WHAT IS RELATIONSHIP MANAGEMENT THEORIES
RELATIONSHIP MANAGEMENT THEORIES ARE FRAMEWORKS OR IDEAS THAT
EXPLAIN HOW BUSINESSES BUILD, MAINTAIN, AND IMPROVE LONG-TERM
RELATIONSHIPS WITH THEIR CUSTOMERS, PARTNERS, EMPLOYEES, AND
OTHER STAKEHOLDERS.
RELATIONSHIP MANAGEMENT THEORIES:
1. SOCIAL EXCHANGE THEORY: RELATIONSHIPS ARE BUILT ON A COST-BENEFIT
ANALYSIS. PEOPLE STAY IN RELATIONSHIPS IF THE PERCEIVED REWARDS
OUTWEIGH THE COSTS. IN BUSINESS, THIS MEANS MAINTAINING CUSTOMER
LOYALTY BY PROVIDING VALUE AND SATISFACTION.
2. SYSTEMS THEORY: AN ORGANIZATION IS PART OF A BROADER SYSTEM OF
INTERCONNECTED RELATIONSHIPS. BUSINESSES MUST ADAPT AND RESPOND
TO CHANGES IN THEIR ENVIRONMENT (LIKE CUSTOMER NEEDS OR MARKET
TRENDS) TO MAINTAIN HEALTHY RELATIONSHIPS.
3. STAKEHOLDER THEORY: COMPANIES MUST MANAGE RELATIONSHIPS WITH
ALL STAKEHOLDERS (NOT JUST CUSTOMERS). THESE INCLUDE EMPLOYEES,
SUPPLIERS, COMMUNITY, GOVERNMENT, INVESTORS, ETC.
4. RELATIONSHIP MARKETING THEORY: FOCUSES ON LONG-TERM CUSTOMER
ENGAGEMENT INSTEAD OF ONE-TIME SALES. EMPHASIZES CUSTOMER
SATISFACTION, TRUST, AND LOYALTY.
5. COMMITMENT-TRUST THEORY (MORGAN & HUNT, 1994): STATES THAT TRUST
AND COMMITMENT ARE ESSENTIAL TO SUCCESSFUL RELATIONSHIP
MARKETING. IF CUSTOMERS TRUST A COMPANY AND FEEL COMMITTED, THEY
ARE MORE LIKELY TO STAY LOYAL AND REFER OTHERS.
CUSTOMER RELATIONSHIP DEFINITION
CUSTOMER RELATIONSHIP REFERS TO THE WAY A BUSINESS INTERACTS
WITH ITS CUSTOMERS TO BUILD LOYALTY, SATISFACTION, AND LONG-TERM
ENGAGEMENT.
CUSTOMER RELATIONSHIP IS THE PROCESS OF MANAGING INTERACTIONS
WITH CURRENT AND POTENTIAL CUSTOMERS THROUGH COMMUNICATION,
SUPPORT, AND PERSONALIZED SERVICE TO ENHANCE CUSTOMER
SATISFACTION AND ENCOURAGE REPEAT BUSINESS.
WHAT IS RELATIONSHIP?
RELATIONSHIP IN BUSINESS, REFERS TO THE CONNECTION OR INTERACTION
BETWEEN A COMPANY AND ITS STAKEHOLDERS— SUCH AS CUSTOMERS,
EMPLOYEES, SUPPLIERS, INVESTORS, AND THE COMMUNITY.
THESE RELATIONSHIPS ARE BUILT ON TRUST, COMMUNICATION,
COOPERATION, AND MUTUAL BENEFIT.
STRONG BUSINESS RELATIONSHIPS HELP DRIVE LOYALTY, LONG- TERM
SUCCESS, AND SMOOTH OPERATIONS.
SOME RELATIONSHIP MANAGEMENT THEORIES:
1. INDUSTRIAL MARKETING AND PURCHASING GROUP (IMP GROUP)-THIS
EUROPE-BASED RESEARCH INITIATIVE IN INDUSTRIAL MARKETING FOCUSES
ON B2B RELATIONSHIPS AND STATES THE FOLLOWING CHARACTERISTICS.
