Relationships from the Customer's Perspective: Genuine versus Synthetic

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Welcome to the inaugural CRM-Forum Customer Intermarketing Bulletin. This is the first of a fortnightly series of email newsletters from the Customer Intermarketing sub-group of the CRM-Forum, presided over by Dr. James G. Barnes of Bristol Group.

The first couple of Bulletins will be sent to the entire membership of the CRM-Forum, after which, only those who have "opted in" will continue to receive them. To opt in, simply send a message to:
mailto:[email protected]
and in the body of the message type:
SUBSCRIBE CRMCIB

In the coming weeks and months, we will be your tour guides in your journey toward building genuine customer relationships. Our inaugural issue explores what genuine customer relationships really are, and why they go beyond CRM technology.

Our views on customer relationships have been developed over 25 years of research and strategy-making on behalf of clients in North America and Europe. In that time, we have learned a great deal about what constitutes a relationship from the customer's perspective - for that is what matters. It's not a relationship at all, or at least not one that will withstand competitive pressure and create long-term customer value, unless the customer feels a closeness and attachment to the company. A relationship is, by definition, an emotional concept. Without that emotional connection, it's not really a relationship.

It is our belief that genuine customer relationships are special: they transcend transactional or functional interactions with customers and lead to very special, lasting associations that are characterized by mutually-held emotions. Only genuine customer relationships will stand the test of time, weathering competition and rocky patches. Only genuine customer relationships provide a steady and increasing revenue stream to those businesses that make the investment required to develop them. Only genuine customer relationships will sustain businesses through the demolition of competitive entry barriers brought about by the Internet. In short, genuine customer relationships will play an increasingly important role in the continued success and prosperity of businesses around the world.

Genuine customer relationships are two-way affairs. The functional capability of your business to serve your customers does not in and of itself lead to the creation of a genuine relationship. Just because you have a great product or service to sell, attractive prices, and the production and technological prowess to market it to consumers, does not necessarily mean that they will be ready or willing to develop a relationship with you. Ultimately, it is your customers who decide whether or not you will have a genuine relationship.

Our work with many clients over the years has demonstrated conclusively that many apparently-loyal customers have functionally-based relationships with companies, relationships that are grounded in the provision of very good products at very attractive prices, through very convenient and accessible distribution channels. But such relationships are vulnerable; because as soon as a competitor develops a better product, offers better value for money, or more convenient locations, the business is lost.

What's the difference between a transactional or functional relationship such as this and a genuine customer relationship? What difference does it make whether or not consumers make an emotional connection with your business, so long as they buy your products? To understand why genuine customer relationships have always been and will continue to be the foundation of business success, we need to look at a snapshot of the past.

Over the past century, marketing has evolved from a production- oriented process to a customer-centric approach. Not so many years ago, the "if you build it, they will buy it" mentality ruled. Quite simply, that approach worked because there was a sufficiently high demand for virtually any product manufactured at that time that consumer uptake rates were quite high. As manufacturing processes became increasingly refined, merely delivering the goods was no longer enough. The "toolkit" approach to marketing came into vogue. Focusing on the four "P's" of product, price, place and promotion acknowledged that there were elements to be contended with beyond merely producing the goods and services. As the modern marketplace continued to develop through the second half of the 20th century, the marketing evolution continued with the result that customers became more demanding and informed. Businesses turned to customer service as a differentiating factor.

Interactions between employees and customers, in the form of customer service, became the route to a competitive advantage. Marketing, in its current form, has evolved to a state of mind, a "culture" rather than a department. To differentiate yourself from the competition by building genuine customer relationships, you need to permeate your business, from the CEO to the mail clerk, with the knowledge, skills and attitude they need to build genuine customer relationships. Here is where we return to the distinction between transactional or functional relationships and genuine customer relationships.

Transactional relationships involve the functional aspects of the interaction between your customers and your business: from producing a superior product, to the efficient delivery of that product to consumers, and all of the processes in between. Transactional relationships incorporate all of the vehicles used to create efficient and effective marketing opportunities. Direct mail, databases and e-commerce all contribute to the transactional relationship you have with your customers. There is nothing wrong with having such functional relationships. To the contrary, they are absolutely essential to the success of any commercial venture. But they are not, and should not be confused with, genuine customer relationships. Functional excellence in the provision of products and service is simply not sufficient to bond a customer to a company for life, to lead to that customer becoming an advocate.

The heart of genuine customer relationships is an understanding of what matters to your customers. It's an understanding of the role that emotions play in moving beyond a transactional relationship, and even beyond behavioural loyalty, to a relationship that involves a measure of emotional involvement by your customers. It's a recognition that how you make your customers feel is at least as important as what they buy from you and the prices they pay. In fact, we have come to the realization over many years of talking with thousands of customers on behalf of our clients that a great deal of what contributes to the long-term satisfaction of customers has absolutely nothing to do with the products we are selling or the prices that we are charging.

Customers who have a genuine relationship with a company have developed an emotional connection. Those customers willingly return to do business over and over again, not because they are members of a frequent-shopper program or because they are getting the lowest prices, but rather because of how they are made to feel. Too many businesses are obviously of the opinion that if they get the product right, keep prices low, and make it easy for customers to do business with them, they will be successful. All of these things are clearly important, but they are not enough to build genuine relationships. Such firms ignore the emotional connection with customers at their peril.

In upcoming issues, we'll offer insights and strategies for creating genuine customer relationships, and demonstrate the long-term payback that results from doing so.

If you have a view on any of the issues discussed here, why not add your comments to this article.

In the meantime, you can see some of our ideas explored in more detail in the paper 'E-Business at the Speed of Like', which looks at the results of a study by Affininet.com about US and Canadian consumer attitudes to the internet.
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