Building customer relationships: an inventory of

service providers' objectives and practices

Cindy Claycomb
W. Frank Barton School of Business, Wichita State University, Wichita,
Kansas, USA
Charles L. Martin
W. Frank Barton School of Business, Wichita State University, Wichita,
Kansas, USA

Keywords benefit from greater sales volumes,

Relationship marketing, Introduction better operating efficiencies, positive
Customer satisfaction, Service
The study and practice of customer-seller word-of-mouth publicity, improved customer
Abstract exchanges have undergone major changes in feedback, and decreased marketing expenses
A study of 205 US commercial the field of marketing. Historically, the (Buttle, 1996; Reichheld and Sasser, 1990;
service providers, representing 31
exchanges were often viewed as arm's length Vavra, 1992).
two-digit SIC codes, identified
The relationship marketing perspective
companies' customer relationship- and adversarial, pitting the customer against
building objectives and practices. the seller in a battle in which each sought to provides the basis for the study of building
Of 42 possible relationship-building maximize immediate returns, while and enhancing relationships with customers,
objectives, the four rated as top
minimizing costs. Growing a business was whether it is couched in terms of
priorities were: encouraging customer/client/guest/patient relations,
customers to think of the firm first thought of in terms of acquiring new
when considering a purchase; customers with aggressive marketing and customer retention, relationship marketing,
providing better service; sales efforts, by offering new goods and relationship management, goodwill,
encouraging customers to speak
services that appealed to a different target customer loyalty, partnering,
favorably about the firm; and after-marketing, defensive marketing, or
encouraging customers to trust the market, or by expanding geographically with
something else. Whatever it is called, the
firm. Answers to open-ended, additional locations.
outcome is the recognition that stronger
exploratory questions revealed 18 The perspective that gained momentum in
categories of relationship-building relationships with customers result in a
the 1980s, however, was that, if marketing
initiatives. The findings suggest number of competitive advantages.
that ``customer relationship- exchanges were developed into long-term,
Despite the growing volume of literature in
building'' means different things to mutually satisfying relationships between
different people and that practices customers and firms, this could be a strategic
support of relationship building and the
to build such relationships vary espoused (anecdotal) stories by its
asset for companies (Webster, 1992). The
considerably. By inventorying the proponents, marketing ``relationship''
range of relationship-building interest in ``relationship marketing'' has
concepts seem to mean different things to
objectives, quantifying their continued through the 1990s and into the new
different writers and to different
priority levels, and identifying millennium, prompting prominent practitioners (Duffy, 1998; Harker, 1999).
specific practices used to build
marketing scholars to dub the movement as a Depending on the individual, ``building
customer relationships, a greater
understanding of current practices ``paradigm shift'' (Gro È nroos, 1994; Kotler, customer relationships'' can imply
was achieved. Thus, the findings 1991, 1995) and leading one team of textbook something about interdependencies or
promise to benefit researchers, authors to conclude that no other marketing mutual interests, repeat patronage, loyalty,
practitioners and consumers in
topic has been written about as much during emotional sentiments (``warm fuzzies''),
terms of knowledge development,
prescriptions for success, and the 1990s (Mowen and Minor, 1998). personalized treatment, interpersonal
enhanced value and satisfaction, The new paradigm asserts that astute rapport, targeted ``one-to-one''
respectively. marketers should view existing customers as communications, after-sale service, customer
a tremendous growth opportunity. Today, satisfaction, word-of-mouth, or doing
these customer-seller relationships are something long-term, to name a few. In other
Research for this paper was recognized as pervasive, inescapable and words, the practices of building customer
partially funded by Wichita highly interdependent, with ties between relationships are interwoven with the
State University through the consumers and businesses vital to the
Department of Marketing consequences of those relationships, because
and Entrepreneurship and a interests of both parties. Consumers benefit it is not precisely clear just what a
W. Frank Barton School of in terms of enhanced value, better quality, ``relationship'' with a customer is. Not
Business summer research and increased satisfaction with their surprisingly, little research has been
grant. purchases (US Department of Commerce, conducted to find out what ``relationship
Marketing Intelligence & 1994; File and Prince, 1993), while firms building'' means in a services marketing
Planning
19/6 [2001] 385±399
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[ISSN 0263-4503] http://www.mcbup.com/research_registers http://www.emerald-library.com/ft

[ 385 ]
Cindy Claycomb and
Charles L. Martin
Building customer
relationships: an inventory of
service providers' objectives
and practices
Marketing Intelligence &
Planning
19/6 [2001] 385±399
[ 386 ]
context or what service firms systematically
do to build relationships with customers. An
inventory of relationship-building objectives
and practices is needed to sharpen the
discussion and evaluate the arsenal of
relationship marketing practices currently
in use. In short, the purpose of this article is
to investigate what relationship-building
means to practitioners and what they do to
build relationships with customers.
Background
In recent years, an increasing number of
businesses have recognized the benefits of
establishing and nurturing ongoing
relationships with their customers. Many
have begun to shift their emphasis from
discrete transactions toward shaping longer-
term, mutually beneficial exchange
relationships. Often referred to as
``relationship marketing'' or ``relationship
management,'' the foundation of this rapidly
emerging business philosophy is the belief
that strengthening ties with existing
customers heightens customer satisfaction
and businesses' abilities to serve customers.
This avoids the high costs both parties might
otherwise experience in the search for new,
acceptable exchange partners. Thus, one-shot
purchase transactions with limited
profitability are transformed into continuous
strings of repeat purchases with potential for
greater long-term profitability (Arndt, 1979;
Dwyer et al., 1987; Jackson, 1985; Levitt, 1986;
Reichheld and Sasser, 1990; Sheth and
Parvatiyar, 1995; Vavra, 1992).
