Journal Article Title:
1) The Impacts of Relationship Marketing Tactics on Relationship Quality &
2) Why Customers Leave….And Five Ideas for Turning Them Back
Authors:
1) Dr. Ying Ming Tseng (Oct 2007)
2) Arthur Middleton Hughes (2007)
Article:
1) The Business Review, Vol. 7, Issue 2, Page 310
2) Target Marketing, Volume 30, Issue 10, Page 73
Review and Comments:
There are three main concepts when defining Relationship Marketing (RM). They are “developing”, “maintaining”, and “enhancing” customer relationship (Berry and Parasuraman, 1991). In the first article, we are exposing to five RM tactics in the service industry. These service industries meant here are banking, airline and travel agent. This research is aim to understand if these five RM tactics will be helpful for developing a long-term transaction relationship.
RM has received much attention because nowadays the most important issue in marketing is to keep loyal customer who will contribute long-term profit to organizations. RM includes all the marketing activities which are designed to establish, develop and maintain a successful relational transaction (Dwyer, Schurr, and Oh, 1987). Again, Dwyer et al., 1987 also emphasize that RM is to gain the maximal value of a customer, who can contribute to the corporation’s long-term profit.
Those five RM tactics focused by this paper are discussed below:
RM Tactic 1: Direct Mail
Direct mail is a good method in building long-term RM because it increases the interaction with customers. Examples of direct mail are letters or catalogues mailed directly to customers (Dwyer et al., 1987; Anderson & Narus, 1990; Morgan & Hunt, 1994).
RM Tactic 2: Tangible Reward
Tangible reward which is also known as visible benefits. For instances, price discounts, gifts or coupons. Tangible reward is not only a tactic of keeping the customer loyalty but also to fight with the competitors’ actions in the market.
RM Tactic 3: Interpersonal Communication
Communication is also an important element to maintain, enforce and bring the relationship to a higher level (Weitz & Jap, 1995), and even to develop another more close relationship. This is because communication with customer by presenting messages of marketing activities to them is helpful to gain their support.
RM Tactic 4: Preferential Treatment
Besides, preferential treatment is also another RM tactic. Wulf, Odekerkan-Sehroder & Lacobucci (2001) defined preferential treatment as a discriminate treatment between regular customers and non-regular customers. An example condition has been given by Gwinner, Gramler & Bitner, 1998 where if the customers are better served and treated in the service delivery process or after the sale, then the service will establish the customers’ loyalty toward the firm.
RM Tactic 5: Membership
Furthermore, membership played its role in keeping the customer loyalty, especially for non-regular customers. Membership system could help customers to perceive that certain firms for being more personal and friendly. Examples of membership is that a service firm can provide long-term privileges or special services to frequent purchase customer.
Result from this research shown that preferential treatment and membership are two main helpful tools in developing long-term relationship in those three industries. Direct mail is significant in travel agent industry and tangible rewards are significant in the airline and travel agent industry. Surprisingly, interpersonal communication shows no influence in all industries.
The second article, “Why Customers Leave” is an additional reading. It identifies two types of customers which are 1) transaction buyers and 2) relationship buyers.
In short, transaction buyers are those who are only interested in price. They have no loyalty. They have all the catalogues and know all the competitors’ prices. For relationship buyers, they are people who are seeking for a supplier they can trust. They seek for friendly companies with reliable products. They will only buy product from their trusted company (Arthur, 2007).
There are five reasons why relationship buyers leave as proposed by Arthur, 2007.
1) They die, or are no longer buying in your category
2) They are unhappy with the price
3) They are unhappy with the product
4) They are unhappy with the way they are treated
Among the reasons, the last reason is the main reason why customers tend to leave. This reason was related to the previous article where the result shown that preferential treatment is the most important RM tactic.
Everyone buy by considering the price, and whether that particular product worth it. However, beside price, there are also several factors which bind relationship buyers to the company:
• Recognition
• Service
• Information
• Helpfulness
• Friendly employees
• Brand identity
• Product quality and price
Lastly, Arthur, 2007 also proposed five ideas to turn the relationship buyers back, a brief explanation is stated for each of the idea:
1) Know who are they
Keep track of them in database and know ho are your gold customer.
2) Communicate with them
Thank them for their business.
3) Use your best customer service people with them
There are certain technology which will shift the profitable customers’ call to a specially selected “gold” customer service them.
4) Build equity in the process
Provide rewards to them.
5) Don’t stress price
When your friend helps you in carrying a heavy item into your house, you would never think of offering him or her money but supply him or her a beer or a cup of tea and conversation. This is wanted from relationship buyers. They would like a company to treat them as a good friend.
My comments about these articles are that the first article is able to provide good advice to marketers especially in service industry. Those five elements also are important in maintaining the relationship buyers. For the second article, it proposed reasons why customer leave and ways to get them back. It would be helpful for company who are failed to keep their relationship buyers.
