Given its emphasis on customer retention, the analysis of current customers plays a central role in the relationship planning process. Traditional marketing techniques advocate the application of segmentation techniques in order to analyze current and potential earnings from customer segments. RM can borrow much from traditional techniques in its analysis of a business unit’s customer base.
The relationship ladder
Payne et al. (1998) developed the concept of the ‘relationship ladder’, whereby customers could be moved from one level of loyalty to the next. The task of relationship marketing strategy is to bring customers as high up the ladder as possible, since greater benefits accrue to the company at each level of loyalty. Although this model is an important one in terms of establishing the fact that relationships progress through different stages, it assumes that this progress is linear; that relationship marketers should aim to develop relationships to the highest possible level, and that the termination of a relationship at any stage is a failure. Subsequent research has indicated that relationships conform to a cycle, and that consideration of how and when to end a relationship is as important a consideration as which relationships should be developed.
The relationship life cycle
It is widely accepted that products have a finite life span which is characterized by distinct stages (Kotler, 2000). The concept of the Product Life Cycle (PLC) is used in marketing planning to make predictions of future demand, profit expectations and changes in the competitive environment. The PLC can even be used as a blueprint for strategy development, the introduction, growth, maturity and decline stages inviting launch, build, hold and harvest strategies respectively.