Relationship Marketing vs. Transactional Marketing | Your Business
basic elements of relationship marketing? Why is internal marketing important to a firm? Identify the three levels of the relationship marketing continuum. Relationship marketing views the person behind the sale. For relationship marketing to be most effective, it must infiltrate every level of contact with a current. What is the first level of the relationship marketing continuum? focus on price What are the three levels for measuring customer satisfaction? understanding.
Although each one of them is espousing the value of interactions in marketing and its consequent impact on customer relationships, Gronroos  and Gummesson  take a broader perspective and advocate that customer relationships ought to be the focus and dominant paradigm of marketing.
For example, Gronroos states: This is achieved by a mutual exchange and fulfillment of promises" [Gronroos Morgan and Hunt  draw upon the distinction made between transactional exchanges and relational exchanges by Dwyer, Schurr, and Oh , to propose a more inclusive definition of relationship marketing.
According to Morgan and Hunt: Such a broadened definition has come under attack by some scholars. Peterson declared Morgan and Hunt's definition guilty of an error of commission and states that if their "definition is true, then relationship marketing and marketing are redundant terms and one is unnecessary and should be stricken from the literature because having both only leads to confusion" [Peterson Other scholars who believe that relationship marketing is distinctly different from the prevailing transactional orientation of marketing may contest such an extreme viewpoint.
Relationship Marketing versus Marketing Relationships An interesting question is raised by El-Ansary  as to what is the difference between "marketing relationships" and "relationship marketing"? Certainly marketing relationships have existed and have been the topic of discussion for a long time. But what distinguishes it from relationship marketing is its nature and specificity. Marketing relationships could take any form, including adversarial relationships, rivalry relationships, affiliation relationships, independent or dependent relationships, etc.
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However, relationship marketing is not concerned with all aspects of marketing relationships. Dwyer, Schurr, and Oh  have characterized such cooperative relationships as being interdependent and long-term orientated rather than being concerned with short-term discrete transactions.
The long-term orientation is often emphasized because it is believed that marketing actors will not engage in opportunistic behavior if they have a long-term orientation and that such relationships will be anchored on mutual gains and cooperation [Ganesan ]. Thus, the terms relationship marketing and marketing relationships are not synonymous. Relationship marketing describes a specific marketing approach that is a subset or a specific focus of marketing. However, given the rate at which practitioners and scholars are embracing the core beliefs of relationship marketing for directing Marketing practice and research, it has the potential to become the dominant paradigm and orientation of marketing.
As such, Kotler , Webster , Parvatiyar and Sheth , and others have described the emergence of relationship marketing as a paradigm shift in marketing approach and orientation. In fact, Sheth, Gardner and Garrett  observe that the emphasis on relationships as opposed to transaction-based exchanges is very likely to redefine the domain of marketing.
Delimiting the Domain of Relationship Marketing For an emerging discipline, it is important to develop an acceptable definition that encompasses all facets of the phenomenon and also effectively de-limits the domain so as to allow focused understanding and growth of knowledge in the discipline. Although Morgan and Hunt's definition  focuses on the relational aspects of marketing, it is criticized for being too broad and inclusive. They include buyer partnerships, supplier partnerships, internal partnerships, and lateral partnerships within the purview of relationship marketing.
Many of these partnerships are construed as being outside the domain of marketing and hence faces the risk of diluting the value and contribution of the marketing discipline in directing relationship marketing practice and research or theory development [Peterson ]. Therefore, Sheth  suggested that we limit the domain of relationship marketing to only those collaborative marketing actions that are focused on serving the needs of customers.
That would be consistent with marketing's customer focus and understanding that made the discipline prominent. Other aspects of organizational relationships, such as supplier relationships, internal relationships, and lateral relationships are aspects being directly attended to by such disciplines as purchasing and logistics management, human resources management, and strategic management.
