Nicholas Ullman
03/22/10
CO.300.022
Customer-Employee Interaction in Relationship Marketing
Abstract: Relationship marketing has been used back and forth in the past decades as companies try to increase profits and decrease costs. Economic busts tend to scare companies away from this type of plan as they worry for the future. I pursued the aspect that these companies should in fact be more aggressive of their customer employee interactions within these campaigns. This provides loyalty to the company through hard times when they’ll need it most.
The interactions between a business and a customer are some of the most crucial parts in achieving relationship marketing success in the retail and service industries. In order to provide value and a reason to return to the store, a customer must remain in contact with the company and its employees. Several different types of interaction can be utilized in order to bring satisfaction to the customer.
The employee-customer interaction is the most useful and persuasive technique in providing value. This is the interaction between the sales force or customer service representatives and the customer. It will most likely be the most prominent source of information for the customer and provide the most value to them. As Grewall, Krishnan, and Lindsey-Mullikin point out, “Customer service represents a key element of retail strategy for maintaining a sustainable competitive advantage” (341).
Two other possible interactions might be possible depending on the size of the company and the extent of the marketing program in use. The store-customer interaction exists for mediocre sized companies. This contact is initiated by the local store by its discretion, based on whatever criteria they feel necessary.
Finally there is the program-customer interaction; this is usually initiated through email. This form of contact exists primarily for larger companies with rewards programs that give credit back to customers for their previous purchases. It is usually very structured and has certain criteria for contact such as timing and consistency of previous purchases. “Retailers with loyalty programs can amass a wealth of information about their customers and use sophisticated data mining programs to target merchandise directly to the right customers”(Grewal, 2008, p 343).
These forms of contact are crucial in order to build a relationship with the customer, a key factor in relationship marketing. This relationship is built upon repeat interactions and trust between the customer and, most commonly, the employee. “Relationship management programs are generally increase customer satisfaction, loyalty and retention.”( Grewal, Krishnan, and Lindsey-Mullikin, 2008, p. 343) The customer believes the employee is there to provide useful information and any assistance needed to said customer. The customer trusts that the employee is not trying to manipulate or persuade the customer to a result he does not wish.
These relationships are important to the company as they believe through the relationship marketing concept that customers are far more profitable through repeat business and loyalty. As Lynette and Simon point out, a 5% increase in retention rate can provide as high as 95% increase in customer net present value such as in an advertising agency or 90% in life insurance (2001, p 534). New loyalty programs provide incentive to return to the store through points and rebates for future purchases. This method is quite useful to get customers in the store but their actual purchase requires confidence and need for the product in question. This can only be provided by a knowledgeable and trustworthy employee who has demonstrated expertise and usefulness.
The employee has several ways in which they can provide credibility to themselves. While usually this is done over time through knowledge of the customer and their preferences. The employee should be knowledgeable of discounts and deals which the customer might be interested in, as well as financing offers which might be useful for larger purchases. This gives the impression to the customer that the employee has certain value and knowledge of the market.
This knowledge gives the customer trust in the employee and trust in the company. This trust builds upon loyalty that brings the customer back to that company in order to find useful information on the market that other companies cannot provide. This is a large reason as to why the electronics retailer Best Buy is able to compete with discount retailers such as Wal-Mart or Costco. Best Buy is able to provide knowledge and know how for almost any electronics question that is asked of them.
Best Buy also incorporates a loyalty program based on points and prior purchases as well as many financing offers so it is hard to judge how much loyalty is provided by their employee interactions. They are a proven company in the relationship marketing area as they have demonstrated by staying a leader in their industry and ousting their rival Circuit City.
Harrah’s hotels is another company which has proven itself in the relationship marketing area, showing that loyalty can only be achieved when both parties are receiving value in their transactions. Harrah’s is a casino chain which also houses hotels as well as many other businesses within their buildings such as restaurants and gift shops. Harrah’s has been hailed as a world leader in their loyalty program and for good reason. They put considerable effort into their customer databases in order to track any aspect of customer likes, dislikes, preferences, and habits.With this information they have been able to manipulate what they can offer on an almost instant basis.
For instance when a customer uses their loyalty card in one of their casinos, it alerts their system of your presence. A customer service representative can then look through your preferences to see if they can offer anything of value to you, such as if there is a room available in the hotel that lives up to your specifications. These specifications are as specific as being close to an elevator, dim lighting, size of bed or as broad as smoking, or which floor.
Once something of value is found for the customer, a representative can contact the customer on the floor to see if they are interested. This provides the customer with an overwhelming feeling of being cared for as the company appears to know the customer very well.
All of these aspects attribute to a customer’s loyalty by making them feel appreciated and useful to the company. This brings the customer back to the store knowing they are needed and that they are able to manipulate what they need as the company does not want to lose them. It is ever changing as a company cannot provide everything that all customers demand and as such have to let some go which provide less of a long term value to the company.
A company is only as good as its profits, without these it wouldn’t be possible to survive. Since customers are crucial to the sales of a company which in turn profit, a customer is a company’s most valuable asset. While many companies have pushed for new customers, retaining your most valuable asset that you already have should be goal number one. Customer employee interaction provides that retention through quality and service, making the customer at home and well serviced whenever they decide to purchase from your company in the future.
References
Grewal, D., Krishnan, R. & Lindsey-Mullikin, J. (2008). Building Store Loyalty Through Service Strategies. Journal of Relationship Marketing, 7(4), 341-358. doi:10.1080/15332660802508406
Lynette Ryals, Simon Knox. (2001). Cross-functional issues in the implementation of relationship marketing through customer relationship management, European Management Journal, Volume 19, Issue 5, Pages 534-542, ISSN 0263-2373, DOI: 10.1016/S0263-2373(01)00067-6.
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Wallace, E. & De Chernatony, L. (2009). Service Employee Performance: Its Components and Antecedents. Journal of Relationship Marketing, 8(2), 82-102. doi:10.1080/15332660902876612
HsinHsin Chang, Su Wen Chen. (2008). The impact of customer interface quality, satisfaction and switching costs on e-loyalty: Internet experience as a moderator, Computers in Human Behavior, Volume 24, Issue 6, Including the Special Issue: Electronic Games and Personalized eLearning Processes, , Pages 2927-2944, ISSN 0747-5632, DOI: 10.1016/j.chb.2008.04.014.
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Bruhn, M., Georgi, D. & Tuzovic, S. (2009). The Link Between Marketing Instruments and Customer Perceptions. Journal of Relationship Marketing, 8(1), 50-67. doi:10.1080/15332660802675718
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