Relationships are wonderful things. In a competitive-collaborative [1] way, they really do make the world go round. And as visitors to this portal know better than most, talk of relationships with customers has been all the rage in business for the past 10 years. That is, businesses have talked on and on about them: In their marketing communications, in their annual reports and pretty much anytime they are in front of a journalist. But as we all know to our cost, few businesses have built relationships with their customers successfully. Not successfully from their customers' perspective that is.
According to researchers Veronica Liljander and Inger Roos, business to customer relationships are quite rare. In a study of relationships in automotive dealerships [2], they found that only about 5% of customers had anything like a relationship with their dealership and that was generally with a particular person at the dealership. And automotive retailing is quite a personalised business. What hope do the big banks, mobile telcos, or utilities have of building any sort of relationship with their customers. If evidence from our own experience, and that of friends and family is to be believed, absolutely none whatsoever.
In fact, it may be worse that that. The prospect of a relationship with a business may be downright confusing to customers. As evolutionary psychologist Dan Arielly describes in his new book Predictably Irrational [3], talking about relationships triggers the social side of our behaviour and comes with the expectation of things like shared goals, mutual trust, long-term commitment, value sharing and an absence of barriers to exit. The things that Liljander & Roos describe as the foundations of true relationships. The sort of long-lasting relationships we all recognise from friends and family.
In stark contrast, most companies only want to have a 'relationship' with their customers when it suits them. The moment value stops flowing to the company the relationship is over. This behaviour triggers the market side of our behaviour which is about pure economic exchange, not at all about relationships. These are what Liljander & Roos call spurious relationships. They are the sort of relationship that don't lead to any loyalty and which forego the profits that loyalty can bring.
As Arielly points out, all the research shows clearly that customers cannot both have a social and a market relationship with someone at the same time without being confused, let alone with a company. So if you can't have social and market-side relationships with customers at the same time, what should companies do? They are left with two core strategies [4]: Either they focus on building true relationships with valuable customers over the long-term, or they focus on managing all customers for value. If they opt for the social-side strategy, it comes with expensive social obligations. If they opt for the market-side strategy, it comes with more limited opportunities. Companies can't have their cake and eat it. They must decide. One way or the other. Unfortunately, most decide for the social-side rhetoric but offer a market-side reality. No wonder customers are confused.
What do you think? Are customers confused by companies unrequited relationship talk? Or do they know the score and are out looking for the best value they can get?
Post a comment and get the conversation going.
Graham Hill
Independent CRM Consultant
Interim CRM Manager