B2B (BUSINESS-TO-BUSINESS) RELATIONSHIP REFERS TO THE PROFESSIONAL
CONNECTION AND ONGOING INTERACTION BETWEEN TWO BUSINESSES.
INSTEAD OF SELLING DIRECTLY TO INDIVIDUAL CONSUMERS (B2C), ONE
BUSINESS PROVIDES PRODUCTS, SERVICES, OR SUPPORT TO ANOTHER
BUSINESS. THESE RELATIONSHIPS ARE OFTEN LONG-TERM, BASED ON TRUST,
SERVICE QUALITY, AND MUTUAL BENEFIT
2. NORDIC SCHOOL - A SCANDINAVIAN SERVICES MARKETING GROUP, NAMED
THE NORDIC SCHOOL, EMPHASIZES ON SUPPLIER-CUSTOMER RELATIONSHIP.
IT IDENTIFIES THE TRIPLET OF RELATIONSHIP MARKETING AS:
INTERACTION: - AS CUSTOMERS AND SUPPLIERS INTERACT, EACH ONE
PROVIDES A SERVICE TO ANOTHER. CUSTOMER PROVIDES INFORMATION AND
SUPPLIER PROVIDES SOLUTION.
DIALOGUE: - COMMUNICATION IS BILATERAL AND IS ESSENTIAL FOR THE
SURVIVAL OF THE RELATIONSHIP.
VALUE: THE BUSINESS NEEDS TO GENERATE SOMETHING
THAT IS PERCEIVED AS VALUE TO THE CUSTOMER.
3. ANGLO-AUSTRALIAN SCHOOL - IT STATES THAT RELATIONSHIPS ARE
IMPORTANT NOT ONLY FROM THE VIEWPOINT OF CUSTOMERS BUT ALSO
FROM THE ANGLE OF STAKEHOLDERS OF THE BUSINESS SUCH AS
EMPLOYEES, SUPPLIERS, AND GOVERNMENT.
4. NORTH AMERICAN SCHOOL - GOOD RELATIONSHIPS REDUCE COSTS
SIGNIFICANTLY. TRUST AND COMMITMENT ARE VITAL ATTRIBUTES OF A
SUCCESSFUL RELATIONSHIPS.
5. (GUANXI) ASIAN SCHOOL - IS BASED UPON THE TEACHINGS OF LORD BUDDHA
REGARDING SOCIAL CONDUCTS AND ACTS OF RECIPROCATION. THIS THEORY
STATES THAT PEOPLE FROM A FAMILY, FRIENDSHIP, SAME-CLAN FELLOWSHIP
ARE CONNECTED TO EACH OTHER DUE TO INFORMAL SOCIAL RELATIONSHIPS
WHICH IMPOSE THEM TO FOLLOW RECIPROCAL OBLIGATIONS TO ACQUIRE
THE RESOURCES BY EXCHANGING FAVORS AND COOPERATION.
WHY COMPANIES WANT RELATIONSHIP WITH CUSTOMERS?
CUSTOMER RETENTION
LOYALTY AND TRUST
REPEAT BUSINESS
WORD-OF-MOUTH MARKETING
CUSTOMER FEEDBACK
COMPETITIVE ADVANTAGE INCREASED LIFETIME VALUE
WHY COMPANIES WANT RELATIONSHIP WITH SUPPLIERS?
REASONS WHY COMPANIES BUILD RELATIONSHIPS WITH SUPPLIERS:
o RELIABLE SUPPLY OF MATERIALS
o BETTER QUALITY CONTROL
o LOWER COSTS AND BETTER DEALS
o FLEXIBILITY AND CUSTOMIZATION
o INNOVATION AND COLLABORATION
o REDUCED RISKS
o STRONGER NEGOTIATION POWER
EVOLUTION OF CUSTOMER-SUPPLIER RELATIONSHIP
AWARENESS EXPLORATION EXPANSION COMMITMENT DISSOLUTION
F. ROBERT DWYER, A MARKETING PROFESSOR AT LINDNER COLLEGE OF BUSINESS
STATES: FIVE PHASES THROUGH WHICH A CUSTOMER-SUPPLIER RELATIONSHIP
EVOLVES:
1. EXPLORATION - IS THE EARLY PHASE IN A CUSTOMER-SUPPLIER
RELATIONSHIP WHERE BOTH PARTIES BEGIN TO ASSESS EACH OTHER’S
POTENTIAL VALUE, COMPATIBILITY, AND TRUSTWORTHINESS.