Therefore, relationship marketing has the greatest potential for becoming a discipline and developing its own theory if it delimits its domain to the firm-customer aspect of the relationship. Of course, to achieve a mutually beneficial relationship with customers, the firm may have to collaborate with its suppliers, competitors, consociates, and internal divisions. The study of such relationships is a valid domain of relationship marketing as long as it is studied in the context of how it enhances or facilitates customer relationships.
Towards a Definition of Relationship Marketing An important aspect of the definitions by Berry, Gronroos, and Morgan and Hunt is that they all recognize the process aspects of relationship development and maintenance.
Relationship Marketing vs. Transactional Marketing
A set of generic processes of relationship initiation, relationship maintenance and relationship termination is also identified by Heide . His definition claims that the objective of relationship marketing is to establish, develop, and maintain successful relational exchanges. Wilson  develops a similar process model of buyer-seller cooperative and partnering relationships by integrating conceptual and empirical researches conducted in this field.
Thus, a process view of relationship marketing currently prevails the literature and indicates that the marketing practice and research needs to be directed to the different stages of the relationship marketing process. In addition to the process view, there is general acceptance that relationship marketing is concerned with collaborative relationships between the firm and its customers.
Such collaborative relationships are more than a standard buyer-seller relationship, yet short of a joint venture type relationship.
They are formed between the firm and one or many of its customers, including end-consumers, distributors or channel members, and business-to-business customers. Also, a prevailing axiom of relationship marketing is that collaborative relationships with customers lead to greater market value creation and that such value will benefit both parties engaged in the relationship. Creation and enhancement of mutual economic, social and psychological value is thus the purpose of relationship marketing.
Relationship marketing is the ongoingprocess of engaging in collaborative activities andprograms with immediate and end-user customers to create or enhance mutual economic, social and psychological value, profitably.
Relationship Marketing and Customer Relationship Management (CRM)
There are three underlying dimensions of relationship formation suggested by the above definition: We will use these three dimensions to illustrate a process model of relationship marketing. Before we present this process model, let us examine the antecedents to the emergence of relationship marketing theory and practice. The Emergence of Relationship Marketing School of Thought As is widely known, the discipline of marketing grew out of economics, and the growth was motivated by a lack of interest among economists in the details of market behavior and functions of middlemen [Bartels ; Sheth, Gardener, Garrett ].
Marketing's early bias toward distribution activities is evident as the first marketing courses at Michigan and Ohio were focused on effectively performing distributive tasks [Bartels ]. Early marketing thinking centered on the efficiency of marketing channels [Shaw ; Weld ; ; Cherrington ;]. Later institutional marketing thinkers, because of their grounding in institutional economic theory, viewed the phenomena of value determination as fundamentally linked to exchange [Duddy, Revzan ; Alderson ].
Although the institutional marketing view was later modified by the organizational dynamics viewpoint and marketing thinking was influenced by other social sciences, exchange remained the central tenet of marketing [Alderson ; Kotler ; Bagozzi ; ; ]. Shift from Distribution Functions to Understanding Consumer Behavior The demise of the distributive theory of marketing began after World War II as marketing focus began to shift from distributive functions to other aspects of marketing.
With the advent of market research, producers, in an attempt to influence end-consumers, began to direct and control the distributors regarding merchandising, sales promotion, pricing, etc. Thus repeat purchase and brand loyalty gained prominence in the marketing literature [Churchill ; Womer ; Barton ; Howard, Sheth ; Sheth ;]. Also, market segmentation and targeting were developed as tools for marketing planning. Thus the concept evolved and the consumer, not distributor, became the focus of marketing attention [Kotler ], and producers, in order to gain control over the channels of distribution, adopted administered vertical marketing systems [McCammon ].
These vertical marketing systems, such as franchising and exclusive distribution rights, permitted marketers to extend their representation beyond their own corporate limits [Little ].
However, marketing orientation was still transactional since its success was measured in such transactional terms as sales volume and market share.
