Building Relationships

Jim Barnes B6230 October 3, 2007

Copyright 2007 McGraw-Hill Ryerson Limited.,

Understanding Relationships
Must be defined from the customers view Most are not genuine relationships More than databases and loyalty programs The relationship is a personal thing Its the recognition of a special status Must have an element of emotion How do we create the real thing?

Copyright 2007 McGraw-Hill Ryerson Limited.,

What A Relationship Is Not

Setting up barriers to exit

Raising the switching costs Getting the customer on a data base Frequent-buyer clubs Locking in the customer

Copyright 2007 McGraw-Hill Ryerson Limited.,

You Know One When You See One

A relationship exists in the eye of the customer The customer must feel that it exists The customer is the object of attention We must know how he or she feels about it There must be parity; both parties win Different segments see it differently Some dont want a close relationship

Copyright 2007 McGraw-Hill Ryerson Limited.,

Relationships at Different Levels

Hands-on: personal, close, first-name, high involvement -- hairdressers, dentists, etc. Face-to-face: meetings, conversation -retail, hotels, mechanics, banks, etc. Distant: less frequent, via technology, few meetings -- telecom, utilities, etc. Brand: contact with customer is through agents -- consumer products, autos, etc.
Copyright 2007 McGraw-Hill Ryerson Limited.,

Key Relationship Indicators

Share of wallet: how much of their business do we have? Level of overall satisfaction Strength of the relationship Perceived closeness or attachment Likelihood of switching their business Likelihood of recommending us to others

Copyright 2007 McGraw-Hill Ryerson Limited.,

Issues in Customer Relationships

Are relationships necessary for retention? With whom does the customer have the relationship? Employee or firm? With whom do we want a relationship? Can relationships and technology coexist? Are empowered employees necessary for a relationship to exist?
Copyright 2007 McGraw-Hill Ryerson Limited.,

Whats a Relationship, Anyway?

do all customers want a relationship? what kind of relationship do they want? what are their motivations for entering into a relationship? some are entered into willingly; others against their will -- they have little choice need to understand their motivations
Copyright 2007 McGraw-Hill Ryerson Limited.,

Meaningful Relationships
three established streams of research:

social psychologists consumer psychologists cultural anthropologists

meaning lies within the individual relationships add and structure meaning in our lives (Fournier) implies closeness and attachment
Copyright 2007 McGraw-Hill Ryerson Limited.,

Research on Meaning
interpersonal relationships: what it means to be in a relationship brand relationships: what meaning certain brands have for consumers consumption objects: what certain personal possessions mean to the owner

Copyright 2007 McGraw-Hill Ryerson Limited.,

The Meaning of Meaning (1)

First, a literal or semantic meaning

what does the company or brand say about its attributes and performance? grounded in words and conversation what meaning does the consumer attach to the communications of a firm? does not represent the totality of meaning
Copyright 2007 McGraw-Hill Ryerson Limited.,

The Meaning of Meaning (2)

Second, a cultural/anthropological view the cultural meaning of the firm or brand as communicated mainly through advertising imbues the firm with appropriate meaning result of a positioning/branding strategy; attempt to achieve consensus; shared meaning this kind of meaning is company-determined and resides in the firm or brand branding is acquisition of agreed-upon meaning
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The Meaning of Meaning (3)

Third, meaning as internalized by consumers; how things come to mean something special to them; the achievement of special status closely related to attachment; centrality resides only in the customers mind; idiosyncratic related to the concept of self, to life events, and to the accomplishment of life tasks a company with clear communications and a broad consensus on brand image may still mean nothing to the individual consumer
Copyright 2007 McGraw-Hill Ryerson Limited.,

The Acquisition of Meaning

how do firms/brands come to mean something to their customers? to achieve a state beyond instrumentality? combination of functional and emotional routes to the achievement of meaning

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The Functional View

accomplishment of life tasks, deal with issues; helps get things done exceeds expectations, behaves differently, go beyond the expected: _____ means more to me than just a supermarket coordinated interdependence: I depend on them to _____

Copyright 2007 McGraw-Hill Ryerson Limited.,

The Emotional View

meaning is acquired as relationships come to reflect self or ideal-self: Im a Tommy girl! the firm or brand shares things with me, we are alike in many ways; they are people like me, overlap of values, beliefs, history the firm or brand reminds me of pleasant things, people, events the firm or brand associates with the things and people with which I associate; borrowed meaning

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Strategies for Meaning Creation

different meanings for different segments what do we want to stand for and mean, and to whom? delivered through communications and how we behave as a firm or brand understand their meaning systems and share in them need insight into whats important, central in customers lives hence the need for the right kind of customer research
Copyright 2007 McGraw-Hill Ryerson Limited.,