2008 - Marketing Educators' Association

RELATIONSHIP MARKETING: A CONCISE CONCEPTUAL FRAMEWORK FOR THE CLASSROOM
E. K. Valentin, Weber State University, Davis Campus, Goddard School of Business & Economics,
2750 North University Park Blvd., MC103, Layton, UT 84041-0103; evalentin@weber.edu
Relationship marketing (RM) has been credited with
greatly enhancing marketing's effectiveness in
creating customer and shareholder value. Its aim is
to forge relationships between the firm and its
customers so as to add value beyond that of
transactional exchange. Accordingly, customer
lifetime value (CLV), rather than profit per
transaction, is the proper criterion for evaluating RM
initiatives.
Classroom experience suggests that RM strategies
and dynamics can be examined instructively and
expeditiously along two dimensions, namely (1) a
symbiotic/predatory dimension, and (2) a customer
dependency dimension. At the symbiotic extreme,
buyers and sellers benefit commensurately from
their relationship. At the opposite extreme, benefits
accrue predominantly to the seller.
Customer dependency, which may stem from the
likes of switching costs and network externalities,
affect the viability of particular RM alternatives.
When customer dependency is low, relationships
between sellers and buyers survive only while
sellers create more customer value than customers
can realize from transactional exchange. Customers
who feel exploited will sever relationships because
they can do so without paying a heavy price. Hence,
sellers must court customers and cultivate trust by
consistently delivering what they promise and
resisting exploitive urges.
When buyer dependency is high, sellers enjoy
strong, exploitable bargaining positions. In the
marketing literature, RM usually is portrayed as a
mutually beneficial, win-win exchange. Yet,
exploitive RM opportunities abound. Of course, via
patent and copyright laws, society has created some
exploitable market imperfections intentionally to
promote innovation.
Manipulative exploitive RM is pursued under the
guise of cultivating mutually beneficial relationships,
but reflects little regard for its targets. Customer
relationship management (CRM), which sometimes
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is equated with RM per se, has provided critics with
abundant examples of manipulative RM. CRM relies
heavily on databases that often contain extensive
information about current customers and promising
prospects. Beyond contact information, such
databases commonly identify vulnerable customers
and include particulars that can be used to
manipulate them. Prospects are vulnerable when
age, ignorance, strife, addiction, or the like impair
their decision making and render them easy prey.
For example, some casino executives boast of
having gathered so much personal information on
prime patrons that, per individual, they can readily
determine which of several incentives is most likely
to lure each customer into returning and wagering
more. While CRM's advocates maintain that people
generally welcome CRM initiatives and benefit from
them, CRM's targets frequently see themselves less
as partners in a mutually beneficial long-term
relationship than as perpetual victims of intrusion
and predation.
Structural exploitation is facilitated by customer
dependency. It entails exercising bargaining power
with little restraint or concern for the exchange
partner. It has been equated with hostage taking.
Customers who are completely satisfied with a
product or a vendor often become apostles, in a
marketing sense, whose loyalty extends not only to
making repeated purchases, but also to sharing their
favorable opinions about the product or the company
with others. Hostages, in contrast, are dissatisfied
customers who cannot switch readily because
switching costs are prohibitive or no satisfactory
alternatives exist. They bolt at the first opportunity.
Although firms generally prefer apostles to hostages,
taking hostages can be profitable. Indeed, Microsoft
may have more hostages than apostles.
Buyer dependence may change over the course of a
relationship. When it intensifies, sellers may choose
to maintain symbiotic win-win relationships, or they
may move toward predation as their power over
buyers increases.