Relationships are wonderful things. In a competitive-collaborative 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, 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, 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: 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
Good to see someone writing sense on this one. The relationship hype has gone on too long. Most ‘relationships’ are essentially one-sided: companies assume they exist and pepper ‘their’ customers with unwanted messages – failing to recongnise the disconnect between the idea of ‘owning the customer’ (dreadful concept!) and having an adult relationship (which is what most customers might want, most of the time).
Like everything else in marketing and branding these days, any relationship has to be on the customer’s terms.
The problem highlighted is at its greatest with B2C markets, where it is usually difficult to be in personal direct contact with the customer. Good B2B marketng typically involves more or less regular face-to-face or other contacts, and is, therefore, simpler – but still cannot be presumed upon.
Graham
I learned along ago not to use the “R” word with customers because they simply laugh at it when it’s used in the context of a business. “That’s not a relationship” they say; and some follow up with the devestating “to me they’re just a bill.” Customers know with whom they have genuine relationships, and for the most part they are people.
But, let’s not confuse their aversion to call them relationships with an absence of such relationships. As we well know, customers do develop strong, lasting emotional connections with companies and brands. Whether we call them relationships or not, they do exist. As you suggest, the challenge for companies is to determine with which customers it is possible to create such connections. For those who are unlikely to get that close, the best we can hope for maybe is to deliver an effective and attractive value proposition that will have them continuing to buy (retention) and hope that over time we can convert some of them to a closer emotional connection.
Jim Barnes
Jim
Wise words indeed.
But they also raise a question about what exactly customers have a ‘connection’ with. Is it the company, or its products. Or is it to the dream that they represent. Harley Davidson is a great example. Harley Davidson motorcycles themselves are not that good. They are low tech, they are heavy and they still break down too often. But the dream of rugged men overcoming the odds, of riding open roads with the wind in your hair, of freedom from the boredom of everyday life is enormously appealing. But the dream is not reality. It is created in the minds of generations of Harley riders and maintained through dozens of peer-organised HOG events. Harley Davidson the company also attends these events, but their presence is only a sideshow. The Harley brand really has been created by generations of riders for future generations of riders. It is the stuff of legend.
Other companies are not so lucky. They mostly sell dull products that are much like all their competitors products. Retention through habitual buying is all that many of them can hope for. And they support that through a broad range of tactical marketing activities. Should they invest money in developing customer loyalty? It depends. Particularly on what the payback from the investment is likely to be. And here is a problem in unsubstantiated talk about developing emotional connections. Where’s the payback? If you can’t show that there will be a payback from developing emotional connections. If you can’t identify the retained customers who should be targeted for these activities. And if you don’t know what activities you need to do and what they will cost over time, then you should be very careful before you squander scarce resources on what is just a marketer’s dream.
Fulfilling customers’ dreams can be very lucrative. But fulfilling marketers’ dreams very rarely turn a profit.
Graham Hill
Independent CRM Consultant
Interim CRM Manager