The value of customer relationships is
particularly noteworthy in the service sector,
for a variety of reasons. First, because
services are intangible, customers often have
little to evaluate prior to making a purchase
commitment. The service provider may be
the most tangible aspect of the service and,
in the eyes of customers, may be equated
with the service itself. Customers'
perceptions of the quality of the relationship
with the service provider may be
commensurate with the quality of the service
itself. Second, the difficulty of evaluating
services prior to making purchase
commitments often means that customers
must rely on the credibility of service
providers and their prior experiences with
them to understand whether the promised
service will meet their expectations. That is,
customers generally do not purchase
services, per se, but promises of services. A
strong, healthy relationship between
customers and service providers engenders
the trust that is necessary for customers to
commit to the service. Similarly, because it is
often not possible to remove defective
services before they reach customers, a
strong relationship often helps to recover
from inevitable mishaps. Customers trust
service providers to take whatever corrective
actions are necessary to ensure quality
service and preserve the relationship. Next,
the production of many services requires
that customers and service providers
interact with one another. Professional
services, in particular, require a high degree
of interaction. If rapport fails to materialize
or if the relationship is otherwise strained,
the quality of the interaction and the
resulting service can suffer. Finally, many
services are somewhat discretionary in the
sense that customers can perform them
themselves. For example, do-it-yourselfers
often tackle their own income tax
preparation, housework, lawnwork, and auto
repair rather than seek the help of
professionals. When customer relationships
are strong, however, customers may be less
inclined to perform the services themselves
and may be quite hesitant to ``fire'' service
providers they like and trust. For all of these
reasons, customer relationships are critical
to the success of service firms.
In an analysis of over 100 service
companies, Reichheld and Sasser (1990)
confirmed the value of customer
relationships in the service sector. They
found that, the longer a customer stays with
a firm, the more profitable the relationship
to the firm. In all cases in the study, the
profitability of the customer increased
substantially in the second year and the
years thereafter. Specifically, customer
purchases rose and company operating costs
(associated with establishing and servicing
new customers and accounts) declined after
the first year. Although Reichheld and Sasser
found that the typical service firm loses
about 20 per cent of its customers annually,
those that can decrease their customer
defection rates by 5 per cent (e.g. from 20 to 15
per cent) could increase their profits from 25
to 85 per cent, depending on the type of
company. These revealing findings have
prompted service companies to develop and
implement marketing efforts aimed at
establishing and strengthening ties with
customers.
The study
Our investigation attempted to understand
what customer relationship-building
means to service providers and what
practices/programs service organizations
Cindy Claycomb and
Charles L. Martin
Building customer
relationships: an inventory of
service providers' objectives
and practices
Marketing Intelligence &
Planning
19/6 [2001] 385±399
use to develop and maintain relationships
with customers. Data reported here are
based on the ratings and comments offered
by 205 marketing managers in response to
three duplicate waves of a mail survey sent to
1,100 potential respondents (19 per cent
response rate). The respondents represent
205 commercial service firms from
throughout the USA and from 31 two-digit
SIC codes.
One part of the survey asked respondents
to rate their priority level of 42 possible
objectives for building customer
relationships. The list was gleaned from an
extensive literature review of more than 300
trade articles describing anecdotal accounts
of relationship-building practices and a
series of qualitative personal interviews with
83 service providers.
Another part of the survey was much more
exploratory, using an open-ended question to
ask respondents to list and describe the
customer relationship-building practices they
used in their organizations. Here, our
research goal was not to quantify precisely
the frequency with which each practice is
used, but to identify the range of practices
that tend to be top-of-mind and likely
formalized within the surveyed organizations.
Therefore, the findings should be interpreted
with some degree of caution, recognizing that
most surveyed firms probably utilize more
relationship-building practices than those
they articulated (this limitation is discussed
further in the ``Conclusions'' section).
Research findings and discussion
Relationship-building objectives
Learning what service providers' specific
objectives are for ``building customer
relationships'' provides some indication of
what the phrase means to them, and leads to
potentially valuable insights as to their
motivations for doing what they do to build
customer relationships. Consequently,
respondents were asked to rate 42 possible
objectives on a scale ranging from one (``very
high or top priority'') to seven (``not a priority
at all''). Rankings, mean ratings, and
standard deviations are listed in Table I.
Although the ratings clearly suggest that
building relationships with customers
means different things to different
marketing managers, it is equally clear that
very few of the respondents would question
the wisdom of doing so. The respondents
viewed the potency of relationship-building
as multifaceted, capable of addressing an
array of desirable marketing and service
objectives. Recognizing the broad potential
of relationship-building, it is not surprising
that no full consensus emerged. Still, more
than 80 per cent of the respondents assigned
high priorities (i.e. rating of one or two) to
the first seven objectives listed in Table I.
These seven items indicate that most
marketing managers expect relationship-
building programs to improve customers'
memory of the business, enhance customer
service, increase the likelihood of
customers spreading positive word-of-
mouth about the company, build customer
trust in the company, and enhance
customers' perceived value and enjoyment
of conducting business with the firm.
Relationship-building practices
Our next step in the study was to identify
practices used by firms to establish and
nurture relationships with customers.
Although our efforts to inventory the range
of relationship-building practices used by
service providers resulted in a list of more
than 900 specific tactics and myriad hybrid
combinations, the multitude of practices was
collapsed into 18 categories of initiatives ±
most having to do with the relationship
between customers and the organizational
entity as a whole, between customers and
contact personnel, or between customers and
products (as shown in Figure 1). A smaller
number of service providers commented on
the importance of relationship linkages
between the organization and customer-
contact personnel, suggesting that employees
are likely to treat customers the way they are
treated by the organization. A few mentioned
tactics or programs pertaining to the
relationships between customers and other
customers, recognizing that customers can
influence the service expectations,
experiences, and evaluations of other
customers. These 18 categories of
relationship-building practices are described
in greater detail in the sections that follow,
beginning with those that were most
frequently mentioned and proceeding to
those less frequently mentioned.
Continuity of communications
Most service providers seem to subscribe to
the principle that customers remember
organizations that remember them. Thus, the
most popular relationship-building practice
seems to be the avoidance of extended
periods of time during which customers are
not contacted (Furlong, 1993; Lindgreen and
Crawford, 1999). This was mentioned by more
than 50 per cent of the survey respondents.
