customer relationship

•          A relationship is a bond or connection between a firm and its customers.

•          It may be strong, weak or nonexistent.

•          It can be intellectual, emotional or both.

Two categories of relationships:

1.        Type

2.        Involvement

•          Continuum ranging from communal to exchange based.

•          Can online firms build emotional, social or psychological benefits into the exchange process?

•          Lack of personal interaction makes it difficult, but not impossible.

     Relationship Involvement

•          Defined as the degree to which a relationship is relevant to the consumer – the extent to which it relates to consumers’ values, interests, or needs.

•          Involvement is a function not only of product characteristics, but also of the purchase situation and the consumer’s personal needs.

Why do firms want relationships with customers?

The long-standing buyer-seller relationship might lead the customer to:

•          Anticipate the positive feelings from remaining loyal to the seller.

•          Trust that the seller will provide good value.

•          Feel that the brand represents who they are.

•          Promote the seller to friends, family and acquaintances.

•          Seek out and actively read the seller’s promotional material.

Two basic reasons why customer relationships increase profitability:

1. Costs of serving existing customers are lower.
2. Existing customers are willing to pay  higher prices.
3. Awareness
4. Exploration and Expansion
   1. Attraction
   2. Relationship Norms
   3. Trust
   4. Power Relations
   5. Satisfaction
5. Commitment
6. Dissolution

Why The Web is Unique at Creating Customer Relationships

1. Interactivity

–         Defined as the extent to which a two-way flow if communication occurs between the firm and the customer.

1. Individualization

–         Reflects the degree to which firm-customer interactions are tailored or customized to the individual user.