Customer Relationships

Question 1

What characterizes a relationship?

Answer 1

Mutual 
Interactive
Provides ongoing benefits to both parties 
Unique 
Requires and produces trust

Question 2

Explain the relationship development process according to Britton

Answer 2

Awareness: knowledge of each other
Exploration: search and trial
Expansion: increase in relationship benefits and interdependence
Commitment: indicated by inputs, consistency and durability
Dissolution: value of the relationship no longer worthwhile

Question 3

What are the two primary relationship building blocks? (Britton)

Answer 3

1. Trust
   Benefits: cooperation, commitment, relationship duration & quality
   Main contributors to trust:shared values, interdependence, quality communication & non-opportunistic behavior
2. Commitment
   Types of commitment: calculative (negatively correlated to trust) & affective (positively correlated to trust)
   Main contributor to commitment: trust

Question 4

What are some other relationship building blocks?

Answer 4

Satisfaction
Uncertainty and dependence: uncertainty increases dependence
Fairness
Symmetry

Question 5

What are the four levels of a relationship?

Answer 5

Intimate
Face-to-face
Distant
No-contact

Question 6

What is emotional, behavioral and functional loyalty?

Answer 6

Emotional loyalty: psychological preference, affective attachment, biggest influence on behavior
Functional loyalty: calculated decisions by customer
Behavioral loyalty: tendency to purchase a brand no matter what the price

Question 7

What are the 2 definitions of customer loyalty?

Answer 7

Attitudinal loyalty: loyalty is the customers state of mind
Behavior loyalty: relies on customers actual conduct
Attitudinal loyalty without behavioral loyalty has no financial benefit for a firm, but behavioral loyalty with attitudinal loyalty is unsustainable

Question 8

What are some best practice for a loyalty program?

Answer 8

Never waste an opportunity to gain insight about a customer
Offers modularity
Should work with other programs
Should be managed around customers not products
Should be simple
Should be tangible

Question 9

What is a trusted agent?

Answer 9

An enterprise the customer trust to act in his own interest, the trusted agent needs to always prioritize the customers interest, improve the customers ability to make choices that best manage his life or business

Question 10

Why do companies work at becoming customer-centric?

Answer 10

Customers are scarce
Customers are the sole source of the company's revenue
Customers create value in two ways:
1. Current profit
2. Customer equity