Service

Management
Building Customer Relationships

Over the past few decades firms have shifted from a

transaction focus to a relationship focus in their

marketing efforts. Customers have become partners

and cocreators as firms have made “long-term

commitments to maintaining those relationships with

quality, service, and innovation.”

The Evolution of Customer
Relationships
Firms’ relationships with their customers, like other social

relationships, tend to evolve over time. Scholars have

suggested that marketing exchange relationships between

providers and customers often have the potential to evolve

from strangers to acquaintances to friends to partners.

 tomers as Strangers
Cus

Strangers are those customers who have not yet had any
transactions (interactions) with a firm and may not even
be aware of the firm. At the industry level, strangers may
be conceptualized as customers who have not yet entered
the market; at the firm level, they may include customers
of competitors.
 Customers as Acquaintances

Once customer awareness and trial are

achieved, familiarity is established and the
customer and the firm become acquaintances,
creating the basis for an exchange
relationship. A primary goal for the firm at
this stage of the relationship is satisfying the
customer.
Customers as Friends

As a customer continues to make purchases from a firm

and to receive value in the exchange relationship, the

firm begins to acquire specific knowledge of the

customer’s needs, allowing it to create an offering that

directly addresses the customer’s situation. The

provision of a unique offering, and thus differential

value, transforms the relationship from acquaintance to

friendship.

 Customers as Partners

As a customer continues to interact with a firm, the

level of trust often deepens and the customer may
receive more customized product offerings and
interactions. The trust developed in the friendship
stage is a necessary but not sufficient condition for a
customer–firm partnership to develop.
 The Goal of Relationship Marketing
The discussion of the evolution of customer relationships demonstrates

how a firm’s relationship with its customers might be enhanced as

customers move further along this relationship continuum. As the

relationship value of a customer increases, the provider is more likely to

pursue a closer relationship.

Benefits for Customers and Firms
Both parties in the customer–firm relationship can benefit from

customer retention. That is, it is not only in the best interest of the

organization to build and maintain a loyal customer base, but

customers themselves also benefit from long-term associations.

 Benefits for Customers
Assuming they have a choice, customers will remain loyal to
a firm when they receive greater value relative to what they
expect from competing firms. Value represents a trade-off
for the consumer between the “give” and the “get”
components.
 Confidence Benefits

Confidence benefits comprise feelings of trust

or confidence in the provider along with a
sense of reduced anxiety and comfort in
knowing what to expect.
 Social Benefits
OVER TIME, CUSTOMERS DEVELOP A SENSE
OF FAMILIARITY AND EVEN A SOCIAL
RELATIONSHIP WITH THEIR SERVICE
PROVIDERS. THESE TIES MAKE IT LESS LIKELY
THAT THEY WOULD CONSIDER SWITCHING,
EVEN IF THEY LEARN ABOUT A COMPETITOR
THAT MIGHT HAVE BETTER QUALITY OR A
LOWER PRICE.
Special Treatment Special treatment includes being given
a special deal or price, getting
Benefits preferential treatment, or perhaps
receiving the “benefit of the doubt”
from the service provider
 Benefits for Firms Economic Benefits
The benefits to organizations of
maintaining and developing a
loyal customer base are
numerous. In addition to the One of the most commonly cited
economic benefits that a firm economic benefits of customer
receives from cultivating close retention is increased purchases over
relationships with its customers, a time; in many industries customers
tend to spend more each year with a
variety of customer behavior
particular relationship partner
benefits and human resource
management benefits are also
often received.
CUSTOMER
BEHAVIOR BENEFITS

The contribution that loyal customers make to a service

business can go well beyond their direct financial impact on
the firm. Maybe the most easily recognized customer behavior
benefit that a firm receives from long-term customers is the
free advertising provided through word-of-mouth
communication. When a product is complex and difficult to
evaluate and when risk is involved in the decision to buy it—as
is the case with many services—consumers often look to
others for advice on which providers to consider. Satisfied,
loyal customers are likely to provide a firm with strong word-
of-mouth endorsements, both via face-to-face communication
and social media.
Human Resource Management
Benefits
Loyal customers may also provide a firm with
human resource management benefits. First,
loyal customers may, because of their experience
with and knowledge of the provider, be able to
contribute to the coproduction of the service by
assisting in service delivery; often the more
experienced customers can make the service
employees’ job easier.
Relationship value of a
customer
is a concept or calculation that looks at customers from the
point of view of their lifetime revenue and/or profitability
contributions to a company. This type of calculation is needed
when companies start thinking of building long-term
relationships with their customers.
The Customer Is Not Always
Right
The assumption that all customers are good
customers is very compatible with the belief that
“the customer is always right,” an almost
sacrosanct tenet of business. Yet any service
worker can tell you that this statement is not
always true, and in some cases it may be
preferable for the firm to not continue its
relationship with a customer.
 The Wrong Segment

A company cannot target its services to all customers;

some segments are more appropriate than others. It
would not be beneficial to either the company or the
customer for a company to establish a relationship with
a customer whose needs the company cannot meet
 NOT PROFITABLE IN THE
LONG TERM

organizations will prefer not to have longterm

relationships with unprofitable customers.
Some segments of customers will not be
profitable for the company even if their needs
can be met by the services offered.
DIFFICULT CUSTOMERS
THE CUSTOMER IS NOT ALWAYS RIGHT.
NO MATTER HOW FREQUENTLY IT IS SAID,
REPEATING THAT MANTR A DOES NOT
MAKE IT BECOME REALITY, AND SER VICE
EMPLOYEES KNOW IT
Relationship Endings

Relationships end in different ways—depending on

the type of relationship in place. In some situations, a
relationship is established for a certain purpose
and/or time period and then dissolves when it has
served its purpose or the time frame has elapsed.
 thank you for listening!

God bless!

submitted by: SHEINA GASPAR

AND
EMILY BALUBAR

submitted to: MA'AM XYRYLLE PILAR