Building Customer Relationships

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Chapter 4

• Building Customer Relationships

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From Single Sale to Symbiosis
Repeat Transactions
Strategic Partnerships
Brand/Source Loyalty
Dyadic Relationships
Discrete Transactions
Perspective Short-Term Long-Term
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Shifting Objectives

• Sales Revenue Close the Deal. Transaction
  Perspective
• Market Share Own the Market.
• Operating Profit Generate acceptable rates
  of return on product, segment, channel investment
• Customer Equity Capture desired portion of
  Customers Lifetime Value

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Loyalty

• Technology
• Product Category
• Particular Brand
• Vendor
• Person

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Industrial Loyalties

• Take longer to establish
• Last longer
• More difficult to dissolve

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Loyalty Factors

• Task Concerns
• Quality, Delivery, Service, Price
• Organizational Concerns
• Politically safe, minimal benefit for change
• Work Simplification Concerns
• Makes it easier, too much trouble to change
• Attitudes Toward Source
• Buyers attitude toward company and people

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Relationship Marketing

• Strong, Lasting Ties
• Earned Trust
• Successful Long-Term Exchanges
• Structural and Social Bonds
• Cooperation/Collaboration
• Long-Term, personalized, mutually beneficial,
  based in deep understanding of customer needs and
  characteristics

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Relationship Marketing

• Strategic Orientation
• Both Buyer and Seller are committed
• Long-Term
• Mutually Beneficial
• Collaboration
• Win-Win

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Relationship MarketingReality or Lip Service?

• Requires more commitment than most are willing to
  make.
• Most take tactical steps rather than strategic
• Shortcomings observed
• Locking in the customer Needs to be win-win
• Informality legal, strategic, outcomes
• Primarily non-financial investments Capital
  equipment is important
• Avoiding Dependency Flexibility over commitment
• Unilateral Buyers should initiate
• Not all customers are worth the investment
• One size never fits all

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Relationship StrengthAffected By

• Volume of purchases
• Frequency of contact
• Extent of collaboration in product development
• Technical distance
• Physical distance
• (See Table 4.1)

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Relationship Classifications

• On/Off Transactions
• Repeat Transactions
• Source Loyal Accounts
• Relationships
• Strategic Partnerships

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Variables Affecting Relationship

• Relational
• Social/Structural
• Social Actor
• Normative

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Some Helpful Criteria for Selecting Partners

• High risk of losing account
• Important customer
• Customer open to partnership
• Can improve relationship
• Cultural match (Not Gateway/IBM cows and suits)
• Potentially mutually beneficial
• Can add benefits in service
• Good competitive position

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