The types of contacts mentioned varied
greatly and involved both personal and
non-personal media. Examples include the
following: company newsletters to keep
[ 387 ]
Cindy Claycomb and Table I
Charles L. Martin Descriptive statistics for objectives for establishing and nurturing relationships with customers
Building customer
relationships: an inventory of Standard
service providers' objectives
and practices Ranking Objective Mean deviation
Marketing Intelligence & 1 Encourage our customers to think of us first when considering a purchase 1.71 1.39
Planning
19/6 [2001] 385±399 2 Provide better service to our customers 1.75 1.29
3 Encourage our customers to speak favorably about us 1.80 1.42
4 Encourage our customers to trust us 1.84 1.47
5 Encourage our customers to enjoy doing business with us 1.89 1.36
6 Add value to what our customers receive from us 1.96 1.36
7 Encourage our customers to refer prospective customers to us 2.01 1.46
8 Help our customers to feel appreciated for doing business with us 2.14 1.41
9 Encourage our customers to be honest with us 2.23 1.46
10 Encourage our customers to purchase a wider range of our products and
services 2.28 1.58
11 Make our business more appealing to prospective customers 2.32 1.53
12 Encourage our customers to buy more frequently from us 2.35 1.57
13 Encourage our customers to buy in greater volume from us 2.43 1.62
14 Encourage our customers to appreciate the quality of our products and
services 2.45 1.45
15 Encourage our customers to buy solely from us, and not from our competitors 2.48 1.48
16 Help our customers to be better informed about our company 2.50 1.37
17 Help our customers to feel welcome in our facility 2.55 1.94
18 Help our customers to be more effective partners when working with us 2.60 1.48
19 Encourage our customers to enjoy interacting with our employees 2.61 1.51
20 Give us the opportunity to learn more about our customers 2.68 1.41
21 Encourage our customers to be receptive to trying new products and services 2.78 1.58
22 Help our customers to know what to expect from us 2.80 1.33
23 Encourage our customers to cooperate with us 2.86 1.53
24 Encourage our customers to communicate more frequently with us 2.98 1.34
25 Encourage our customers to communicate more frankly with us 2.98 1.48
26 Encourage our customers to accept changes in our prices 3.06 1.41
27 Encourage our customers to be more dependent upon us 3.09 1.55
28 Encourage our customers to view us as a socially responsible company 3.12 1.78
29 Encourage our customers to understand our business well enough so that they
may offer feasible suggestions for improvement 3.34 1.69
30 Discourage our customers from being too price-sensitive 3.40 1.66
31 Encourage our customers to pay closer attention to our promotional messages 3.44 1.62
32 Encourage our customers to accept changes in our operating policies and
procedures 3.49 1.57
33 Encourage our customers to forgive us for our occasional mistakes 3.51 1.72
34 Encourage our customers to upgrade to our premium line of products and
services 3.67 1.88
35 Encourage our customers to be friendly to our employees 3.78 1.75
36 Encourage our customers to be patient 3.78 1.62
37 Discourage our customers from comparing us with competitors 4.24 1.72
38 Encourage our customers to play more active roles in providing portions of the
service themselves 4.31 1.78
39 Encourage our customers to interact well with other customers on the
premises 4.33 2.07
40 Encourage our customers to help acclimatize other customers to our facility 4.59 1.92
41 Decrease our reliance upon new customers 4.70 1.82
42 Encourage our customers to spend more time in the business facility 5.07 1.70
Notes: 1 = ``very high or top priority'', 7 = ``not a priority at all''; n = 205

customers informed about updated representatives in the field calling on

capabilities, new products, new people,
marketing trends, etc.; regularly scheduled
personal letters and telephone calls; targeted
direct mailers; management and sales
[ 388 ]
customers; mass media advertising designed
to stimulate telephone calls about the firm's
offerings; open houses for clients; attendance
at trade shows and conferences in which
Cindy Claycomb and
Charles L. Martin
Building customer
relationships: an inventory of
service providers' objectives
and practices
Marketing Intelligence &
Planning
19/6 [2001] 385±399
Figure 1
Customer relationship-building practices and linkages
clients participate; and quarterly and annual
user conferences.
In addition to keeping the service
organization ``top-of-mind,'' ongoing contact
with customers positions the organization as
a valuable resource for them, and as a leader
ready to serve and convenient to contact. The
longer the typical time period between
purchase and repurchase, the more
important contact between sales seems to be.
However, enhancing the effectiveness of the
communications seems to involve more than
just frequency per se. Several service
providers recognized the importance of
communications between sales efforts, for
example: ``Customers get tired of seeing us if
the only time they do is when we want to
make a sales pitch.'' Relationship-building
contacts involve following up on past sales to
ensure that promised benefits have
materialized, checking to see if customers'
needs, interests or circumstances have
changed, recognizing important events or
celebrations in customers' lives (e.g. birthday
and anniversary cards), passing along helpful
information, or just saying ``hello.''
Another key to enhancing the impact of
continuous communications is to make them
meaningful to customers. Creative hype may
catch prospects' attention and entice them
into a relationship, but helpful information
nurtures the relationship and further
enhances the credibility of the service
provider (Fisher, 1998). Newsletter
[ 389 ]
Cindy Claycomb and
Charles L. Martin
Building customer
relationships: an inventory of
service providers' objectives
and practices
Marketing Intelligence &
Planning
19/6 [2001] 385±399
[ 390 ]
proponents in particular subscribed to this
philosophy.
Finally, a number of service providers
believed that the effectiveness of the
communications is enhanced when the
process is interactive (Murphy, 1996).
Obviously, personal contact lends itself to
engaging customers in dialogue, but less
personal forms of communication can invite
interactivity too. For example, newsletters,
direct mail pieces, and trade advertisements
can express the company's willingness to
respond to customers' questions, encourage
customers to fill out reply cards to receive
additional information or surveys to help the
company assess customer needs, invite
customers to call or visit their store, log-on to
the company's Web site, and so on.
