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Customer relationships

With a recognition that existing customers are the source of most companies' profits, there has been an explosion of interest in understanding customers from a long-term, relationship view.

Frequently though this "relationship" view just means trying to sell more things to more customers. If companies are really going to embrace the concept of relationships they have to understand more about what their customers need and want to build a "shared future" with their customers.

Relationship marketing and relationships in marketing are used to describe a variety of different marketing approaches. CRM specialists use relationships when talking about analysing customer databases to uncover who the most valuable customers are. Advertising people use brand-relationships to describe how brands bind consumers emotionally to products as a statement of self-identity. Business-to-business marketeers use relationships to describe the day-to-day interaction of account management and choices about which accounts to develop and which to leave.

The dictionary definition of a relationship refers to "the state of having a connection or correspondence or feeling that prevails between persons or things". But there is more to a relationship than just a connection.

A genuine relationship is two-sided, takes place over a period of time and is strongly reliant on trust. It has value to both parties, but it also brings with it costs in terms of time and commitment.

When we describe a customer relationships we have to reflect the fact that is is time based. It has a past, a present and a future. And going forwards, customers rely on trust based on past performance. We use the description "shared future" to describe these type of long-term on-going relationships.

A shared future is a challenging concept since it means that both parties have to understand how the other will help them get to where they want to go and what has happened in the past. To commit to one supplier means a customer risks missing out on a better deal or a better product elsewhere.

And relationships are not always wanted or desirable. In many situations purchasers would choose to reduce the relationship-overhead to focus on pure cost and value. Building customer knowledge to understand where and when a relationship approach adds value is essential in defining the product/service mix. Removing relationship costs, as discount stores and "DIY sheds" have found, may be more successful than layering on marginally valued service.

For help and advice on understanding the strength of your customer relationships contact

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