Only in the s, did marketers begin to emphasize customer satisfaction measures to ensure that they were not purely evaluated on the basis of transactional aspects of marketing and that the sale was not considered the culmination of all marketing efforts. Early Relationship Marketing Ideas Although Berry  formally introduced the term relationship marketing into the literature, several ideas of relationship marketing emerged much before then.
For example, McGarry included six activities in his formal list of marketing functions [McGarry ; ; ; ]: Of these, the contractual function falling within the main task of marketing, reflected McGarry's relational orientation and his emphasis on developing cooperation and mutual interdependency among marketing actors.
For example, he suggested that: McGarry's work has not been widely publicized and his relational ideas did not lead to the same flurry of interest caused by Wroe Alderson's  focus on inter- and intrachannel cooperation.
Although the distributive theory of marketing no longer enjoys a central position in marketing, interest in channel cooperation has been sustained for the last three decades, and many relationship marketing scholars have emerged from the tradition of channel cooperation research [Anderson, Narus ; Stern, El-Ansary ; Weitz, Jap ].
They have contributed significantly to the development of relationship marketing knowledge and have been most forthcoming in applying various theoretical ideas from other disciplines such as economics, law, political science, and sociology. These are discussed in more detail in other sections of this article. Two influential writings in the 60s and 70s provided an impetus to relationship marketing thinking, particularly in the business-to-business context.
First, Adler  observed the symbiotic relationships between firms that were not linked by the traditional marketer-intermediary relationships. Later, Vardarajan , and Vardarajan and Rajarathnam , examined other manifestations of symbiotic relationships in marketing. The second impetus was provided by Johan Arndt  who noted the tendency of firms engaged in business-to-business Marketing to develop long-lasting relationships with their key customers and their key suppliers rather than focusing on discrete exchanges, and termed this phenomenon "domesticated markets.
In USA, several scholars began examining long-term interorganizational relationships in business-to-business markets, while in Europe, the Industrial Marketing and Purchasing IMP Group laid emphasis on business relationships and networks e. The Nordic School approach to services marketing was also relationship-oriented from its birth in the s [Gronroos, Gummesson ].
This school believes that for effective marketing and delivery of services, companies need to practice internal marketing and involve the entire organization in developing relationships with their customers [Gronroos ]. Except for the greater emphasis on achieving a marketing paradigm shift by the Nordic School, its approach is similar to relationship marketing ideas put forth by services marketing scholars in the United States [Berry ; ; Czepiel ; Berry, Parsuraman ; Bitner ].
To a certain degree, recent scholars from the Nordic Schools have tried to integrate the network approach popular among Scandinavian and European schools with service relationship questions [Holmlund ]. As relationship marketing grew in the s and s, several perspectives emerged.
One perspective of integrating quality, logistics, customer services, and marketing is found in the works of Christopher, Payne, and Ballantyne  and in the works of Crosby, Evans, and Cowles . Another approach of studying partnering relationships and alliances as forms of relationship marketing are observed in the works of Morgan and Hunt , Heide , and Vardarajan and Cunningham .
Similarly, conceptual and empirical papers have appeared on relationship-oriented communication strategies [Owen ; Mohr, Nevin ; Schultz, Tannenbaum, Lauterborn ]; supply chain integration [Christopher ; Payne et.
The Emergence of Relationship Marketing Practice As observed by Sheth and Parvatiyar [b], relationship marketing has historical antecedents going back to the pre-industrial era. Much of it was due to direct interaction between producers of agricultural products and their consumers. Similarly, artisans often developed customized products for each customer. Such direct interaction led to relational bonding between the producer and the consumer.
It was only after industrial era's mass production society and the advent of middlemen that there were less frequent interactions between producers and consumers leading to transaction-oriented marketing.
The production and consumption functions became separated, leading to marketing functions being performed by the middlemen.
