Understanding the business relationship

All forms of customer loyalty begins with a first meet and then develops into a relationship and in due time, trust. Shoemaker (1999) argues that, “The sales and marketing departments for many years believed that the goal of marketing was to create and hunt for as many new customers as possible (quantity) from an endless source of new business, conquest marketing.” (Stowe Shoemaker, 1999) This gave little room to build a close relationship and in turn, trust.

To be able to further evolve that relationship and the level of trust this can be obtained in a number of situations. Palumbo for example argues that a good situation can be, “when service personnel take the time to understand the problem and build trust with the customer, loyalty is created by providing a customer benefit that is valued and remembered” (Fred Palumbo, 2000)

The shift from quantity, to quality in the client-customer relationship now focused more on adding customer value. This increased the customer experience, when it comes to quality, both intrinsic and extrinsic. This also means according to Zineldin that, “The manager and the marketer must focus on the company’s mission, resources, and strategy to create an environment that concentrates on customers’ needs and satisfaction. One of the keys is in making a customer understand that the satisfaction of needs is important to the company.” (Zineldin, 2000)

In short: All companies and people have an interest in a win-win situation or –partnership and according to Zineldin et al. (1997) “seven conditions are important to have a mutually beneficial business relationship;”

1. Two or more individuals, groups or organizations are willing to be engaged and interact in a relationship and exchange process.
2. Each party must possess something of value that the other party desires.
3. Each party must be willing to give up its “something of value” to receive the “something of value” held by the counterparty in return. E.g. a relationship must be a mutually rewarding connection between them.
4. Each party is free to accept or reject on term and conditions of exchange that will leave them better off than before the exchange.
5. The parties to the relationship and interaction must be able to communicate with each other to make their “something of value” available.
6. The parties of the relationship must be aware that ethical values and norms, interdependence, commitment, and adaptations are most important cornerstones in creating, developing and enhancing a positive, sustainable long-term partnership/ relationship.
7. The parties in the relationship must have the ability of creating a positive balance of both pros and cons associated with a close relationship.

This and more has been collected under the term of relationship marketing that Berry (1983) introduced as a term in a service context to describe a long-term approach to marketing. However, not only Berry has written about this, according to Zineldin (2000) the content of relationship marketing have been discussed and developed by many other American and Scandinavian writers (Jacksson, 1985; Crossby, and Stephens, 1987; Rosenberg and Czepiel, 1984; Christopher, Payne, and Ballantyne, 1991; Grönroos, 1990; Gummesson, 1987; Zineldin, 1993; McKenna 1991))” (Zineldin, 2000)

Berry et al. (1983) defines relationship marketing as the following, “Relationship marketing is attracting, maintaining and – in multi service organizations enhancing customer relationships” (L.L Berry, 1983) This definition still stands today and if you look more closely at the basic concept of relationship marketing according to Levitt (1983) it is a group of methodologies and terms that describes what cooperation’s should strive for: long-term relations, work with quality goods and make every effort for good customer service.” (Levitt, 1983)

The main differences from the earlier more transaction oriented approach and the relationship marketing approach has been summarized by Zineldin as follows (Zineldin, 2000)

There are many approaches how to enhance customer relationships over the customer life cycle but the repeat business is important in any form of business. Zineldin (2000) argues and supports Drucker writing the following, “Peter Drucker stated as early as 1963 that ‘the purpose of a business is to create and keep a customer.’ He then wrote the following; ‘Because the purpose of business is to create and keep customers, it has only two central functions – marketing and innovation. The basic function of marketing is to attract and retain customers at a profit.’ ” (Zineldin, 2000)