2. AWARENESS - THE CUSTOMER AND SUPPLIER BECOME AWARE OF EACH
OTHER. INVOLVES BEING AWARE OF HOW EACH PARTY CONTRIBUTES TO
BUSINESS SUCCESS AND HOW COLLABORATION CAN LEAD TO MUTUAL
BENEFITS.
3. EXPANSION - STAGE OCCURS AFTER SUCCESSFUL EXPLORATION. IN THIS
STAGE, THE CUSTOMER AND SUPPLIER BEGIN TO INCREASE THE SCOPE AND
DEPTH OF THEIR RELATIONSHIP. TRUST IS GROWING, AND BOTH PARTIES ARE
MORE WILLING TO INVEST TIME, EFFORT, AND RESOURCES INTO THE
PARTNERSHIP.
WHY EXPANSION IS IMPORTANT:
INCREASES EFFICIENCY
BOOSTS INNOVATION
STRENGTHENS COMPETITIVE EDGE
REDUCES RISK
EXAMPLE: A SMARTPHONE COMPANY PARTNERS WITH A CHIP SUPPLIER.
INSTEAD OF JUST PLACING ORDERS, THEY BEGIN TO: CO-DEVELOP NEW CHIP
TECHNOLOGY. SHARE FUTURE PRODUCT ROADMAPS. SIGN A 5-YEAR
EXCLUSIVE SUPPLY CONTRACT
4. COMMITMENT- STAGE IS WHEN BOTH THE CUSTOMER AND SUPPLIER HAVE
DECIDED TO BUILD A LONG-TERM RELATIONSHIP. THERE IS A MUTUAL
AGREEMENT TO WORK TOGETHER CONSISTENTLY, BASED ON TRUST, SHARED
GOALS, AND PROVEN RELIABILITY.
COMMITMENT MEANS THAT BOTH SIDES: ARE LOYAL AND STAY DEDICATED
EVEN DURING CHALLENGES. FOCUS ON LONG-TERM SUCCESS, NOT JUST
SHORT-TERM TRANSACTIONS. ARE RELIABLE AND CONSISTENT IN DELIVERING
PROMISES. SHOW RESPECT, TRUST, AND RESPONSIBILITY IN THEIR DEALINGS.
EXAMPLES OF COMMITMENT: A SUPPLIER PRIORITIZES URGENT ORDERS
FROM A LOYAL CUSTOMER, EVEN DURING HIGH DEMAND. A CUSTOMER
CONTINUES TO ORDER FROM THE SAME SUPPLIER, EVEN IF CHEAPER
OPTIONS ARE AVAILABLE, BECAUSE OF TRUST AND PROVEN QUALITY. A
COMPANY PROVIDES TRAINING OR FINANCIAL SUPPORT TO HELP A SMALL
SUPPLIER GROW.
5. DISSOLUTION -REFERS TO THE END OR BREAKDOWN OF THE RELATIONSHIP
BETWEEN A CUSTOMER AND A SUPPLIER. THIS HAPPENS WHEN TRUST,
COMMUNICATION, OR BUSINESS PERFORMANCE FAILS, MAKING IT NO LONGER
BENEFICIAL OR POSSIBLE TO CONTINUE THE PARTNERSHIP.
DISSOLUTION IS THE TERMINATION OF THE BUSINESS RELATIONSHIP DUE TO:
POOR PERFORMANCE
CONFLICT OR DISAGREEMENT
LOSS OF TRUST
CHANGING BUSINESS NEEDS
COMMON REASONS FOR DISSOLUTION
Reason Description
Poor product or service quality Repeated delivery of defective goods.