And middlemen are in general oriented towards economic aspects of buying since the largest cost is often the cost of goods sold. In recent years however, several factors have contributed to the rapid development and evolution of relationship marketing.
These include the growing de-intermediation process in many industries due to the advent of sophisticated computer and telecommunication technologies that allow producers to directly interact with end customers. For example, in many industries such as airlines, banks, insurance, computer program software, household appliances and even consumables, the de-intermediation process is fast changing the nature of marketing and consequently making relationship marketing more popular.
Databases and direct marketing tools give producers the means to individualize their marketing efforts. As a result, producers do not need those functions formerly performed by the middlemen. Even consumers are willing to undertake some of the responsibilities of direct ordering, personal merchandising, and product use related services with little help from the producers.
The recent success of on-line banking, on-line investment programs by Charles Schwab and others, as well as direct selling of books, automobiles, insurance, etc. The de-intermediation process and consequent prevalence of relationship marketing is also due to the growth of the service economy.
Since services are typically produced and delivered by the same institution, it minimizes the role of the middlemen. A greater emotional bond between the service provider and the service user also develops the need for maintaining and enhancing the relationship.
It is, therefore, not difficult to see that relationship marketing is very important for scholars and practitioners of services marketing [Crosby, Stephens ; Crosby, Evans, Cowles ; Berry, Parsuraman ; Bitner ; Gronroos ]. Another force driving the adoption of relationship marketing has been the total quality movement.
When companies embraced Total Quality Management TQM philosophy to improve quality and reduce costs, it became necessary to involve suppliers and customers in implementing the program at all levels of the value chain.Political Ideology: Crash Course Government and Politics #35
This needed close working relationships with customers, suppliers, and other members of the marketing infrastructure. With the advent of digital technology and complex products, a systems selling approach became common. This approach emphasized the integration of parts, supplies, and the sale of services along with the individual capital equipment. Customers liked the idea of systems integration, and sellers were able to sell augmented products and services to customers. The popularity of system integration began to extend to consumer packaged goods as well as services [Shapiro, Posner ].
At the same time, some companies started to insist upon new purchasing approaches such as national contracts and master purchasing agreements, forcing major vendors to develop key account management programs [Shapiro, Moriarty ]. These measures created intimacy and cooperation in the buyer-seller relationships. Instead of purchasing a product or service, customers were more interested in buying a relationship with a vendor.
The key or national account management program designates account managers and account teams that assess the customer's needs and then husband the selling company's resources for the customer's benefit. Such programs have led to the foundation of strategic partnering relationship programs within the domain of relationship marketing [Shapiro ; Anderson, Narus ;]. Similarly, in the current era of hyper-competition, marketers are forced to be more concerned with customer retention and loyalty [Dick, Basu ; Reichheld ].
Several studies have indicated that retaining customers is less expensive and perhaps a more sustainable competitive advantage than acquiring new ones, [Rosenberg, Czepiel ], and some current research has been focused on quantifying the economic benefits of retention e.
An added benefit is that relationship marketing insulates marketers from service failures [Priluck ]. In addition, customer expectations have rapidly changed over the last two decades.
Fueled by new technology and growing availability of advanced product features and services, customer expectations are changing almost on a daily basis. Consumers are less willing to make compromises or trade-offs in product and service quality.
In the world of ever changing customer expectations, collaborative relationships with customers seem to be the most prudent way to keep track of their changing expectations and appropriately influence them [Sheth, Sisodia ]. Companies are increasingly collaborating with customers on marketing, sales and support processes. Technological forces are also shaping the practice of relationship marketing.
CRM software automates and integrates marketing activities such as segmentation, targeting, product development, sales, service, order management, market research, and analytics, to focus on customer acquisition, customer retention and profitability [Rigby, Reichheld, Schefter ]. However, implementation challenges such as lack of critical inputs such as user acceptance, senior management engagement, strategic focus, resources, and focused change management [Bohling et al.