Service quality
Although promises of quality may attract
customers, service providers frequently
expressed the belief that delivery of quality is
essential to building and maintaining
customer relationships. Delivering on
promises is the essence of mutually
satisfying service relationships (Bitner,
1995). Service quality refers to the
consistency with which customers'
expectations are met and the general
superiority of the service relative to that of
the competition (Gilpin, 1996). Accordingly,
this initiative includes any practices focused
on identifying what services and service
attributes customers want (doing the right
things) and providing them to customers'
satisfaction and better than the competition
(doing things right). Comments referring to
efforts to raise standards and improve
service performance, listening to customers'
preferences, and ensuring that customers'
requirements are met are included in this
category. Some of the quality initiatives
mentioned dealt more with the technical
aspects of quality (``what'' is delivered), while
others were more relevant to the personal
aspects of service delivery (``how'' it is
delivered) (GroÈnroos, 1994).
Clearly, if a service organization cannot
consistently satisfy customers' expectations
better than the competition, other aspects of
a relationship-building program are likely to
accomplish little (Pine et al., 1995). As
such, over 45 per cent of the survey
respondents identified a service quality
relationship-building practice. Respondents
said that providing friendly, professional,
courteous service that was consistent, fair
and reliable is one of the best ways to
establish and maintain customer
relationships. This is exemplified by making
on-time deliveries, supplying a wide range of
goods and services, having a knowledgeable
staff, and providing technical competence.
Service quality also includes listening to
customers ± knowing the market and
understanding customers' needs. The most
common method associated with listening to
customers was some form of gathering
customers' ideas (e.g. telephone and mail
surveys, focus groups, comment cards,
advisory groups). Finally, consistently
meeting customers' expectations includes
responses focusing on providing high quality
goods and services. About one-quarter of the
respondents using service quality practices
found that top management must support
these practices and gain widespread
cooperation throughout the firm to
successfully implement the service quality
initiative.
Personalization
Personalization refers to the customization of
some aspect of the service or its delivery,
treating each customer as a unique
individual with a unique set of service
requirements ± thereby creating unique fits
between customers and services (Goldsmith,
1999). As such, personalization initiatives
provide direct linkages between customers
and service personnel and between
customers and services themselves. Of the
survey respondents, 45 per cent identified
personalization practices as part of
their relationship-building programs. Of
those, over one-quarter identified
personalization as one of their most
successful relationship-building initiatives
used.
Interestingly, personalization practices
were recognized on three different levels ±
interpersonally, operationally, and
organizationally. Examples of interpersonal
aspects include learning and using
customers' names, building rapport by
encouraging face-to-face contact between
employees and customers, ``getting to know''
customers in informal social settings, and
acknowledging customers' backgrounds and
achievements (Fisher, 1998). The operational
level involves efforts to obtain a detailed
knowledge of customers' processes and
requirements. This allows the service firm to
provide unique ideas to help their clients.
Additionally, employees are empowered to
deviate from rigid procedures when serving
customers who have special needs or unique
requests (Bowen and Lawler, 1995; Ledford
et al., 1995). At the organizational level,
respondents said that their firms assigned
employees the responsibility of serving
specific customers (e.g. as personal bankers
or project managers) rather than assign the
responsibility of performing specific tasks.
This encourages close personal relationships
Cindy Claycomb and
Charles L. Martin
Building customer
relationships: an inventory of
service providers' objectives
and practices
Marketing Intelligence &
Planning
19/6 [2001] 385±399
between the firm's representatives and the
customer.
Although many aspects of personalization
hinge on the interpersonal skills and
enthusiasm of individual service providers,
the choice to employ it is not entirely an
individual decision. Rather, full
implementation requires top management to
structure organizationally the firm in order
to assign employees the responsibility of
serving specific customers, and to empower
employees to treat each customer as a unique
individual. Personalization efforts require
widespread cooperation, as employees must
work together to serve customers rather than
focus on performing individually assigned
tasks.
Service differentiation and augmentation
Service differentiation means enhancing
perceived value by providing services or
service attributes not provided by the
competition. The closely related concept of
service augmentation involves giving
customers something extra (Gilpin, 1996). If
points of differentiation and augmentation
are meaningful to customers, their
perceptions of value are enhanced (Duffy,
1998; Shaw, 1996). Also, some competitive
advantages are gained. The idea is essentially
to eliminate competition by meaningfully
differentiating the company's goods and
services to the point where, in the customer's
mind, other companies' offerings are not
comparable. This means that firms need to
make the customer's experience more
memorable than the competition. This is
usually something customers appreciate but
do not necessarily expect (Fisher, 1998).
Almost 40 per cent of the surveyed
respondents identified service differentiation
or augmentation practices. They commented
on:
. [being] creative in what we do;
. developing a niche;
. offering services exclusive to us; and so
on.
In addition, survey respondents identified
practices that had to do with giving
customers something extra in the form of
``give-aways'' such as sales promotions (i.e.
sponsoring workshops and seminars of
interest to customers, giving away gifts and
trinkets, providing free training),
entertainment (e.g. hosting breakfast, taking
customers to lunch or sporting events), and
affinity clubs (e.g. establishing senior clubs
that offer travel opportunities). These
practices were noted by almost 20 per cent of
those using them as requiring top
management support and being dependent
upon employee cooperation.
Many of the personal interviews revealed
a more generalized interest in building
additional value in the service on a day-to-
day basis ± for example, by augmenting the
service with warranties, maintenance
checks, telephone helplines, and
miscellaneous amenities such as
restaurants that provide free after-dinner
mints or sport medicine clinics that provide
tips sheets to help injured patients treat
themselves. Obviously, the success of this
type of differentiation through
augmentation depends on whether the
augmentation is perceived as such and is
truly valued by customers. The added value
should exceed the added cost of providing it.
Other considerations include: Can the
augmentation be easily and quickly
duplicated by competitors? How likely is the
``augmentation'' to become a customer
expectation? If likely, is the firm prepared to
retain the augmentation permanently or
face disgruntled customers when it is
removed?
Affective engineering
Affective engineering is the label we assigned
to a range of efforts designed with the
intention of evoking customers' emotional
responses to make them feel good about the
company and otherwise warm and cosy in
the relationship with the firm. Research
suggests that customers' affective
commitment (i.e. emotional attachment to
the service provider) is positively related to
their willingness to remain in a relationship
with a service provider (Shemwell et al.,
1994). More than 20 per cent of the surveyed
respondents identified practices that
included community and civic events
involvement, monetary sponsorship of
community events, employee volunteerism,
image advertising, and cause-related
advertising as part of their relationship-
building programs.
