Jill Avery, Susan Fournier and John Wittenbraker
Consumers have always had relationships with brands, but sophisticated tools for analyzing customer data are finally allowing marketing organizations to personalize and manage those relationships. With this new power comes a new challenge: people now expect companies to understand what type of relationships they want and to respond appropriately—they want firms to hold up their end of the bargain. Unfortunately, many brands don't meet those expectations.
Consumers have always had relationships with brands, but sophisticated tools for analyzing customer data are finally allowing marketing organizations to personalize and manage those relationships. With this new power comes a new challenge: People now expect companies to understand what type of relationships they want and to respond appropriately—they want firms to hold up their end of the bargain. Unfortunately, many brands don’t meet those expectations.
Despite the “R” in CRM and the $11 billion spent on CRM software annually, many companies don’t understand customer relationships at all. They lack relational intelligence—that is, they aren’t aware of the variety of relationships customers can have with a firm and don’t know how to reinforce or change those connections. They may be very good at capturing simple demographic data—gender, age, income, and education—and matching them with purchasing information to segment customers into profitability tiers. But this is an industrial view of customer relationships, a sign that many firms still think of customers as resources to be harvested for the next up-sell or cross-sell opportunity rather than as individuals looking for certain kinds of interactions.
As a consequence, consumer companies often manage relationships haphazardly and unprofitably, committing blunders that undermine their connections with customers. A person wanting to be treated like a friend is more likely to be treated as a mere party to an exchange—or, even worse, as an adversary. It goes the other way, too: A customer looking for a mere exchange may get an off-putting attempt at building a friendship. In study after study, we find that consumers are frequently frustrated by companies’ inability to meet their relationship expectations.
Through our two decades of research on brand relationships in a wide variety of industries across the globe, we’ve learned how companies can glean information about the kinds of connections their customers are looking for. We’ve also identified a number of relationship types, complete with the rules each type implies. Some of the types are what you’d expect; others veer into surprising territory. Do your customers want to have a fling with the brand? Do they assume a master–slave relationship, with the customer playing master to a servile company? We’ll explain these and show why they matter for profitability.
Drawing on our analysis of firms that have made progress in managing relationships, we’ll show how companies can unlock the mysteries contained in their portfolios of relationships and deliver on customers’ expectations.
A New Approach to Relating
Why are relationships important? Consider these examples from our research.
A customer of a grocery delivery start-up is very happy to have found a service that can save him from one of his least favorite chores: going to the supermarket. He wants this business to survive, so he sends in suggestions for fixing operational glitches. But he gets no response—just a stream of promotional e-mails encouraging him to place orders more frequently. Dismayed, the customer cuts back his use of the service, believing that the company isn’t interested in developing a relationship on his terms.
A clothing brand popular with plus-size baby boomer women tries to reposition itself as relevant to younger, thinner customers and in so doing alienates established customers, who feel betrayed and disrespected—as though they’ve been dumped for someone more attractive...
Published on Harvard Business Review in July-August, 2014.
ABOUT THE AUTHOR
Harvard Business School