CRM is undoubtedly changing the course and definition of relationship marketing, and eventually RM may likely transform into CRM with hybrid relationship marketing programs ranging from relational to transactional, and include the outsourcing of marketing exchanges and customer interactions [Sheth ].
The challenge is to keep CRM focused on relational needs rather than just profitability [Fournier, Avery ]. Given the vast amount of information on the Internet and the easy availability of peer to peer advice at websites such as Amazon and Edmunds, customers may well expect that the step after collaboration should be customer advocacy i. For example, Progressive Auto Insurance provides rates of competitors to make it easier for customers shopping for insurance.
Thus, instead of tactical use of CRM for promotions, such companies leverage CRM for understanding and advocating customers' needs to enhance customer relationships by winning trust, loyalty and even purchases. On the supply side, it pays to develop closer relationships with a few suppliers than to develop more vendors [Hayes, Wheelwright, Clarke ; Spekman ].
In addition, several marketers are also concerned with keeping customers for life, rather than making a one-time sale [Cannie, Caplin ].
In a recent study see: Further, as many large, internationally oriented companies are trying to become global by integrating their worldwide operations, they are seeking collaborative solutions for global operations from their vendors instead of merely engaging in transactional activities with them.
Such customer needs make it imperative for marketers interested in the business of global companies to adopt relationship marketing programs, particularly global account management programs GAM [Yip, Madsen ]. Conceptually similar to national account management programs, GAMs are more complex as they are global in scope. Managing customer relationships around the world calls for external and internal partnering activities, including partnering across a firm's worldwide organization.
Building on that work, and anchored to our definition of relationship marketing as a process of engaging in collaborative relationship with customers, we develop a four-stage process model for relationship marketing. The broad model suggests that the relationship-marketing process comprises the following four sub-processes: Figure 1 is the generic model and Figure 2 depicts the important components in greater detail.
Formation, Governance and Evaluation Model of Relationship Marketing The Formation Process of Relationship Marketing The relationship marketing process comprises distinct stages such as the core interaction, planned communication that provides opportunity for meaningful dialog, and the creation of customer value as an outcome of relationship marketing [Gronroos ].
Forming a collaborative relationship with an individual customer or a group of customers involves three important decision areas — defining the purpose or objective engagement; selecting parties or customer partners ; and developing programs or relational activity schemes. Relationship Marketing Purpose The overall purpose of relationship marketing is to improve marketing productivity and enhance mutual value for the parties involved in the relationship.
Seeking and achieving strategic marketing goals, such as entering a new market, developing a new product or technology, serving new or expanded needs of customers, redefining the company's competitive playing field, etc. Similarly, by seeking and achieving operational goals, such as reduction of distribution costs, streamlining order processing and inventory management, reducing the burden of excessive customer acquisition costs, etc. Thus, stating objectives and defining the purpose of relationship marketing helps clarify the nature of relationship marketing programs and activities that ought to be performed by the partners.
Defining the purpose would also help in identifying suitable relationship partners who have the necessary expectations and capabilities to fulfill mutual goals.
It will further help in evaluating relationship marketing performance by comparing results achieved against objectives. These objectives could be specified as financial goals, marketing goals, strategic goals, operational goals, and general goals.
Similarly, in the mass-market context, consumers expect to fulfill their goals related to efficiencies and effectiveness in their purchase and consumption behavior. Sheth and Parvatiyar [a] contend that consumers are motivated to engage in relational behavior because of the psychological and sociological benefits associated with a reduction in choice decisions.
In addition to their natural inclination of reducing choices, consumers are motivated to seek the rewards and associated benefits offered by relationship marketing programs of companies. Relational parties customer selection or parties with whom to engage in collaborative relationships is another important decision in the formation stage.
Even though a company may serve all customer types, few have the necessary resources and commitment to establish relationship marketing programs for all. Therefore, in the initial phase, a company has to decide which customer type and specific customers or customer segments will be the focus of their relationship marketing efforts.