Involvement in community events and
support for charitable organizations or social
causes can generate favorable media
publicity and word-of-mouth, thereby helping
to position firms positively in their
communities ± as good corporate citizens
interested in giving back to the communities
that support them.
Image-related or ``feel good'' advertising
frequently avoids rational appeals altogether
(Alreck and Settle, 1999), for example,
omitting any information about price or
product attributes. Instead such advertising
tends to engineer affect through associations
between the business (or its products,
employees, or good deeds) and family values,
patriotic themes, holidays, nostalgic
[ 391 ]
Cindy Claycomb and
Charles L. Martin
Building customer
relationships: an inventory of
service providers' objectives
and practices
Marketing Intelligence &
Planning
19/6 [2001] 385±399
[ 392 ]
memories, and other emotionally laden
contexts.
Employee relations
Employee relations refer to relationship-
building practices designed to support the
frontline employees who serve customers.
About one of every six surveyed respondents
mentioned some aspect of employee relations
as part of their relationship-building
practices. Most of the references were to
well-trained employees. While this may be a
broad or indirect view of customer
relationship-building, it recognizes the vital
role that employees play in the service
delivery and relationship-building processes.
Labor-intensive service firms that invest
the necessary time, money and effort to
recruit, train, equip and motivate their
customer-contact employees are likely to
enjoy stronger relationships with customers
than those that fail to establish frontline
employees as a top priority (Gilpin, 1996;
Lindgreen and Crawford, 1999).
Not surprisingly, almost one-half of the
firms using employee relations practices
found them to be dependent upon employee
cooperation and widespread cooperation
throughout the firm. This recognition
emphasizes the importance of internal
marketing ± a philosophy that views
employees as internal customers who
consume the roles and responsibilities of
their jobs (Frost and Kumar, 2000; GroÈnroos,
1981). The philosophy is based on the
intuitive notion that frontline employees are
unlikely to cheerfully, enthusiastically and
competently contribute to the process of
satisfying customers, if they are not satisfied
with their jobs. Just as it is common practice
to aggressively seek out prospective external
customers, it is also appropriate to take a
marketing approach to find and recruit
well-qualified job applicants (Reynoso and
Moores, 1996). Similarly, just as it is
appropriate to be sensitive to the needs and
preference of external customers, it also pays
to avoid a heavy-handed approach when
dealing with employees.
Relationship pricing
Rewarding loyal customers with better prices
may be the oldest tool for relationship
building (for example, see Gilpin, 1996, and
her discussion of the hospitality industry).
Several survey respondents (over 15 per cent)
referred to some type of special or
competitive pricing as part of their firms'
relationship-building practices. Relationship
pricing was specifically mentioned by
respondents in terms of special deals based
on the strength of customers' relationships
with the firm, preferred customer programs
for the 20 per cent of the customers who
generate 80 per cent of the business, loyalty
programs (e.g. discount services for loyal
customers), and special pricing for customers
who use multiple services.
In addition to cementing relationships
with customers by rewarding them for their
loyalty, many of these programs generate
enormous amounts of useful customer and
purchase data. Customers may be required to
complete a ``membership application'' prior
to receiving discounts and present an ID card
that is electronically swiped prior to each
purchase (Duffy, 1998). Thus purchase
patterns can be linked to customer
characteristics, and specific advertising
and promotional efforts can then be
customized for specific groups of customers
(Clayton-Smith, 1996; McMillin, 1999).
Of those identifying relationship pricing as
an initiative, over one-third said that it is
typically dependent on top management
support, because it requires discounts on
prices to select customers. Furthermore,
sophisticated relationship pricing programs
that involve establishing, maintaining and
mining a database do not run themselves
(Clayton-Smith, 1996). They require
management direction and dedicated
resources.
Systems friendliness
Systems friendliness refers to practices that
make it easy and convenient for customers to
conduct business with the company. This
involves making company representatives
accessible, removing contact barriers,
ensuring that customer interfaces with
technology are not overwhelming, and not
making customers wait for service
unnecessarily or perform tasks (e.g. fill out
paper work) they would rather avoid
(Peppers et al., 1999). Understandably,
customer relationships can suffer when
unfriendly systems leave customers feeling
frustrated, unwelcome and convinced that
there must be a better way to acquire the
service. Ideally, system interfaces should
leave customers with a sense of looking
forward to doing business with the company
in the future (Shapiro, 1988).
Of the survey respondents, 15 per cent
identified system-friendly practices as part of
their relationship-building philosophies.
Specifically, they mentioned the following:
. quick decision making by local decision
makers;
. 24-hour a day, seven-day a week service;
. ``hot'' lines;
. toll-free telephone lines;
. customer support staffs;
. convenient locations of new facilities;
Cindy Claycomb and
Charles L. Martin
Building customer
relationships: an inventory of
service providers' objectives
and practices
Marketing Intelligence &
Planning
19/6 [2001] 385±399
. lobby greeters whose job it is to educate
customers;
. free parking;
. prepaid and pre-addressed return
envelopes; and
. fast response to customers' inquiries.
Pioneer advantage
Formulating programs to reach and cultivate
relationships with prospective customers
before competitors approach them can create
a ``pioneer advantage'' in that, once the
relationships are established, it becomes
increasingly difficult for competitors to lure
satisfied customers away (Shaw, 1996).
Indeed, classic studies investigating
consumers' relationships with specific
brands have found that people first exposed
to brands as children are more likely to be
loyal to those brands as adults than are
consumers not exposed to the brands until
adulthood (Guest, 1955, 1964).
A total of 12 per cent of the surveyed
respondents specifically sought to create
pioneer advantages by beating competitors to
new consumers (e.g. children, teens), to
consumers new to the community, or to
consumers with new needs. Specific
examples mentioned included banking
programs for children who some day will
need a broad range of banking services, using
``welcome wagon'' services to reach new
residents, and holding ``coffee talks'' about
trust accounts at senior centers.
