danish: Relationship Management - Retaining A Competitive Advantage
Relationship Management - Retaining A Competitive Advantage
The management of relationships has been a element of business for as long as business transactions have existed. On the most basic level, Relationship Management is about interaction with customers. From a broader perspective one can consider employees, suppliers and consumers as customers, the employees being the internal customers of the organization. Relationship Management deals with the treatment and management of partners, connections, linkages and chains between business entities.
For the purposes of this paper, we view Relationship Management (RM) as a conscious and planned activity. It would be inaccurate to suggest that there haven’t been relationships in company or any focus on relationships by companies. However, the pushed of RM, as expounded couple of years, points to a more tactical and strategic approach to focusing on the customer rather than a relentless focus on the competition.
After the economic depression of the 90s, many companies begun to examine the possible benefits to be gained from less negotiation strong-arming, friendship to suppliers and the establishment of constructive relationships with strategic stakeholders. This does not suggest that RM was founded in the us alone, or have not existed before then; the japanese had improved RM and value-concretisation into an art form on the basis of social structure and communal creed.
RM itself have not just many different types but many levels. The manufacturer has his suppliers and the end users as his customers; the retailer has the manufacturers and the end users as his customers, and manufacturer, the supplier and every organization with a tactical or strategic agenda have internal customers.
There have been several different sandwich types of Relationship Management introduced by writers, marketers and business pundits, beginning the most widely known Customer Relationship Management (Buttle, 2004; Kracklauer, Mills & Seifert, 2004) to Customer Centricity (Gummesson, 2008); Collaborative Customer Relationship Management (Kracklauer, Mills & Seifert, 2004); Supply Sequence Relationship Management (Kracklauer, Mills & Seifert, 2004), Integrated Supply Sequence Relationship Management (Kracklauer, Mills & Seifert, 2004), and so on. Hines (2006) delineates three types of relationships: the strategic alliance, the functional partnership and the one-sided partners. Donaldson & O'Toole (2007) outlines four types of relationships: partnership, friendship, adversarial and detachment. Our discussion here organisations on four components of Customer Relationship Management: Customer Identification, Customer Attraction, Customer Maintenance and Customer Development; all of which, for the purposes of this paper, Trauma
we should certainly consider all of these under the umbrella term Relationship Management; Relationship Marketing, the management of, not the cooperation with customers; the latter being the job of relationship management, is not within the scope of this paper but since from a conceptual perspective, the difference between the two may not be as simplistic and marked, it may be mentioned or discussed in passing.
Traditionally, RM was an activity (or non-activity) that involved an electronic customer database of an organisation's customers or consumers, which reports on consumer buying behaviour. Contemporarily, RM delves much deeper than this: undertaking intensive research on customers and customer behaviour and using the result of such research to (re)design business culture. RM, at its strategic level, advocates for a business culture with a concentrated focus on the customer rather than on the products or the sales, but what seems to be the biggest trump card of and in RM is loyalty. The customer-centric concentration in company relationships couple of years has forced a move towards shared goals and shared benefits, and for this to work there has to be commitment; each party being committed to their personal objectives but also to the shared goals; each party having the competence to carry out their responsibilities and assuming and counting, having a confident and positive requirement that the other party will act within the ambits of the agreement.
The focus on the customer (which is the basis for a relational existence) runs across certain concepts: price, quality, innovation, reliability of product, reliability of associated service and brand reputation. On the proven storyline that it is easier and cheaper to retain an individual than to realize a new one or regain a lost one, customer RM on the concepts already discussed should be the goal of the contemporary business.
Different types of RM have been identified, ranging from the transactional, the collaborative and the formation of alliances, which is also known as partners or value-added exchanges. The alliance is a partnership with suppliers that involves a mutual beneficiary arrangement where cost-cutting investment strategies are together addressed by both buyer and seller, owner being considered an file format of the consumer's organization. The business relationship between Japanese suppliers using JIT is a good example. For example Toyota holds a strong alliance even with its 1 / 3 tier vendors. The result of such partners means added value, reduced production and transport costs, a more seamless supply and delivery network, and maintenance of exceptional quality, as per TQM considerations.
Traditionally, companies were preoccupied with rigorous competition, firm-induced and firm-controlled business strategies, focus on short-term profits and strategies and independent decision-making. This transactional existence meant a focus more on the competition than the customer, a concentration on short-term profits rather than long-term strategic gains and likelihood to be oblivious to opportunities for expansion and change. Today's strategically-minded companies are pre-occupied with partnership with other firms, collaboration and coaction, boundarylessness, joint decision-making and a focus on long term benefits. With today's business climate, one can easily foresee a rapidly changing business environment where manufacturers will have the most fruitful partners with every member of the supply sequence and the consumers, a scenario where the manufacturer will run a 'virtual factory' with the effective and efficient use of value sequence networks unlimited by geographical location or consideration.
RM functions on a strategic, a tactical and an in business level. Businesses that are product-oriented ensure effective performance of their products, in the design, the features and output; the production-oriented business (not to be confused with the product-oriented) believe in mass production at a cheap scale on the notion that the customer uses low-price as a single consideration; sales-oriented businesses put a lot of stock in advertising, promotions and public relations while the customer-centric enterprise strives to understand its customers preferences and purchasing behaviour and models its business activities to suit this. This is considered strategic RM. The in business level deals with automating the customer management process using computer applications and devices across market, sales staff and service categories. Tactical RM deals with using the data from customer management computer applications to add value both to the customer and the company.
While it would be in a good way useful to run an individual database to keep this company in sync with full information with its customers, RM especially from a strategic perspective delves deeper than just software; it deals with a 'pull' strategy, letting the wants and needs of the customer shape what services can be obtained, rather than the other way round, using a production-oriented strategy to 'push' services that the consumers may or may not need, but which does not ultimately satisfy the customer.
Companies generate more revenue when they satisfy - and because of this retain- their customers. It is hereby propounded that the simple economic fact that customer maintenance is cheaper than customer attraction supplies the customer with an intrinsic importance to business performance than anything else.
Discussions on RM, or even relationship marketing, cannot be possible with the exclusion of the word 'customer'. The customer is the object - and sometimes also the subject - of RM. Attainment of an effective RM is consistent upon customer care, customer maintenance, customer loyalty and a host of sub-concepts preceded by the word 'customer'.
But though it is known what the customer represents, it is not always known who the customer is or how many different representations of the customer we have.
A vehicle manufacturer for example will have its suppliers of raw material in tiers, its distribution partners, and the actual end users. From a business point of view, all these are customers and even though there is very single set of consumers. The basis of the RM between these different customers (and even between different sub-levels of customers - supplier tiers for instance) could be immense. Customer Relationship Management in its true sense may refer simply to the end users or consumers in this case, for the attraction and maintenance schemes may not sign up for first tier suppliers, though development will, albeit from a different perspective.