Subsequently, when the company gains experience and achieves successful results, the scope of relationship marketing activities is expanded to include other customers into the program or engage in additional programs [Shah ]. However, not all customers want to develop relationships with companies.
Customer relationship importance, relationship characteristics [Ward, Dagger ], type of relationship marketing tactics, and perceived relationship investment [De Wulf, Odekerken-Schroder, Iaobucci ], influence firm-customer relationships. Although customer selection is an important decision in achieving relationship marketing goals, not all companies have a formalized process of selecting customers. Some follow an intuitive judgmental approach of senior managers in selecting customers, and others partner with those customers who demand to do so.
Yet other companies have formalized processes of selecting relational customers through extensive research and evaluation along chosen criteria. The criteria for customer selection vary according to company goals and policies. These range from a single criterion such as life time value of the customer to multiple criteria, including several variables such as customer's commitment, resourcefulness, and management values. New technologies enable companies to use customer data to build customized and profitable databases of select customers who can be provided preferential treatments that enhance relationship commitment, purchases, share-of-customer, word of mouth and customer feedback.
However, this can create controversies since many customers would be left out of the program [Russell, Suh, Morgan ]. Relationship Marketing Programs A careful review of literature and observation of corporate practices suggest that there are three types of relationship marketing programs: These take different forms depending on whether they are meant for end-consumers, distributor customers, or business-to-business customers.
Table 1 presents various types of relationship marketing programs prevalent among different types of customers.
Obviously, marketing practitioners in search of new creative ideas develop many variations and combinations of these programs to build a closer and mutually beneficial relationship with their customers.
The growing concern to retain customers as well as emerging knowledge about customer retention economics has led many companies to develop continuity marketing programs that are aimed at both retaining customers and increasing their loyalty [Payne ; Bhattacharya ].
For consumers in mass markets, these programs usually take the shape of membership and loyalty card programs where consumers are often rewarded for their membership and loyalty relationships with the marketers [Raphel ; Richards ]. These rewards may range from privileged services to points for upgrades, discounts, and cross-purchased items.
For distributor customers, continuity marketing programs are in the form of continuous replenishment programs ranging anywhere from just in-time inventory management programs to efficient consumer response initiatives that include electronic order processing and material resource planning [Persutti ; Law, Ooten ]. In business-to-business markets, these may be in the form of preferred customer programs or in special sourcing arrangements including single sourcing, dual sourcing, and network sourcing, as well as just-in-time sourcing arrangements [Postula, Little ; Hines ].
The basic premise of continuity marketing programs is to retain customers and increase loyalty through long-term special services that has a potential to increase mutual value through learning about each other [Schultz ]. However, Malthouse and Blattberg  find that the past profitability of customers may not accurately reflect their future profitability.
One-to-one or individual marketing approach is based on the concept of account-based marketing. Such a program is aimed at meeting and satisfying each customer's need uniquely and individually [Peppers, Rogers ]. What was once a concept only prevalent in business-to-business marketing is now implemented in the mass market and distributor customer contexts. In the mass market, individualized information on customers is now possible at low costs due to the rapid development in information technology and due to the availability of scalable data warehouses and data mining products.
By using on-line information and data bases on individual customer interactions, marketers aim to fulfill the unique needs of each mass market customer. Information on individual customers is utilized to develop frequency marketing, interactive marketing, and after-marketing programs in order to develop relationships with high yielding customers [File, Mack, Prince ; Pruden ].
Effectively and efficiently creating, disseminating and utilizing knowledge for creating value for customers requires a relationship climate and culture within the organization [Tzokas, Saren ]. For distributor customers these individual marketing programs take the shape of customer business development. Such a relationship requires collaborative action and an interest in mutual value creation.
In the context of business-to-business markets, individual marketing has been in place for quite sometime. Known as a key account management KAM program, marketers appoint customer teams to husband the company resources according to individual customer needs.