Trust
To build trust is to ensure that customers
know that the business will stand behind its
promise of service and honor its
commitments (Buttle, 1996). Trust is often
described as the corner-stone of any healthy
relationship (Scanzoni, 1979). In the service
sector trust is particularly relevant, because
customers often do not buy services per se.
What they buy are implicit and explicit
promises of service ± for example:
. promises that insurance companies will
honor future claims;
. promises that banks will accurately
process checks;
. promises that home security systems will
promptly contact the police when burglars
break in, and so on.
Customers must trust service providers
before they are willing to pay for promises.
Therefore, trust is an important element of
a relationship-building program, because it
builds confidence, fosters cooperation, and
gives the service provider a second chance
when inevitable mishaps occur (Morgan and
Hunt, 1994). It may not be possible to rebuild
customer relationships when trust is broken
(Gilpin, 1996).
Accordingly, more than 10 per cent of the
survey respondents acknowledged the
importance of trust, when they mentioned
or alluded to trust-related concepts such
as trustworthiness, honesty, integrity,
or ethical behavior in their list of
relationship-building practices. More
specifically, service providers build trust by
keeping their commitments, not
overpromising (e.g. keeping advertising
claims and sales pitches realistic), otherwise
managing customers' expectations (e.g.
clearly clarifying what the service does and
does not entail), maintaining open channels
of communication with customers so that
misunderstandings and mishaps can be
quickly identified and remedied, and
establishing codes of ethics to promote
trustworthy actions throughout the
organization.
Cross-selling
The sale of additional services to existing
customers accomplishes obvious objectives
such as building total sales volume and
profitability (Ennew and Hartley, 1996). From
a relationship-building perspective, however,
cross-selling also tests the strength of the
relationship in that dissatisfied customers
are less likely to purchase additional services
than are satisfied customers. Customers'
hesitancy in purchasing additional services
provides opportunities to identify and
remedy dissatisfactions that threaten the
relationship. Cross-selling also builds the
relationship in that the sale of each
additional service encourages the customer
to incrementally invest more resources,
more time, or more trust in the relationship
(Worthington, 1996). When customers become
bored with some services or outgrow the
need for others, cross-selling promises to
rekindle or extend the relationship.
The relationship potency of cross-selling
was highlighted in one study that found a 0.15
likelihood that banking customers who used
only one bank product would remain in the
relationship for five years. In contrast, a 0.45
likelihood of a five-year relationship was
found among customers who purchased two
products and a 0.80 likelihood for those with
three (Furlong, 1993).
Consequently, 10 per cent of the survey
respondents mentioned cross-selling of
products to meet customers' needs as a
relationship-building practice. These
responses included exposing customers to
the firm's full product line, using direct
mail to let customers know about
additional products, and training employees
in cross-selling techniques.
[ 393 ]
Cindy Claycomb and
Charles L. Martin
Building customer
relationships: an inventory of
service providers' objectives
and practices
Marketing Intelligence &
Planning
19/6 [2001] 385±399
[ 394 ]
The concept of the ``consumption chain'' is
a particularly appealing cross-selling tool. It
is based on the notion that customers' needs,
interests, and possibly spending power often
evolve in a logical, predictable sequence, and
that a ``chain'' of products can be developed to
satisfy those needs and preferences. Using
the concept, sales staff first locate a
customer's position on the chain and then
focus cross-selling efforts on adjacent links in
the chain (Slight, 1995). For example,
relationships with teenaged banking
customers may be initially established with
passbook savings accounts or checking
accounts. As their lives unfold and they
progress along the chain to develop interests
in credit cards, car loans, IRAs, home
mortgages, business loans, brokerage
services, estate planning, and so on, sales
reps assist them at each link. Further,
understanding these links, their sequence,
and the growth of the chain reduces the
likelihood that customers may outgrow the
business's ability to serve them and thus
sever the relationship.
Reinforcing ``thank yous''
Reinforcement practices are those that
encourage customers to repeat desirable
behaviors and are based on the principle that
reinforced behaviors are more likely to be
repeated than those not reinforced. In the
context of serving customers and
strengthening relationships with them, the
seemingly simple act of thanking customers
may be the most potent reinforcement tool
available to service businesses. For example,
one study found that insurance customers
were more likely to renew their policies, if
they received a thank you letter prior to
receiving a renewal notice (Bergiel and
Trosclair, 1985). In another study, jewelry
store customers were more likely to purchase
additional items within the next 12 months, if
they received a follow-up phone call thanking
them for their original purchase (Carey et al.,
1976). Still another study found that thanked
customers were more likely to be satisfied
with their shopping/service experience than
non-thanked customers (Martin and Adams,
1999a). Although the practice of thanking
customers would seem to be common-sense,
studies involving mystery shoppers estimate
that between 14 and 34 per cent of customers
are not thanked (Martin and Adams, 1999b).
In the present study, 8 per cent of the
surveyed respondents specifically referred to
relationship-building practices that thanked
customers for their business or their
suggestions. Of course, as mentioned
previously, it is quite likely that many service
providers do reinforce customer behaviors in
general and thank customers in particular,
but may not consider it as a formal part of
their relationship-building programs.
Innovations
Innovations can play important roles in
establishing and building relationships with
customers (Kandampully and Duddy, 1999).
For example: innovations help position firms
as market leaders or ``winners'' with
whom customers want to associate. They
enhance customers' perceptions of value
when customers know that they are
purchasing the ``latest'' and ``most advanced.''
They rekindle tired relationships when
product lines become too familiar, and they
extend the relationship life cycle, as
customers' needs change and outgrow the
current line. Innovations give customers
reasons to continually revisit, overcome
boredom, and repurchase. When innovations
are introduced and others are promoted as
being on the horizon, customers are
reminded that the present is not an
opportune time to sever the relationship. But
customers will deliberately try to seek
variety by exiting a relationship if they get
bored (Sheth and Parvatiyar, 1995). As a
result, 7 per cent of survey respondents
indicated that providing innovative product
lines and offering the latest technology are
part of their relationship-building programs.
