Relationship Marketing :Relationship Marketing Rob Morgan Culverhouse College of Commerce & Business Administration University of Alabama


Relationship Marketing :Relationship Marketing What is relationship marketing? Satisfaction vs. Commitment & Trust The 3rd variable in services Outcomes of achieving commitment, trust, and comfort How do we generate commitment, trust, and comfort? The Moneyball phenomenon Multiple constituencies Research opportunities


What is Relationship Marketing? :What is Relationship Marketing? "Relationship marketing is attracting, maintaining and - - in multi-service organizations - - enhancing customer relationships" Berry 1983


What is Relationship Marketing? :What is Relationship Marketing? "Relationship marketing concerns attracting, developing, and retaining customer relationships." Berry & Parasuraman 1991


What is Relationship Marketing? :What is Relationship Marketing? "Relationship marketing refers to all marketing activities directed toward establishing, developing, and maintaining successful relational exchanges." Morgan & Hunt 1994


The Firm’s PotentialMarketing Relationships :The Firm’s PotentialMarketing Relationships


Commitment & Trust vs. Satisfaction :Commitment & Trust vs. Satisfaction Satisfaction is very unstable Satisfaction is a poor predictor of outcomes Commitment & Trust are very stable Commitment & Trust are good predictors of outcomes


Outcomes of Commitment & Trust :Outcomes of Commitment & Trust Retention Positive Word of Mouth Cooperation Ease of Complaining Willingness to Complain Uncertainty Functional Conflict Share of Wallet New Product Adoption


How do we generateCommitment & Trust? :How do we generateCommitment & Trust? Economic Content Resource Content Social Content


Understanding How Customer Relationships Develop :Understanding How Customer Relationships Develop Relationship Attitudes Relationships’ Economic Content Relationships’ Social Content Relationships’ Resource Content Attitudinal Outcomes Behavioral Outcomes


Building Relationships :Building Relationships Relationship Attitudes Relationships’ Economic Content Relationships’ Social Content Relationships’ Resource Content Attitudinal Outcomes Behavioral Outcomes First, let’s look at the fundamental drivers of relationships, the economic, resource, and social contents.


Economic Content :Economic Content The purely economic costs and benefits of participating in the relationships Examples: Service fees Interest rates Costs saved due to superior management of customer’s wealth


Resource Content :Resource Content Benefits gained that match/complement the needs or resources held by the partner. Examples: Professional competence Comprehensive financial services Business development assistance Convenience (time as a resource) Tangibles Brand equity


Social Content :Social Content Psychic benefits gained due to feelings of compatibility -- similar values, goals, etc. -- that result in a feeling of comfort. Examples: Relationships with employees Fit of firm’s mission and actions with customers’ values High quality communication programs


Building Relationships :Building Relationships Relationship Attitudes Relationships’ Economic Content Relationships’ Social Content Relationships’ Resource Content Attitudinal Outcomes Behavioral Outcomes Next, let’s look at the ultimate outcomes of relationships, which impact firm’s business performance.


Attitudinal Outcomes :Attitudinal Outcomes Customer beliefs that result from relationship dynamics, these attitudes can go on to impact behaviors and the development of even stronger attitudes. Examples: Uncertainty Brand ambivalence Brand equity Brand personality


Behavioral Outcomes :Behavioral Outcomes Partner behaviors and intended behaviors that directly or indirectly impact the firm’s performance. Examples: Retention Positive word of mouth Complaining Willingness to try new/other services


Building Relationships :Building Relationships Relationship Attitudes Relationships’ Economic Content Relationships’ Social Content Relationships’ Resource Content Attitudinal Outcomes Behavioral Outcomes What’s missing? Intermediary, relationship attitudes. These attitudes are built from the particular content of the relationship and go on to impact critical outcomes!


The Moneyball Phenomenon :The Moneyball Phenomenon


The Moneyball Phenomenon :The Moneyball Phenomenon What factors make for a successful baseball player? Traditional Wisdom: - 60 yard dash time - RBIs - Batting average


The Moneyball Phenomenon :The Moneyball Phenomenon What factors make for a successful baseball player? Traditional Wisdom: - 60 yard dash time - RBIs - Batting average Sabermetrics indicates: - Slugging average (total bases/at bats) - On-base percentage


Moneyball and Relationship Marketing :Moneyball and Relationship Marketing Example: Retail Banking Traditional wisdom: rates, fees, and calling the customer by name Research indicates: responsiveness, reliability, and brand equity


Multiple Constituencies Approach :Multiple Constituencies Approach Premise: Individuals develop commitment to an organization through the commitments that develop first to individuals or groups of individuals. Organizations do the same thing, as a collection of individuals.


Multiple Constituency Approach :Multiple Constituency Approach If we can understand who these “constituencies” are, and how these constituency commitments develop, and their unique contribution, we can better manage the overall relationship.


Research Opportunities :Research Opportunities How are high levels of trust achieved quickly? How do economic, resource, and social content vary in importance over the relationship life cycle? Implications for outsourcing?