Trust, Value, and CRM are Inextricably Linked – No Different than Water is to Life!


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Researchers suggested that collaborative customer relationships can promote long-term value creation for both suppliers and customers. Under the customer value management ideals, the duration of value sharing is considered a manageable customer relationship performance metric. As supply firms generate value generating strategies and tactics, they must exchange these ideas with customers; to share in the benefits and to stabilize business relationships (Muthuraman, Sen, Gupta, Seshadri, & Narus, 2006). An optimal customer value management strategy may bond organizations and consumers for several months or even several years. However, lackadaisical customer value management may cause firms (suppliers and customers) to transition from a collaborative relationship to a transactional relationship (Muthuraman et al). Customer value management (collaborative or transactional) must be determined by the supplier management team. Collaborative relationships may also be appropriate for firms with similar visions and market strategies. While transactional relationships (supplier selling mode) may be appropriate for selling commodities; which can be influenced by competitors.

From a collaborative relationship standpoint, CRM may be enhanced through supplementing product offerings (Anderson & Narus, 1991). One of several product augmentation tools, as suggested by Anderson and Narus, is to “coordinate cost-reduction programs [which] can be implemented to dramatically pare the firm’s real costs of doing business”. Such a program may be worthy of supporting due to the fact that a collaborative relationship is a good platform for costs reduction and B2B e-commerce; and sends a positive signal to consumers that the product and service providing organization want to balance personal gain and value added processes as well as customer oriented benefits. However, this and similar programs are only successful when grounded in trust and value.

Trust and value are key ingredients for maintaining customer retention. Singh, Jayanti, Kilgore, Agarwal, and Gandarvakottai (2005) postulated that “trust is defined as an exchange partner’s expectation that a firm is dependable and can be relied on to deliver on its promises and is motivated by giving priority to the exchange partners’ best interests…Value is defined as an exchange partner’s assessment of the net contribution of benefits obtained from the core functions of a product or service compared with the costs involved in the acquisition and use of a product or service”. However, the argument can also be made that trust and value are important CRM components; that are achieved through leadership’s long-term investment in relationship management. As such, companies must be committed to leveraging quality account executives and marketing instruments to manage client relationships; maintain and use accurate and timely customer information; provide proactive and reactive responsiveness and attention; have candid dialogues and negotiations; be vigilant at setting expectations and meeting commitments; and provide hassle free service subsequent to product or service delivery.

Dr. Johnny D. Magwood
Northeast Utilities Service Company
V.P. Customer Experience & Chief Customer Officer; Northeast Utilities Service Company. J. D. Power Smart Grid Advisory Council; Chairman- Housing Authority Baltimore City; Next Generation Utilities Advisory Board; Utility Knowledge Customer Service Council; CS Advisory Council; Magistrate Judge Seletion Committee. Marketing Executive Council; Mechanical Engineer - The Johns Hopkins University; MBA - Loyola University of Maryland; DBA - University of Phoenix; Doctoral dissertation; Mergers and Acquisition: The Role of Corporate Executives' Relationships with Stakeholders


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