Linking of purchases
Linking of repeated purchases is a broad
category of practices mentioned by 6 per cent
of the survey respondents. The result is
connected purchases designed to reward
customers for their loyalty and to ensure that
transactions are not discrete. When
purchases are linked, there is no opportune
time for customers to sever relationships
(Liebermann, 1999; Worthington, 1996). Often
there are customer benefits or incentives to
link purchases ± a form of relationship equity
that is lost if the relationship is broken
(Gilbert, 1996). Examples from survey
respondents include rewarding multi-
service, long-time customers with special
advantages (e.g. free computer link),
bundling products and services (e.g. bank
package account including a variety of
services), offering product of the month
promotions, offering frequent shopper
programs (e.g. free haircut program ±
purchase eight haircuts, get the ninth free),
and reminding customers about renewals
(e.g. certificate of deposit renewals). Other
examples include membership packages such
as season tickets to sporting events, bounce-
back coupons distributed at time of purchase
but not redeemable until the next purchase,
collectible promotional items such as
tableware pieces that are more valuable as a
Cindy Claycomb and
Charles L. Martin
Building customer
relationships: an inventory of
service providers' objectives
and practices
Marketing Intelligence &
Planning
19/6 [2001] 385±399
complete set than as individual pieces, and
frequency promotions that reward purchases
with points or ``miles'' that have value only if
accumulated (Albert, 1997; Gilbert, 1996).
Many of the continuity, collection and
frequency programs that link purchases
together require a long-term management
commitment. Not only do many of the more
elaborate programs require establishing and
maintaining an extensive database to keep
track of each customer's status in the
program, but also typically the commitment
must be sustained over a much longer time
period than that involving typical coupon
promotions. Otherwise such programs can
backfire when customers become disgruntled
after they have accumulated a significant
number of points, punches or miles, only to
have the program terminated unexpectedly.
Service recovery
For most service businesses there are simply
too many details involved in service delivery
to expect flawless operations at all times.
And, unfortunately, when mistakes do occur,
it is not uncommon for customers to find out
before service providers. While efforts to
minimize occasional (but inevitable) mishaps
are appropriate, efforts to enable both the
business and customers to recover from the
errors are needed as well (Brown et al., 1996).
Researchers have found that 91 per cent of
unhappy customers will never buy again
from the company that dissatisfied them and,
furthermore, they will tell nine other people
about their dissatisfaction (Vavra, 1992).
Service recovery involves practices
companies use to aggressively correct
mistakes when they occur and offset
customers' inconveniences and other
negative consequences caused by these
mistakes (Fabien, 1997). Through service
recovery, service failures can be transformed
into positive acts that strengthen customers'
attitudes toward the firm (Bejou and Palmer,
1998; Bitner et al., 1990). In fact, customer
satisfaction with the process of service
recovery is often more important than the
initial service attributes in influencing
overall customer satisfaction, future
purchase intentions, and positive
word-of-mouth communication by customers
(Spreng et al., 1995). In the present study, only
6 per cent of the survey respondents
explicitly recognized the necessity for
customer complaint procedures and quick
follow-up action to resolve problems as part
of their relationship-building programs.
Unconditional guarantees
Related to service recovery systems are
unconditional service guarantees that
provide and honor commitments to
customers without excuses or hurdles. In
other words, companies guarantee services
without excessive conditions, limitations,
excuses, or hurdles for invoking guarantees
(Fabien, 1997; Hart, 1988). Some service
providers guarantee a broader concept than
the service itself by guaranteeing customer
satisfaction with the service. A total of 6 per
cent of the survey respondents mentioned
consistently honoring commitments to every
customer, guarantees of performance with
financial remuneration for errors, and
following-through on customers' requests.
Although many firms, especially smaller
ones, may not have formally articulated and
promoted unconditional service guarantees,
they do stand behind their products through
refunds and exchanges as if they have. It may
be that promoting their practice would
provide further assurance to customers
and thereby strengthen relationships
(Davis et al., 1995).
Customer-to-customer relationships
Customer relationships are generally
thought of in terms of the relationships
between customers and the firm (or the
firm's representatives or products/services).
Indeed, most of the relationship-building
initiatives focus on these three linkages (see
Figure 1). Another linkage that also
influences customers' experiences and their
inclination to patronize the business in the
future is the relationship between customers
and other customers. Customers influence
one another in at least two interrelated ways:
1 through word-of-mouth communications;
and
2 by customers' degree of compatibility
with one another.
Word-of-mouth communications between
customers are rich in information and
opinions, and referrals are generally
perceived to be among the most influential
and unbiased sources of marketplace
influence. For example, in a study of retail
store shoppers, Davies et al. (1995) found that
consumers were more likely to seek
reassurance from other customers
than from employees. Such communications
affect customers' purchase decisions,
consumption experiences and satisfaction.
Word-of-mouth is particularly influential
when the quality of service varies or when
services are difficult for customers to fully
evaluate prior to purchase (Langeard et al.,
1981; Quelch and Ash, 1981; Schlissel, 1985).
Thus, one would expect service providers to
be interested in influencing the content
and transmission of word-of-mouth
communications ± stimulating positive and
minimizing negative word-of-mouth.
[ 395 ]
Cindy Claycomb and
Charles L. Martin
Building customer
relationships: an inventory of
service providers' objectives
and practices
Marketing Intelligence &
Planning
19/6 [2001] 385±399
[ 396 ]
Customer compatibility refers to the extent
to which customers get along with one
another in the service environment (Martin
and Pranter, 1989). The management of
customer compatibility involves influencing
customer-to-customer interaction ± largely
by fostering desirable, while minimizing
undesirable customer behaviors (Pranter
and Martin, 1991). In retailing, the relevance
of the positive social dimension of shopping
with others has long been recognized
(Tauber, 1972; Woodside and Sims, 1976). For
example, one study revealed that 42 per cent
of the 600 mall shoppers surveyed reported
having ``socialized with friends or others''
while at the mall and 23 per cent ``had a
conversation with other shoppers I just met
today'' (Bloch et al., 1991). However, an
undesirable negative dimension exists as
well. Customers may feel uneasy, threatened,
or otherwise dissatisfied, if they find
themselves to be incompatible with other
customers with whom they share the
business's physical environment. For
example, patrons may not be willing to
tolerate other customers who smoke, shout,
have strong body odor, stare, jump the queue,
have an untidy appearance, or fail to
supervise their children (Grove and Fisk,
1997; Martin and Clark, 1996). Because the
degree of compatibility between customers
can spill over to affect the relationship
between the firm and its customers,
proactive efforts to shape or manage
customer compatibility are highly relevant.
