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Lesson 3 - Relationship Development Strategies

1. The document discusses relationship development strategies that companies use to encourage customer loyalty. It identifies four levels of relationship bonds: financial, social, customization, and structural. 2. Core service provision, switching barriers, and relationship bonds affect customer loyalty and rationale. Satisfying customer expectations of quality and value builds core service provision. 3. The stages of a customer relationship are described as strangers, acquaintances, friends, and partners. Companies target different goals like acquisition, satisfaction, retention, and enhancement through marketing activities tailored for each stage.

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Cyrus Clyde Culanculan
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428 views4 pages

Lesson 3 - Relationship Development Strategies

1. The document discusses relationship development strategies that companies use to encourage customer loyalty. It identifies four levels of relationship bonds: financial, social, customization, and structural. 2. Core service provision, switching barriers, and relationship bonds affect customer loyalty and rationale. Satisfying customer expectations of quality and value builds core service provision. 3. The stages of a customer relationship are described as strangers, acquaintances, friends, and partners. Companies target different goals like acquisition, satisfaction, retention, and enhancement through marketing activities tailored for each stage.

Uploaded by

Cyrus Clyde Culanculan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Relationship Development Strategies

Companies need to exert effort in order to satisfy the needs of their


customers and encourage them to keep on purchasing. Three factors affect the
rationale of the strategies of companies in keeping their customers: core service
provision, switching barrier, and relationship bonds.

Core service provision includes service foundations that are built upon
delivery of excellent service. In order to do so, the company must be able to satisfy
customers by meeting their expectations about a product. This, however, will be
influenced by the perceived quality of the product (or the subjective evaluation of a
product's worth by a customer in relation to his or her expectations of the product)
and its perceived value. For example, you decided to buy a new pair of shoes for
school. You would most likely try on different pairs before you pick the best one
for you. Based on how you feel while fitting different pairs, you would already
have expectations for each one of them. Perhaps you chose one pair over the others
because of its price-you got the cheapest pair that costs P200. You probably will
not expect the pair of shoes to last for a very long time (perceived quality) because
of the price (perceived value). On the other hand, if you chose the pair of shoes
from a popular brand that costs P1 200, you expect that the shoes would last for at
least one school year (perceived quality) because the brand is well known and the
price is relatively higher (perceived value).

Switching barrier can also affect the loyalty of customers. It is the


economic and psychological difficulty perceived by the customers if they switch
from one brand to another. For instance, a student in grade 9 will find it difficult to
transfer to another school because it will be hard for him or her to build new
friendships or to cope with the lessons in the new school. This may also be true if
you are going to a different supermarket for the first time-you will find that you are
unfamiliar with the aisles, so you spend more time finding the things that you need.
Some items may not be available, so you will spend more time and money going to
another supermarket just to get what you need.
Relationship bonds are retention strategies that keep the customer buying
the same

This strategy has four levels:

1. Financial bond this level, the customer patronizes a brand because of the
financial incentives that he or she may receive from the company. These may be in
the form of discounts, lower prices, or rewards points. Customers who own a
loyalty card in a supermarket may choose to buy from the same establishment
more frequently in order to collect points that can be converted into rewards (gift
items or cash credits).

2. Social bond - This type of bond focuses on the interpersonal relationship


between the company and the customer. This may be commonly observed in a
customer's relationship with his or her hair stylist, massage therapist, or even
doctors. Because this bond is not price-sensitive (consumers will not readily switch
because of the competitor's lower price), it may be difficult to make a customer
switch to another company or service provider.

3. Customization bond -Customer loyalty may be encouraged when


customers are allowed to avail of tailored services to fit their individual needs.
Simple customization, such as granting a customer's request to remove beans from
his or her halo-halo or allowing a wet market suki to choose the best parts of meat,
fall under this level. Elements from levels 1 and 2 may be combined at this level,
because a customer may enjoy the extra service and incentives extended to him or
her as a result of the social bond developed with the business.

4. Structural bond - At this level, financial, social, and customization bonds


are all combined in order to deliver services that fit the need of the customer. This
may apply to business-to-business transactions. For example, a tailoring company
that is the official provider of school uniforms most likely has a structural bond
with the school. The company provides punctual delivery of school uniforms upon
the order of the school, and their agreement is covered by a contract that specifies
the quantity, sizes, style (and other customizations), and the terms of payment.
Over time, as the relationship develops, the tailoring company may provide
additional incentives or discounts to the school for its loyalty and continued
patronage.
Relationship Development Stages
Businesses deal with customers on a daily basis. A company's relationship
with various customers differs depending on how well the staff know the customer,
how long the customer has been shopping at the store, and how knowledgeable the
customer is of the company's products, among others.

You can see the evolution of customer relationships in figure 4.2, and the
corresponding goals of marketing in each stage.

Customers as Strangers

A company's relationship with its customers starts as strangers. In this stage,


the customers are not familiar with the company's products. They may have heard
of the company, but they are not entirely aware how they can benefit from it.
Because the company is introducing itself to its customers, its marketing goal is to
acquire customers and earn their confidence. This can be done through advertising,
social media campaigns, sales promotions, product trials, and other promotional
activities.

Customers as Acquaintances

Once the customers understand what the company can do for them, they
move to the next stage: acquaintances. Here, the customers are trying out the
products of the company and investing a little by buying a product or two. The
goal of the company is to satisfy these new customers. Because the relationship is
still fragile at this point, the company should avoid making a mistake and instead
focus on providing superior customer service and product quality. The customers
may ask a lot of questions, and may even doubt the effectiveness of the company's
products, but they may be willing to take the risk so they can try the products.
Customers as Friends

Over time, customers who are satisfied with the company's products and
services will develop loyalty. In this stage, the company and the customers become
friends. The company's goal is to retain the customers through different marketing
activities. Customers will only stay loyal if the company's products and services
continuously satisfy them. Maintaining product quality and consistent customer
service is important to ensure that customers. continue valuing the company's
products, and will not stray to other brands. Offering sales promotions from time to
time gives customers added value to their purchase. Giving superior customer
service, like sending customers a message when new stocks arrive, remembering
the customers' preferences, and knowing them by their first name, may seem trivial
but these are important simple services that the sales staff can be trained to do.

A popular coffee shop in the Philippines trains its baristas to warmly greet
the customers as soon as they enter the café. They maintain a sunny disposition
while interacting with the customers, and may go as far as asking how their day is
going or engaging the customers in a casual conversation. For their regular patrons,
they remember their favorite coffee blends and ask them if they want to order their
usual order. These small acts make the customers feel special,

Customers as Partners

The last stage is when companies and customers are already partners.
Companies not only want to maintain the loyalty of their customers but also
enhance their relationship to ensure that they will always choose to buy from them
and not from the competitors. Enhancing customer relationship also strengthens the
company's brand equity, or its credibility in the eyes of their customers. They are
partners because as the company provides value to the customers through loyalty
programs, the customers also provide value to the company by recommending it to
friends, talking about it on social media, promoting it in their social circle, and
keeping it their preferred choice.

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