Secrets of Customer Relationship Management: It’s All about How You Make Them Feel

Citation

Fournier, S. (2002), "Secrets of Customer Relationship Management: It’s All about How You Make Them Feel", Journal of Services Marketing, Vol. 16 No. 7, pp. 700-703. https://doi.org/10.1108/jsm.2002.16.7.700.1

Despite the embrace of relationship marketing as a “paradigm shift” (Sheth and Parvatiyar, 2002), it is estimated that upwards of 60‐70 percent of customer relationship management (CRM) initiatives have stalled or failed (Dyche, 2002). CRM has attained distinguished status as the fastest‐growing management tool with the third lowest satisfaction score, as reported in a Bain survey of 5,600 senior executives around the world (Rigby, 2001). While there surely exist organizational and structural reasons for CRM’s fall from grace, theoretical shortcomings – and, relatedly, the inability to translate meaningful relationship theories into actionable CRM practices – seem also to blame. Drawing on extensive consulting and research experiences, Barnes’ book provides much original thinking and insight on the subject of relationships that helps marketers put the “R” back into CRM.

Several important conceptual conundrums that cloud activities in the CRM field are considered head‐on in Barnes’ treatment. Of particular note is reflection on the loyalty versus retention underpinnings that distinguish true relationship‐building activities from mere frequency rewards. The core distinction between “established relationships” versus “secured patronage”, as Barnes conceptualizes it, is one of emotional vestment, which precipitates important benefits beyond incremental purchase behaviors, including referrals, word‐of‐mouth recommendations, and increased likelihood of recovery from failures. Barnes provides an effective illustration of the pitfalls of blindly worshipping the repeat patronage master by demonstrating how firm behaviors dedicated to retention goals may actually be antithetical to the maintenance of true consumer relationships. He also makes a compelling case for the extreme form of this argument: that a relationship may exist between a consumer and a brand/firm absent purchase behaviors in the first place. This is an evocative issue that most theoreticians have either denied or dismissed, yet it remains an issue with significant implications for CRM practice. In any case, Barnes’ explicit goal is a worthwhile one: to move managers beyond retention as the overriding relationship goal, and beyond purchase behavior as the sole qualifying criterion, so as to broaden managers’ conception of the meanings and benefits of true relationships between consumers and firms.

Strengthening this line of inquiry is Barnes’ comparison of the theoretical spirit of CRM and the database management practices with which CRM is typically equated. Barnes identifies several fundamental misalignments between these two operative philosophies, and points out how dominant database management practices often violate the very tenets of relationality on which the systems should be based. Concerns for cost efficiency and targeting effectiveness are highlighted as the dominant motives guiding database management in the first place, and these firm‐centric intentions are criticized for being fundamentally opposed to the mutuality and reciprocity that constitutes true relationships between consumer and firm/brand. Importantly, Barnes provides practical ideas for relationship‐savvy segmentation schemes that can deliver increased value toward this end. Specification of several relevant relationship‐status groups is also provided (e.g. weakening relationships, taken‐for‐granted relationships, don’t‐want‐a‐relationship relationships), which can further enhance the actionability of database systems. Holistic CRM designs that are sensitive to predictable stress points in the relationship are also recommended (e.g. employee turnover, store closings, committed transgressions), which further enhances delivery against the “R” in CRM.

Along these same lines, a central contribution of Barnes’ book involves elaboration of the marketing lexicon beyond “relationships” in some abstract, generalized sense, to include consideration of explicit relationship levels, dimensions, and forms. While clearly a contribution versus extant works, this portion of the theory could benefit from deeper development; however. Barnes’ conception of the relationship in its most basic form does little, for example, to move the field beyond its obsession with the idea of highly‐committed, emotionally‐vested, exclusive relationships, which is held to be ideal. Surely this is one significant form of the consumer‐firm relationship, but to suggest that it comprises the one “true” relationship exemplar seems short‐sighted and limiting. The domain seems to be begging for an innovative typology of significant relationship forms: ideally, one that considers the rules of engagement defining relationship conduct, so as to maximize managerial relevance and actionability. Barnes presents much fodder for this exercise (e.g. the “emotional tenor” of the relationship, dimensions of relationships, degrees of closeness, the types of benefits and values that are derived through firm engagements, “zones of tolerance” guiding expectations setting), yet formal codification and organization of these ideas is lacking. Do Barnes’ alternate conceptions of value provide the bases for 13 different relationship forms, for example? Are all the relationship elements put forth characteristic of all relationship types, or can cluster patterns be extrapolated? Barnes’ multitudinous lists of benefits, dimensions and the like at times become confusing and can appear ad hoc. More systematic development and validation of this conceptual terrain – particularly vis‐à‐vis the extensive works published in the interpersonal relationships field – would prove invaluable. In particular, theory could surely be advanced through a relationship typology defined not on magnitude (as in Barnes’ typology of close versus distant relationship forms, or his consideration of the levels of expectations involved in relationship satisfaction) but on issues of content, as with characteristic dimension/benefit/feeling patterns, and specific relationship rules. With a more complete and organized vision of the content and scope of the consumer‐firm relationship map, much theoretical and practical advance can be made.

