Holistic Relationship Marketing: Internal and External Strategy

Introduction

Relationship marketing is one of the fastest growing research topics in business and marketing today. The premise of relationship marketing is very broad and includes — or should include — external and internal relationship building as a reciprocal factor for firm success. Successful relationship marketing, according to the literature, results in high productivity, high employee and customer satisfaction, low employee and customer attrition, and ultimately high profitability and success (Ballantyne, 1997, pp. 343–366; Ballantyne, 2000, pp. 274–286; Herington, Johnson & Scott, 2006, pp. 364–381). Relationship marketing is defined as marketing activities aimed at developing and managing trusting and long-term relationships with larger customers. In relationship marketing, customer profiles, buying patterns, and histories of contacts are maintained in a sales database, and an account executive is assigned to one or more major customers to fulfill their needs and maintain the relationship. Yet, fundamentally, this definition of relationship marketing (RM) demonstrates only one aspect of its purpose. Ultimately, RM exists to help the firm develop both internal (employee) and external (customer) relationships by building and maintaining professional — and possibly even personal — relationships with all members of the firm community.

The defining desire of relationship marketing is to make each participating member — whether large or small customers, firm employees, or even suppliers — feel valued and respected. The goal of relationship marketing is to make each person feel important to the firm and supported in whatever way possible. This paper discusses RM in these terms, as both an internal and external tool to support firm success, arguing that relationship marketing is both an external and internal component of success as well as a vital component for the successful marketing of firms. To perform this analysis, the paper first examines a body of literature that supports either internal or external relationship marketing, or both, and then uses this information to investigate an existing firm whose mission is focused on both internal and external relationship marketing and which reports notable success. The firm analyzed employs a holistic relationship marketing mission and reports high customer and employee satisfaction, low levels of employee and customer attrition, higher productivity, and higher profitability compared to its previous mission structure.

Relationship Marketing Theory

Relationship marketing has a relatively short history in the business and marketing world, and has been — and will likely continue to be — defined as the manner in which firms develop and maintain lasting relationships with existing customers in an attempt to retain and re-engage those same customers. There is a clear sense that external relationship marketing demonstrates a more effective business strategy than attempting to gain new customers on a dollar-per-dollar basis, since existing customers already have a relationship with the firm and understand its workings to some degree. Companies that retain existing customers while creating new ones experience much more rapid growth (Seroka, 2000, p. 43). The reasons for success associated with the narrower definition of RM are associated with lower cost of contact — it costs less in time and resources to communicate with existing customers than to seek new ones through various marketing channels.

RM has also traditionally focused on larger customers, where the firm places most of its resources on keeping major clients close and satisfied so that they return when they seek to utilize services again. Kindling and rekindling these relationships can vary a great deal by business and industry, but as noted in the marketing literature, this often means one-on-one relationship development with large customers. Historically, the RM trend began in the mid-1970s in Europe with a small group of firms in the industrial marketing and purchasing group (IMP), was then introduced to the services industry, and lastly to consumer markets (Veloutsou, Saren & Tzokas, 2002, p. 433). The RM trend as a business strategy has since expanded to nearly every area of business. Its first proponents worked in relatively small-number relationship markets, where suppliers and consumers dealt with large quantities of products in high volumes; it has grown to encompass companies dealing with direct consumer purchasing, where each customer seeks to purchase or utilize only a small share of business. The necessity of retaining customers is high, as even a single customer could potentially make a significant impact if he or she were to seek out and purchase materials from another supplier. Business models that utilize this later RM strategy include firms such as banks or travel agencies, where both large and small customers exist and the firm attempts to make each service encounter as easy, pleasant, and memorable as possible.

External Relationship Marketing

As previously noted, external RM represents the first conception of the practice — with the longest tradition and the most infrastructural development. The services and standards associated with building customer relationships have existed for a long time, and RM as a marketing strategy gave them a name and a structure for both business and research development. The goal of many firms became one of making every customer a customer for life (Seroka, 2000, p. 43). Increased pressure from demanding customers is a hallmark of today's business world, and companies must respond effectively to gain competitive advantage (Herington, Johnson & Scott, 2006, p. 364). This emphasis has led to trends focusing on customer relationships as the most important aspect of maintaining and gaining market share.

Early proponents of the expanded conception of RM — as a tool usable by businesses with large customer bases, where individual customers represent small transactions but together represent large business percentages — began to recognize the need to emphasize positive customer relations as crucial and foundational to success. These firms placed great emphasis on building large, multi-access-point databases containing customer information to help employees recognize customer history and create relationships even when a customer might be accessing a different employee contact point at every encounter (Lee & Trim, 2007). Some firms even moved toward creating strategic alliances with other compatible firms to build customer and information networks (Rich, 2003).

In creating these systems to better support customer relations and external relationship marketing, many businesses began to notice a missing link: employees who were not happy and invested found it far more difficult than their satisfied counterparts to be consistently positive in every customer interaction. From this recognition grew a new urgency around customer-relations quality development and a new demand for relationship marketing that turned inward — to build employee and supplier relationships to greater levels — giving rise to internal RM (Lee & Trim, 2007; Herington, Johnson & Scott, 2006, p. 364).

Conclusion

Relationship marketing is clearly one of the fastest growing research topics in business and marketing today, as well as one of the fastest growing business application trends. Successful relationship marketing, according to the literature, results in high productivity, high employee and customer satisfaction, low employee and customer attrition, and ultimately high profitability and success (Ballantyne, 1997, pp. 343–366; Ballantyne, 2000, pp. 274–286; Herington, Johnson & Scott, 2006, pp. 364–381). There is also a clear need to expand the definition of RM to encompass the holistic approach demonstrated in this research and firm analysis.

The defining desire of relationship marketing is to make each participating member — whether large or small customers, firm employees, or even suppliers — feel valued and respected. The goal of relationship marketing is therefore to make each person in the chain feel important to the firm and supported in whatever way possible. This paper has discussed RM in these terms, as both an internal and external tool to support firm success, arguing that relationship marketing is both an external and internal component of success as well as a vital element for the successful marketing of firms. As evidenced by this firm analysis and supporting research, holistic RM is an obvious and meaningful adaptation for business success in the modern world.

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