Relationship Development Model

Relationship Drivers Outcomes

Customer Benefits
Relationship Bonds Confidence Benefits
Financial Bonds Social Benefits
Social Bonds Special Treatment Benefits
Customization Bonds
Structural Bonds

Core Service Provision Strong Customer

Satisfaction
Perceived Service Quality Relationship
Perceived Value (Loyalty)
Firm Benefits
Economic Benefits
Customer Behavior Benefits
Human Resource Management Benefits
Switching Barriers
Customer Inertia
Switching Costs
Figure 7.5
ã 2005 - Dwayne D. Gremler
 Levels of Retention Strategies
Stable
Volume and Pricing Bundling and
Frequency
Cross Selling
Rewards

Continuous
Integrated I. Financial Relationships
Information
Systems Bonds

Excellent
IV. II.
Joint Service Personal
Investments Structural Social Relationships
and
Bonds Bonds
Value
Shared
Social Bonds
Processes
III. Customization among
and
Customers
Equipment Bonds

Anticipation/ Customer
Figure 7.6 Innovation Intimacy
Mass
Customization

ã 2005 - Dwayne D. Gremler

Developing loyal Customers at Boots- The
Chemists
 Best known and trusted brand in us and uk
 1887
 Leading health and beauty retailer
 1400 retail store and online store
 Called “Chemist to the nation”
Success Story:
Focus on customer – develop customer loyalty – no. of retention and relationship strategies.
Advantage Card: (1997)
World’s largest smart card loyalty scheme
13 million members
50% sales linked with this card
Benefits:
Increased sales
Built greater loyalty
Strategy: 4 points for every pound spend - redeemed for selected products – not discounts – simple
lunch – increased average transaction of high spending customers
Mail beauty and health magazine for top 3 million customers – online purchase – credit card version -
Relationship Challenges
The customer is not always right
The wrong segment
Not profitable in the long Term
Difficult customers – dysfunctional customer - actions
by customers who intentionally, or perhaps
unintentionally act in a manner that in some way
disrupts otherwise functional service encounters.
Ending Business Relationship
Relationship ends
Should firm fire their customers?