Neglecting existing relationships is a common mistake. Although the maintenance of mature relationships often requires fewer resources than initiating and developing new ones, they are clearly critical to the success of RM strategy, since this stage represents the ‘pay-off from efforts to build the relationship. With well developed systems in place, the focus at this stage is programmes – strategy, structure and systems on monitoring and control, safeguarding the customer’s satisfaction with, and trust in, the supplier.
Communication is a crucial requirement for building successful long-term relationships, by fostering trust and creating customer satisfaction. For example, the Danish Food Company Flensted Catering A/S attributed much of the success of its relationship marketing programme to frequent, effective communication. Among other things, newsletters, site visits and personal sales contacts were used to keep customers informed of current and planned progress (Lindgreen and Crawford, 1999). Similarly, but in a consumer environment, Sharma and Patterson (2000) found that communications had a greater impact than technical or function quality on the degree of relationship commitment exhibited by customers of financial advisers. The study suggested that effective communications served a number of functions, including shaping customers’ expectations of the service and influencing their perceptions. Regular contact also helped in creating empathy with the customer by showing that the adviser cared about the state of their affairs, and valued their custom. It is important to strike a balance between regular meaningful communication and pestering the customer.
Customers will remain loyal to the supplier for as long as the perceived benefits outweigh the perceived sacrifice – the major cost being the lack of freedom to take advantage of short-term gains arising from competing offers (Sheth and Parvatiyar, 1995). In their attempts to win new customers, many organizations reinforce this perceived sacrifice by themselves targeting new customers with introductory deals that offer better terms than those afforded to existing customers. In 1991 it was estimated that the credit card company, MBNA, spent on average $100 to attract a new customer. A customer who had had their credit card for five years generated about $100 profit per year, whilst a cardholder of ten years’ standing accounted for some $300 per year (Clancy and Shulman, 1991). Ten years later in the UK, MBNA was offering an introductory interest rate of 1.9 per cent APR for the first six months on balance transfers from other credit cards. Existing customers paid 14.9 per cent APR on the balance of their MBNA account. Given that a number of credit cards regularly run similar offers, it is not surprising that an increasing number of customers are transferring their credit balance periodically to take advantage of introductory rates. Given the economics of customer retention in this sector, a strategy that rewarded long-term customers would seem far more logical.
Develop supporting systems
Gronroos (1994) argues that in order to practice RM, the task of the marketer should be approached from a process management perspective. In order to maintain relationships, the organization must implement systems for managing communications, product quality and service recovery.