Relationships in consumer markets
Understanding customer relationships depends on whether you are looking at a direct relationship, such as in a business to business market, or an indirect relationship such as that in a consumer market.
It has become fashionable to describe repeat purchasing behaviour in consumer markets as forming a relationship. But many customers prefer a minimal level of interaction with suppliers and few customers have direct contact with product manufacturers forming unrequited associations with brands.
Consumer relationships
Whereas relationships are extremely important in B2B markets for key suppliers, in consumer markets they are less important. Indeed for many goods such as financial services or utilities customers want the minimum level of contact with the supplier.
Although many companies will talk about brand loyalty and customer relationships in a consumer environment often they are referring just to repeat purchasing patterns which they measure by analysing customer databases or brand relationships which are associated with advertising and PR.
Allowing for the semantics, there is often an emotional connection between a consumer and a brand deliberately fostered by the brand positioning, imagery and values. This can be described as a "relationship" and it can be measured in terms of the strength of the bond between the brand and the consumer in terms of purchase commitment.
However, like businesses, consumers would have a limited repertoire of brands with which they would claim a strong relationship-bond, most normally associated with how we present ourselves to the outside world and normally reflecting membership of some form of "club" (eg fashion, cars) or personal identity with a product or a company's values and philosophy (eg Macintosh, Bodyshop, Dyson).
For the most part, for the majority of things that consumers buy, brand is important in supporting and enhancing the perceived delivery of functional and emotional benefits of the product but does not directly lead to a relationship-bond, even though the product may be purchased week-in-week-out. In these situations, the product is more open to competition from other suppliers, than where there is a deeper attachment.
What is true for products is also true in how we choose shops and services. Although financial service institutions may believe they have "a relationship", when it comes down to it faced with a large price difference consumers will trade away from the brand unless there are strong functional benefits, and in most service-type industries minimising personal contact time is more valued by consumers than developing any form of relationship.
The main reason why customers don't like relationships is that there are costs to the consumer. Evidence suggests that consumers happily forgo relationships in purchasing in return for simple fast and efficient service and low cost and may seek to minimise contact levels. This has been true in shopping where supermarkets and "sheds" dominate, in financial services, where telephone services are key, in airlines and is now being seen via the Internet and e-commerce. Understanding "value" using techniques such as conjoint analysis is central to designing appropriate levels of service.
Companies have to work out whether the overhead associated with relationship based services justifies the cost, or whether it leaves the business vulnerable to low-cost efficient providers. Where companies are being successful is in responding creatively to consumer-level customer knowledge to identify customer needs without the need for interrogating each individual customer.
For help and advice on strategic approaches to customer relationships contact info@dobney.com
