. International Journal Of Human Resource

Management, 27(11), 1217-1236. doi:10.1080/09585192.2015.1069752

Braun, M., Schweidel, D. A., & Stein, E. (2015). Transaction Attributes and Customer

Valuation. Journal Of Marketing Research (JMR), 52(6), 848-864.

doi:10.1509/jmr.13.0377

Chang, H. H., Tsai, Y., Chen, S., Huang, G., & Tseng, Y. H. (2015). Building long-term

partnerships by certificate implementation: a social exchange theory perspective. Journal

Of Business & Industrial Marketing, 30(7), 867-879. doi:10.1108/JBIM-08-2013-0190

Chou, S., & Hsu, C. (2016). Understanding online repurchase intention: social exchange theory

and shopping habit. Information Systems & E-Business Management, 14(1), 19-45.

doi:10.1007/s10257-015-0272-9

Kumar, V., Bhagwat, Y., & Xi (Alan), Z. (2015). Regaining "Lost" Customers: The Predictive

Power of First-Lifetime Behavior, the Reason for Defection, and the Nature of the Win-

Back Offer. Journal Of Marketing, 79(4), 34-55. doi:10/1509/jm.14.0107

Self-Disclosure and Customer Retention Rate 12

Lioukas, C. S., & Reuer, J. J. (2015). Isolating Trust Outcomes from Exchange Relationships:

Social Exchange and Learning Benefits of Prior Ties in Alliances. Academy Of

Management Journal, 58(6), 1826-1847. doi:10.5465/amj.2011.0934

Liu, Z., Min, Q., Zhai, Q., & Smyth, R. (2016). Self-disclosure in Chinese micro-blogging: A

social exchange theory perspective. Information & Management, 53(1), 53-63.

doi:10.1016/j.im.2015.08.006

Mason, C., & Simmons, J. (2013). Giving as Good as They Get? Organization and Employee

Expectations of Ethical Business Practice. Business And Society Review: Journal Of The

Center For Business Ethics At Bentley College,118(1), 47-70.

Russell, K. (2014, November 18). Why Customer Retention Marketing. Retrieved June 20, 2016,

from http://blog.thanx.com/why-customer-retention-marketing

West, R. L., & Turner, L. H. (2014). Introducing Communication Theory: Analysis and

application (5th ed.). Boston: McGraw-Hill.

Self-Disclosure and Customer Retention Rate 13

Consent Form

RUTGERS UNIVERSITY: SELF-DISCLOSURE AND CUSTOMER RETENTION RATE

STUDY

Please read this consent document carefully before you decide to participate in this study.

Purpose of the research study:

The purpose of this study is to examine behaviors in relationships between employees and
customers based on self-disclosures within the business.

What you will be asked to do in the study:

Following a brief [5] minute [warm-up on a stationary bicycle], you will be asked to [volunteer
to perform several stretching exercises. You will then be asked to sit on a kinetic testing device
with your dominant ankle and lower leg securely fastened to the footplate attachment. You will
be given a series of warm-up repetitions to familiarize yourself with the appropriate ankle motion
to be tested. Following the warm-up you will be asked to perform 3 tests with your dominant
ankle only. A total of 4 ankle motions will be tested at two different test speeds (slow and fast).
The speed is controlled by the computer in the kinetic testing device. Following the test you will
be asked to place your dominant ankle in a whirlpool tub filled with ice and cold water for 10
minutes. At the conclusion of the procedure you will again be tested for ankle strength using the
identical procedure described above.] At the conclusion of the test session, you will be asked to
[perform a series of stretches].

Time required:
5-10 Minutes (Depending on when the participants finish the surveys.)

Risks and Benefits: There are no risks. The incentive benefits of the study include a 5% discount
on a blinds purchase. If you are younger than 18, you will be excluded from the study.

Confidentiality:
Your identity will be kept confidential to the extent provided by law. Your information will be
assigned a code number. The list connecting your name to this number will be kept in a locked
file in the faculty supervisor's office. When the study is completed and the data have been
analyzed, the list will be destroyed. Your name will not be used in any report or publication.
Voluntary participation: Your participation in this study is completely voluntary. There is no
penalty or loss of benefit for choosing not to participate.

Agreement:
If you wish to participate in this study, please sign the form below. A signature will indicate
agreement to participate.

Participants Name: (Print) ______________________________________________

Signature ___________________________________ (Date) _________________