The Quality and Paradox of Relationship Marketing.

Jul-Sep 2016 edition of Masterpeice Magazine @ Masterpeice-ng.com

I once had a boss who lived the maxim “think outside the box”. Our bank planned to refresh the relationship marketing team and unsurprisingly everyone looked at the traditional route of cherry picking from competitors, but he differed and suggested instead that we focused on the physical goods market. After all, the aim of marketing according to Peter Drucker is to “know and understand the customer so well the product or service fits him and sells itself”. To achieve this the intelligence of a relationship team is required to relate with customers and provide firsthand knowledge of what fits the customer’s needs, tangible or intangible, and strive to satisfy those needs.

Relationship marketing paradigm relates to all industries but our concern in this article pertains to the service industry where physical encounter with the customer, human or virtual, is a “must” ingredient in the marketing process. Service firms actively engage, train, and renew their relationship management team as a critical strategy for achieving customer satisfaction and overall marketing goals. From the hotel staff, banking officer, the hospital worker, to aviation personnel, the expectations of the customer is about the same, unpredictable, dynamic, and frequently benchmarked against best practices elsewhere. The customer wants a service that is superior in his judgment to available alternatives, and relationship marketing facilitates the attainment of customers’ expectations.

Firms engage relationship officers (RO) to accentuate the service quality that customers receive. The RO have core deliverables; to develop, nurture, and entrench satisfaction, trust, and commitment with the customer, which are the essential ingredients that define the relationship quality between the customer and the service provider. To strengthen relationship quality, RO invest time, energy, and resources of the company in developing, horning and sustaining interpersonal relationships with the customer nesting on mutual disclosure, friendship, and common social identity. Little surprise you see RO at social events of their key customers. The assurance of relationship quality with the customer eventually evolves into customer loyalty and hopefully brand loyalty. 

A caveat is that relationship quality can only be effective if the core services offered to customers meet basic expectations. Research also shows that relationship quality moderates the negative influence of poor service delivery process, and that customers are likely to overlook a shoddy service delivery process provided the core quality of the service itself is passable.  What this implies is that the most important part of the marketing process is the assurance of non-compromise of the service or products’ core component and brand promise. Customers tend to tolerate and forgive slight shoddiness in the delivery process and or the extent of relationship quality but neither can moderate the impact of compromised product of service core quality. 

Take your barbing salon as an example. You are inclined to stick to the salon that cuts your hair exactly the way you like it even if the service delivery process (environment, pricing, timeliness, equipment, et al) is not at par with competition across the road. Similarly, at periods of financial crisis when safety of funds is uppermost in customer’s value preference, there would be flight to banks perceived as financially stable, regardless of the service quality. A hospital that consistently delivers the right prescription and treatment is likely to gain your confidence than one that has better state of the art equipment and service environment but delivers wrong prescriptions consistently. At the end, the core service components demanded by customer is the most important ingredient in service marketing which must however be complemented with efficient facilitation of a sound delivery process and relationship management.

Therefore, producing the right service components is a minimum and necessary requirement for meeting a brand promise. A sufficient condition that delivers the strategic differentiator entails the design of a robust delivery process and the accompanying relationship management architecture. Service firms spend a sizeable part of their budget to head hunt, train, nurture, and challenge RO to deliver on income generating assets and liabilities for the firm. The customers more often develop personal closeness and bond with the RO, close only to family members. The close relationship culminates into customer loyalty and superior returns for the firm. The tripod relationship between the customer, RO, and the firm generates relational challenges of situating customers’ allegiance. Is it with the RO or with the service firm? Here lies the paradox of relationship marketing.

Interpersonal interaction, information sharing, and common social identify develops out of the relationship building process that elevates the otherwise business ties between the customer and RO to a level of personal friendship and bond. When this strength of relationship quality develops, there is potential for incremental value to the business and paradoxically a latency for loss of potential business for the service firm. Anecdote suggests that customers owe their fidelity to RO than the service company. Firms have lost market share when RO leave to join competitors because of customer’s willingness to move their relationships along with the RO to show their affinity and loyalty to RO.

It is a frustrating paradox for service firms, which require delicate handling. It is truly challenging when your once valued assets (RO) threaten and imperil the very existence of the business. One of the panaceas for this paradox is that service firms must strive to build processes and service architecture that facilitate the performance of the functions of the service firm in a manner not easily replicable. The absence of these unique processes and architecture in a competitor’s environment is likely to impede the performance of departing RO. Service architecture does not only imply the equipment required to deliver the core service, but intrinsically include policies and procedures that make the work flow easier. It also include the embedded value system that enables a seamless workflow devoid of gaps. An entrenched service culture of this type is not easily replicable and RO understand clearly that they may not be able to deliver equivalent value should they depart.

Most importantly however, is the human resource angle where the firm must work at creating an entrepreneurial environment. Each employee must feel a part of the long-term team and be able to assess his long-term career path and progression. The best hands in a service firm on the average depart if they are unable to put in focus where they stand in the medium to long term with an organisation. Therefore, crafting a good relationship-marketing program starts like most other organisational activities from the organisational value, culture, and down to the people factor.