Relationship Marketing, The Future?

The way in which marketing operates today has fundamentally changed. Advancements in information technology has given organisations a clearer understanding of their consumers through data and yet the effectiveness of marketing has weakened. Consumers, having gained an understanding of various marketing tactics, develop a level of resistance towards the traditional marketing ‘lures’ that would have previously captivated the attention of passive consumers. This resistance has led to the creation of new marketing strategies, including relationship marketing, whereby organisations further interact with their customers and develop a relationship with them to gain competitive advantage. In order to understand what values their customers seek, organisations must collect consumer data and use this to support their relationships. However, with the use of customer data, there are concerns as to whether or not customers should consider this an issue or whether the benefits of this data exchange outweigh such concerns. This article serves to analyse the quality of relationships between organisations and customers and discuss the means by which organisations understand their customers and apply this data to improve the customer experience.

How well do organisations today know their customers?

In order for an organisation to thrive and maximize profitability, it must understand their customers and manage the business-customer relationship effectively ?(Dyché 2002; Jackson, 1988; Doyle and Roth, 1992).?The strategy of an organisation and its dependency on operant resources to maintain competitive advantage is the key determinant of an organisation’s level of understanding of their customers (Baker 2007). With the emergence of engaged consumers, the value of operant resources is ever-increasing; customers also “expect companies to understand what type of relationships they want” (Avery et al,?2014). Relationship marketing requires organisations to host a high degree of information sharing between organisation and customer to form strong relationships, which can furthermore result in extending their stakeholder network (Jayachandran et al. 2005). This strategy emphasizes the importance in maintaining long-term associations with customers, which requires greater research into customer values and interests than in firms that adopt a transactional marketing strategy (Morgan & Hunt, 1994; Gr?nroos & Ravald, 2011; Lusch & Webster,2011 as cited by Alves et al. 2016). Despite consumers and organisations both wanting relationships(O’Malley and Tynan 2000), many organisations who lack relational intelligence (Avery et al,?2014) still choose a transactional marketing strategy whereby the focus remains on selling to many customers rather than building a customer-organisation relationship. In my opinion organisations today all share a general understanding of their customers, as without this basic understanding, an organisation would not be able to fulfil its basic function – to create wealth for shareholders; it is the marketing strategy that they incorporate to drive further growth that determines their depth of understanding.

Where does the information come from?

?“If you're not paying for the product, then you are the product” (Orlowski, 2020).

In the business marketplace today, organisations must do considerably more to maintain competitive advantage with rivalling firms. Organisations use tools to analyse customer data, allowing them to personalize and nurture their customer relationships (Avery et al,?2014). The rise of information technology has resulted in ease of access to customer information and analytics regardless of the size of the organisation. Larger organisations of course have an upper hand with the ability to collect larger amounts of information from their customers, forming detailed databases. The collection of this data is a result of the various points at which the customer interacts with the organisation including sales and customer service (Jayachandran et al. 2005), often unrealized by the consumer (Karjoth et al. 2003). While it is to use the data to improve customer relationships, this allows organisations to target customers based on previous interactions. The movie ‘The social dilemma’ draws attention to the copious amounts of data given up by consumers on a daily basis. Legislation struggles to keep up with the fast pace of information technology and as a result the laws surrounding the issue of consumer consent and data privacy are lagging. Despite the obvious advantages for organisations, I believe the issues of data misuse far outweigh the positives for consumers in the organisation-customer relationship. Furthermore, I expect the legislation surrounding data privacy will increase in line with advancements in information technology, making it much harder to maintain the level of commitment between organisations and customers.

How do they use this information to support the relationships?

In order to maintain the organisation-customer relationship, organisations use the data they collect to communicate more effectively. Trust develops over time through the consistent and effective responses when interacting with an organisation (Jayachandran et al. 2005). Communication is important when forming a relationship as it establishes trust and commitment (Gummerus et al. 2017) and assists organisations in resolving disputes and ensuring the expectations and perceptions of the customer are aligned with the organisation(Etgar 1979 as cited by Morgan and Hunt 1994). The commitment-trust theory recognizes commitment and trust to be the key components of preserving a relationship (Morgan & Hunt,1994) with trust as “the cornerstone of the strategic partnership” (Spekman 1988). Organisations who use such tactics garner long-term relationships and benefit from increased profits and lower outreach costs. Good relationships between organisations and customers lead to loyalty – brand commitment occurs as a response to the continuous co-creation of value between both parties over time (Egan 2011 as cited by Banyte 2014; Ford, 1997; Gr?nroos, 1981; Gummesson, 1987; H?kansson, 1982 as cited by O’Malley and Tynan 2000). I believe that relationship marketing really improves the customer-organisation relationship but it is interesting to note that without the use of data to aid the organisation, the significant amount of personalized?interaction that would be forfeited may cost the entire relationship as customers look to competitors to provide more value. ?

Does it improve the customer experience?

The customer experience is shaped throughout each stage of the buyers journey, from pre-purchase, whereby the customer becomes aware of a product or service, to post-purchase, where customers exchange experiences through social networks which results in shaping their own experience (Alves et al. 2016). By forming a relationship through the use of data, organisations can provide a continuous source of value for customers. The reason why relationship marketing is so attractive to organisations is the difficulty in providing additional value to customers without forming a relationship (O’Malley and Tynan 2000). According to Crosby and Stevens (1987), satisfaction can be attributed to three dimensions in the organisation-customer relationship; interactions with personnel, satisfaction of core service and satisfaction with the organisation. Customer data enables the organisation to nurture the relationship as customers ‘pass through’ each step. As mentioned previously, customers expect a level of understanding by the organisation; when organisations fail to meet their needs directly, this is when customers experience dissatisfaction (Bejou and Palmer 1998). Avery (2014) recalls a popular ‘plus size’ women’s brand that attempted to reposition themselves with a younger, thinner audience and as a result alienated their old audience. I believe that while customers fear the collection of data, it allows for much better relationships with the organisations and definitely helps to improve the customer experience. Organisations also benefit from such data as it shapes their overall business strategy, helping organisations to make better, more informed decisions.

Wrapping up

Despite the high amount of companies that share a lack of relational intelligence, the need to understand an organisations customers is ever-increasing in order to maintain competitive advantage. Customers are becoming increasingly demanding, searching for additional operant resources behind the operand resources offered by organisations adopting a traditional approach to marketing. ?The collection of data by organisations may be considered intrusive by some however it forms the basic foundations of relationship management, a strategy valued equally by both customer and organisation. Relationship management, once adopted by an organisation allows the organisation to gain further insight to the needs of their customers, providing new sources of value that help maintain a long-term relationship with their customers. Henri Ford once stated “if I asked customers what they wanted, they would have asked for faster horses”. If organisations continuously asked customers what they wanted, they would certainly form a good relationship however by using mass customer data to inform business decisions, they have the ability to achieve far more; it is in the best interest of both parties to maintain this relationship.

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