Often times such programs require extensive resource allocation and joint planning with customers.
Key account management programs implemented for multi-location domestic customers usually take the shape of national account management programs, and for customers with global operations it becomes global account management programs. The third type of relationship marketing programs is partnering relationships between customers and marketers to serve end user needs.
In mass markets, two types of partnering programs are most common: In co-branding, two marketers combine their resources and skills to offer advanced products and services to mass market customers [Marx ]. For example, Delta Airlines and American Express have cobranded the Sky Miles Credit Card for gains to consumers as well as to the partnering organizations.
Relationship Marketing and Customer Relationship Management (CRM) - ppt video online download
Affinity partnering program is similar to co-branding except that the marketers do not create a new brand but rather use endorsement strategies. Usually affinity-partnering programs try to take advantage of customer memberships in one group for cross-selling other products and services. For example, Intel transformed from a brand that few end-consumers had heard of to a brand that signaled high quality, with its "Intel Inside" campaign in which it partnered with over computer manufacturers [McKee ].
In the case of distributor customers, logistics partnering and collaborative marketing efforts are how partnering programs are implemented. In such partnerships, the marketer and the distributor customers cooperate and collaborate to manage inventory and supply logistics and sometimes engage in joint Marketing efforts. For business-to-business customers, partnering programs involving codesign, co-development and co-marketing activities are not uncommon today [Mitchell, Singh ; Young, Gilbert, McIntyre ].
Management and Governance Process. Once a relationship marketing program is developed and rolled out, the program as well as the individual relationships must be managed and governed.
For mass-market customers, the degree to which there is symmetry or asymmetry in the primary responsibility of whether the customer or the program sponsoring company will be managing the relationship varies with the size of the market. However, for programs directed at distributors and business customers, the management of the relationship requires the involvement of both parties.
The degree to which these governance responsibilities are shared or managed independently will depend on the perception of norms of governance processes among relational partners given the nature of their relationship marketing program and the purpose of engaging in the relationship. Not all relationships are or should be managed alike, however, several researchers have suggested appropriate governance norms for different hybrid relationships [Borys, Jemison ; Sheth, Parvatiyar ; Heide ].
Whether management and governance responsibilities are independently or jointly undertaken by relational partners, several issues must be addressed. These include decisions regarding role specification, communication, common bonds, planning process, process alignment, employee motivation and monitoring procedures. Role specification relates to determining the role of partners in fulfilling the relationship marketing tasks as well as the role of specific individuals or teams in managing the relationships and related activities [Heide ].
The greater the scope of the relationship marketing program and associated tasks, and the more complex the composition of the relationship management team, the more critical is the role specification decision for the partnering firms. Role specification also helps in clarifying the nature of resources and empowerment needed by individuals or teams charged with the responsibility of managing relationships with customers. Communication with customer partners is a necessary process of relationship marketing.
It helps in relationship development, fosters trust, and provides the information and knowledge needed to undertake collaborative activities of relationship marketing. These marketing efforts are investments in the promise of long-term sales. Face-to-face interaction is less frequent, and many more services and product transactions are occurring behind a computer screen. With a few clicks on their keyboards, clients can access a world of information that influences their purchase decisions, making the client relationship more important than ever.
While the Internet has reduced face time with clients, it has provided more and different avenues to develop relationships with current and prospective clients. Some product companies never had direct relationships with their customers before the proliferation of the Internet and social media. The stores that carried their products exclusively built and maintained the client relationships. Now, manufacturers are reaching their customers more directly, branding and building relationships through interactive and educational features on their websites, blog articles and posts on their Facebook pages.
Retaining Customers When your business is moving product, it may be tempting to put all resources into marketing tactics that bring immediate results. However, when you consider that acquiring new customers can cost as much as five times more than retaining current customers, according to Emmett C.
Murphy and Mark A.