1) The Impacts of Relationship Marketing Tactics on Relationship Quality &
2) Why Customers Leave….And Five Ideas for Turning Them Back
Authors:
1) Dr. Ying Ming Tseng (Oct 2007)
2) Arthur Middleton Hughes (2007)
Article:
1) The Business Review, Vol. 7, Issue 2, Page 310
2) Target Marketing, Volume 30, Issue 10, Page 73
Review and Comments:
There are three main concepts when defining Relationship Marketing (RM). They are “developing”, “maintaining”, and “enhancing” customer relationship (Berry and Parasuraman, 1991). In the first article, we are exposing to five RM tactics in the service industry. These service industries meant here are banking, airline and travel agent. This research is aim to understand if these five RM tactics will be helpful for developing a long-term transaction relationship.
RM has received much attention because nowadays the most important issue in marketing is to keep loyal customer who will contribute long-term profit to organizations. RM includes all the marketing activities which are designed to establish, develop and maintain a successful relational transaction (Dwyer, Schurr, and Oh, 1987). Again, Dwyer et al., 1987 also emphasize that RM is to gain the maximal value of a customer, who can contribute to the corporation’s long-term profit.
Those five RM tactics focused by this paper are discussed below:
RM Tactic 1: Direct Mail
Direct mail is a good method in building long-term RM because it increases the interaction with customers. Examples of direct mail are letters or catalogues mailed directly to customers (Dwyer et al., 1987; Anderson & Narus, 1990; Morgan & Hunt, 1994).
RM Tactic 2: Tangible Reward
Tangible reward which is also known as visible benefits. For instances, price discounts, gifts or coupons. Tangible reward is not only a tactic of keeping the customer loyalty but also to fight with the competitors’ actions in the market.
RM Tactic 3: Interpersonal Communication
Communication is also an important element to maintain, enforce and bring the relationship to a higher level (Weitz & Jap, 1995), and even to develop another more close relationship. This is because communication with customer by presenting messages of marketing activities to them is helpful to gain their support.
RM Tactic 4: Preferential Treatment
Besides, preferential treatment is also another RM tactic. Wulf, Odekerkan-Sehroder & Lacobucci (2001) defined preferential treatment as a discriminate treatment between regular customers and non-regular customers. An example condition has been given by Gwinner, Gramler & Bitner, 1998 where if the customers are better served and treated in the service delivery process or after the sale, then the service will establish the customers’ loyalty toward the firm.
RM Tactic 5: Membership
Furthermore, membership played its role in keeping the customer loyalty, especially for non-regular customers. Membership system could help customers to perceive that certain firms for being more personal and friendly. Examples of membership is that a service firm can provide long-term privileges or special services to frequent purchase customer.
Result from this research shown that preferential treatment and membership are two main helpful tools in developing long-term relationship in those three industries. Direct mail is significant in travel agent industry and tangible rewards are significant in the airline and travel agent industry. Surprisingly, interpersonal communication shows no influence in all industries.
The second article, “Why Customers Leave” is an additional reading. It identifies two types of customers which are 1) transaction buyers and 2) relationship buyers.
In short, transaction buyers are those who are only interested in price. They have no loyalty. They have all the catalogues and know all the competitors’ prices. For relationship buyers, they are people who are seeking for a supplier they can trust. They seek for friendly companies with reliable products. They will only buy product from their trusted company (Arthur, 2007).
There are five reasons why relationship buyers leave as proposed by Arthur, 2007.
1) They die, or are no longer buying in your category
2) They are unhappy with the price
3) They are unhappy with the product
4) They are unhappy with the way they are treated
Among the reasons, the last reason is the main reason why customers tend to leave. This reason was related to the previous article where the result shown that preferential treatment is the most important RM tactic.
Everyone buy by considering the price, and whether that particular product worth it. However, beside price, there are also several factors which bind relationship buyers to the company:
• Recognition
• Service
• Information
• Helpfulness
• Friendly employees
• Brand identity
• Product quality and price
Lastly, Arthur, 2007 also proposed five ideas to turn the relationship buyers back, a brief explanation is stated for each of the idea:
1) Know who are they
Keep track of them in database and know ho are your gold customer.
2) Communicate with them
Thank them for their business.
3) Use your best customer service people with them
There are certain technology which will shift the profitable customers’ call to a specially selected “gold” customer service them.
4) Build equity in the process
Provide rewards to them.
5) Don’t stress price
When your friend helps you in carrying a heavy item into your house, you would never think of offering him or her money but supply him or her a beer or a cup of tea and conversation. This is wanted from relationship buyers. They would like a company to treat them as a good friend.
My comments about these articles are that the first article is able to provide good advice to marketers especially in service industry. Those five elements also are important in maintaining the relationship buyers. For the second article, it proposed reasons why customer leave and ways to get them back. It would be helpful for company who are failed to keep their relationship buyers.
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