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Evolution of Customer Relationships and Value

The document discusses the evolution from a transactional to a relational approach in customer relationships and value. A transactional approach focuses on short-term single sales and product features, while a relational approach develops durable customer relationships where customers are partners in innovation and value creation. All organizations now strive to be customer-centered and place customer satisfaction at the core of decisions to acquire and maintain a competitive advantage. This requires sharing information and changing company vision, culture, structures and processes to preserve and increase customer loyalty.

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35 views2 pages

Evolution of Customer Relationships and Value

The document discusses the evolution from a transactional to a relational approach in customer relationships and value. A transactional approach focuses on short-term single sales and product features, while a relational approach develops durable customer relationships where customers are partners in innovation and value creation. All organizations now strive to be customer-centered and place customer satisfaction at the core of decisions to acquire and maintain a competitive advantage. This requires sharing information and changing company vision, culture, structures and processes to preserve and increase customer loyalty.

Uploaded by

karim abbou
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6 The Evolution of Customer

Relationships and Customer Value

6.1 From a "Transactional" to a "Relational" Approach


Today's companies operate within a complex economic environment featuring
continuous and radical changes owing to the steady arrival of new kinds of
competition.

Many factors push companies in the direction of change, including the market and
the development of new technologies (Groenroos, 1990). First, customers are get-
ting more and more particular, declining standard products and services and atten-
tive to the available alternatives. Purchase choices are value-for-money oriented as
much as they are influenced by the search for personalized products able to fulfil
individual requirements. Second, if technology evolution allows companies to
provide new products and services more easily, it forces them at the same time to
look for new strategies in order to differentiate themselves from the competition.

Hence the need to tum away from the transactional approach, which is focused on
short-term-oriented (McDonald, Rogers, 1999) single sales and on the product's
features, with scarce and discontinuous contacts with customers. From the transac-
tional perspective, the relationship between company and customers is conflictual
in nature and limited to the negotiation (quantity, price, delivery terms etc.) and
service provision phases.

Therefore, companies have to adapt a relational approach, that is to say a strategy


meant to develop and reinforce steady and durable relationships with customers,
who become active partners in the process of innovating and creating value
(Figure 6.1).

This different vision of the market makes abandonment of the traditional concepts
of marketing management inevitable and contributes to the development of so-
called interactive or relational marketing.

According to Berry (1983), "marketing is the establishment, maintenance and re-


inforcement (usually, though not always, on a long term basis) of relationships
with customers and other partners, in order to achieve the objectives of all the par-
ties involved. This is obtainable through a reciprocal exchange and a mutual keep-
ing of promises."

F. Rajola, Customer Relationship Management


© Springer-Verlag Berlin Heidelberg 2003
92 The Evolution of Customer Relationships and Customer Value

TOMERS • Continuous innovation


(customers value creation:

• Continuous
information flow
(customers need)
• Continuous information
FIRM
flow

• Learning organization
(new competencies)

Figure 6.1 Value loop. Source: Cantone, 1996

The market is regarded more as a network of stable relationships between a num-


ber of actors (customers, companies, providers and competitors) than just as a
combination of exchanges. The single transaction is no longer the key to economic
activities, as it becomes part of a steady relational process, which in turn creates a
system of exchanges.

All organizations are striving to become more and more customer centred: in order
to acquire, increase or maintain a competitive advantage, they have to set the cus-
tomer and customer satisfaction at the centre of most of the company's choices
and decisions (Cuomo, 2000).

All resources, including personnel, technology and systems, must be used to pre-
serve and increase the customer's fidelity to the company.

The adaptation of this kind of approach requires sharing of information, techno-


logical and management know-how, so as to imply a radical change in company
vision and business processes, starting from the company culture, right through all
organizational structures, systems, and management and operational processes.

6.2 The Company Culture


In order to create value within the company it is necessary to diffuse an overall
system of shared values and rules, which lead each member to behave in such a
way as to meet customers' expectations through the range of offered services.

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