Beyond sharpening our understanding of the complexity of the relationship construct, and revealing the implicit and perhaps misaligned rules by which relationships have been managed through data‐driven systems, Barnes’ book also explores metrics for the measurement of CRM initiatives. Barnes’ notion of long‐term customer value (LTCV) is central here, and, importantly, stresses the need to consider relationship value beyond the simple notion of future spending streams. The importance of measuring relationship dimensions, characteristics (i.e. closeness, emotional tonality, and strength), and overall relationship equity is stressed as well. While valuable in the provision of a general landscape of relationship‐relevant constructs for evaluation, tracking, and measurement, specification of the metrics is somewhat lacking. Concrete conceptual frameworks and specific ideas for measurement are not clearly set forth, and tactics for overcoming barriers to operationalization are not provided. Guidance on how firms could begin to consider the activity‐based accounting practices needed for LTCV calculations would prove invaluable, for example. A critical reflection on the all‐too‐easily assumed benefits obtained from valued customers (e.g. willingness to pay price premiums, engagement of word‐of‐mouth activities), as informed through empirical research where it exists, would also extend intended contributions concerning the LTCV notion. In addition, ideas regarding how relationship equity should be conceptualized for a given scenario should also be explored, with particular attention to the mathematical procedures and trade‐offs involved in creating a relationship equity index. Confusion across Barnes’ constructs (e.g. closeness versus relationship depth versus relationship strength versus relationship equity) would need to be clarified in providing actionable guidance such as this (see Bove and Johnson, 2001). Moreover, a more thorough consideration of extant literatures in and beyond marketing could also be attempted (for example, as concerns the notion of relationship equity, see Blattberg and Deighton (1996), Rust et al. (2000), Lemon et al. (2001); for ideas on relationship strength indices, see Fincham and Bradbury (1987), Fournier (1998), Glenn (1990), Spanier and Lewis (1980)).

A final strength of Barnes’ book lies in its integrative capacity and outlook. Barnes explores CRM not as a marketing responsibility, nor a technology initiative, but as a consumer‐centric organizational capacity that delivers shareholder value. His integrative conceptualization incorporates inextricably‐interwoven managerial concepts that are often kept independent and separate, including satisfaction, loyalty, value, retention, and brand equity. Importantly, relationship‐inspired ideas and practices that seamlessly characterize the cultures of small businesses are explored for their applicability and translation to large‐scale company initiatives. The virtuous cycle of brand‐employee‐firm loyalties touted so often in the services field is also centrally implicated. Finally, issues of investment payback are directly considered in operationalizing the relationship value chain, and ideas on relationship marketing economics that extend beyond the oft‐quoted findings of Reichheld and Sasser (1990) are attempted.

This notion of integration is a tall order to fill, obviously, and some of Barnes’ connections remain rather elusive in the present writing. The treatments of branding and sponsorship, in particular, appear rather disjointed from the central thesis at hand. Interconnections could surely be developed by pushing for more refined consideration of the levels of analysis issue, on the first hand, and for theoretical connections between meaning making and relationship processes, on the second, though this endeavor likely comprises a second book treatment. As regards general notions of cross‐concept integration, enhanced conceptual rigor of the types noted above would also help to improve distinctions and overlaps in the web of concepts considered here, as would empirical efforts devoted to construct validation goals, perhaps using LISREL technology.