Slightly over 5 per cent of the survey
respondents mentioned their efforts to
influence or manage customer-to-customer
relationships. Specifically mentioned were
the use of referrals from customers,
testimonials from customers, and visits to
customers' sites by potential customers as
relationship-building practices. These
word-of-mouth behaviors both perpetuate and
foster customer compatibility, because
existing customers are prone to communicate
with others with whom they are compatible
and new customers learn from the existing
customers about appropriate customer
expectations and behaviors.
Vulnerability
Building and maintaining customer
relationships may mean accepting some risk,
trusting customers, and giving customers
something of value without any certainty of
making a sale or receiving any sort of
reciprocal consideration or commitment.
Free samples, diagnoses, advice, meals, gifts,
and personal or confidential disclosures are
typical vulnerabilities (Martin, 1996).
Although somewhat risky, the practice is
based on the established principle that people
frequently do feel compelled to reciprocate in
some way after someone else has helped them
or given them something of value
(Christensen, 1983).
Of the survey respondents, 5 per cent
reported vulnerable practices as part of their
conscious relationship-building efforts. They
indicated that their firms provided
consultative advice and technical support
prior to customer commitments to purchase.
The implication is that these service
providers believed that this was the ``right
thing to do'' to show that they want a
partnership with the customer.
Concluding thoughts and
recommendations
There seems to be widespread agreement that
long-term business success depends on
organizations' abilities to build positive
relationships with their customers. However,
as our research indicates, there are numerous
objectives available for specifying one's
definition of ``relationship-building'' and
myriad potential practices from which service
firms can choose and blend to customize
unique customer relationship-building
programs for their firms. Although we have
attempted to inventory the objectives and
practices that service firms consciously
employ, each service firm must decide which
combination is right for its organization ±
given its unique circumstances involving
resource constraints, health of existing
customer relationships, competitive
environment, growth opportunities, internal
strengths, and so on. In much the same way as
that a generic marketing mix cannot be
justified for all firms, it would be inappropriate
for us to recommend a single recipe or ``cement
mix'' for service organizations to cement
relationships with their customers.
Still, our inventories provide frameworks
for developing customer relationships ± from
which a number of recommendations stem.
First, the range of possible relationship-
building objectives and their priority ratings
(Table I) challenge service providers to more
fully articulate what ``relationship-building''
means or could mean to their firms. Is
relationship-building defined differently
throughout the organization? Is it defined too
narrowly? Are the firm's relationship-
building objectives clearly communicated
throughout the organization? Given the
variation in priority ratings among
respondents in the present study, it is only a
small inferential leap to suggest that service
providers within a specific service
organization are likely to vary substantially
Cindy Claycomb and
Charles L. Martin
Building customer
relationships: an inventory of
service providers' objectives
and practices
Marketing Intelligence &
Planning
19/6 [2001] 385±399
too. Until relationship-building priorities
are clearly established and uniformly
recognized throughout the organization,
relationship-building practices are likely to
be misdirected and their effectiveness
impossible to measure.
Second, service firms should consider
relationship-building practices in light of the
linkages they provide. As shown in Figure 1,
some of the relationship-building practices
represent direct linkages between
customers and the organizational entity
itself, while others link customers to the
organization through its products, personnel,
or other customers. A comprehensive
relationship-building program that
reinforces all of these linkages would seem to
be more capable of producing stronger
relationships than programs that focus on
less than the full range of linkages.
Third, firms should examine their
repertoire of specific relationship-building
practices. Although most surveyed firms
recognized that opportunities to build
customer relationships extend far beyond
simply being nice to customers, most
reported a limited range of initiatives,
begging questions such as: what emphasis do
they place on some of the most frequently
reported practices, such as continuity of
communications, service quality,
personalization, and service differentiation/
augmentation? If appropriate, are these
practices fully utilized? The reality that these
four categories of relationship-building
practices were mentioned more frequently
than other practices implies that there is
enough merit to them for other firms to
consider their use. The review of other
practices mentioned less frequently may be
highly relevant as well. They may be adopted
outright, combined with other practices, or
their underlying principles creatively applied
in a unique fashion.
A fourth recommendation is implied by the
study's chief limitation, the limitation being
that the survey's open-ended format used to
identify relationship-building practices
tended to evoke responses primarily related
to only formalized or ``top-of-mind'' practices.
For example, although not frequently
reported, we suspect that many respondents'
firms do make an effort to thank customers,
or introduce innovative new products to keep
customers interested in the firm, or
leverage word-of-mouth communications,
but that these and many other practices
were not thought of in the context of
relationship-building and therefore were
omitted by many respondents. Given the
exploratory nature of this part of the study,
we accept this sort of inherent limitation.
However, to the extent that it suggests that
service providers are not fully aware of the
range of relationship-building practices or
possibilities in their respective firms, we
recommend that service firms conduct
systematic, company-wide relationship-
building audits of their organizations. Indeed,
the range of relationship-building practices
that was collectively identified by the 205
respondents seems to justify such an audit in
that the practices cut across numerous
functional areas ± involving marketing,
operations, customer service, R&D, human
resources, and accounting. The head of any
one of these functional areas is not likely to
realize the full extent and the full potential of
company-wide relationship-building efforts
without such an audit. Further, such audits
promise to elevate the entire organization's
consciousness of relationship-building and
lay the foundation for fully integrating and
coordinating relationship-building practices
throughout the organization.
To conclude, the findings of this
research promise to benefit both service
firms and the interests of the customers
they serve. Service providers will benefit
from the inventory of relationship-building
objectives and initiatives, as they consider
developing, implementing or expanding their
efforts to build relationships with customers.
As a result, customers will see the benefits of
dealing with firms that seek stronger
relationships ± benefits such as enhanced
value, improved product quality, open
communication with service providers, and
greater satisfaction.
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