Failure to meet deadlines Frequent late deliveries hurt customer operations.
Unfair pricing or hidden costs Sudden price hikes damage trust.
Lack of communication Misunderstandings and delays.
Ethical or legal violations Breach of business standards or laws.
Changing business goals One party no longer needs the other’s product or
COMMERCIAL CONTEXTS OF CRM
1. BANKS-ARE FINANCIAL INSTITUTIONS THAT PROVIDE A WIDE RANGE OF
SERVICES INVOLVING MONEY AND FINANCE. THEIR MAIN ROLE IS TO
SAFEGUARD MONEY, LEND MONEY, AND FACILITATE FINANCIAL
TRANSACTIONS.
2. AUTOMOBILE MANUFACTURER- IS A COMPANY THAT DESIGNS, BUILDS, AND
SELLS VEHICLES SUCH AS CARS, TRUCKS, AND BUSES. THESE COMPANIES
USE ADVANCED TECHNOLOGY, ENGINEERING, AND LARGE-SCALE
PRODUCTION PROCESSES TO CREATE VEHICLES FOR CONSUMER AND
COMMERCIAL USE
EXAMPLE OF AUTOMOTIVE MANUFACTURER
Company Country Popular Models
3. HIGH-TECH COMPANIES MANUFACTURER
• ADVANCED AND INNOVATIVE PRODUCTS THAT RELY ON CUTTING-EDGE
TECHNOLOGY AND SCIENTIFIC KNOWLEDGE. THESE COMPANIES ARE INVOLVED IN
INDUSTRIES LIKE ELECTRONICS, AEROSPACE, BIOTECHNOLOGY, ROBOTICS, AND
INFORMATION TECHNOLOGY.
• HIGH-TECH COMPANIES USE RESEARCH AND DEVELOPMENT (R&D) TO DESIGN AND
PRODUCE TECHNOLOGICALLY ADVANCED GOODS. THEIR MANUFACTURING
PROCESSES OFTEN INVOLVE AUTOMATION, ARTIFICIAL INTELLIGENCE, AND
PRECISION EQUIPMENT.
EXAMPLE OF WHAT HIGH-TECH COMPANIES MANUFACTURE:
4. CONSUMER GOODS MANUFACTURERS - ARE COMPANIES THAT PRODUCE
PRODUCTS INTENDED FOR DAILY USE BY THE PUBLIC. THESE GOODS ARE USUALLY
BOUGHT BY INDIVIDUALS FOR PERSONAL OR HOUSEHOLD CONSUMPTION, NOT FOR
RESALE OR BUSINESS USE.
CONSUMER GOODS CAN BE CATEGORIZE INTO:
DURABLE GOODS – LONG-LASTING ITEMS LIKE APPLIANCES AND FURNITURE
NON-DURABLE GOODS – ARE PRODUCTS THAT ARE CONSUMED QUICKLY OR
USED UP AFTER A SHORT PERIOD, USUALLY WITHIN THREE YEARS OR LESS.
EXAMPLE: HOUSEHOLD PRODUCTS, OFFICE AND SCHOOL SUPPLIES:
FAST-MOVING CONSUMER GOODS (FMCG) – PRODUCTS THAT SELL QUICKLY
AT A RELATIVELY LOW COST. EXAMPLE: PERSONAL CARE, FOOD &
BEVERAGES, HOUSEHOLD PRODUCTS.
Company What They Manufacture Product Type
CUSTOMER SATISFACTION, LOYALTY AND BUSINESS PERFORMANCE
AN IMPORTANT RATIONALE FOR CRM IS THAT IT IMPROVES BUSINESS
PERFORMANCE BY ENHANCING
• CUSTOMER SATISFACTION - REFERS TO HOW HAPPY OR CONTENT A
CUSTOMER IS WITH A COMPANY’S PRODUCTS, SERVICES, AND OVERALL
EXPERIENCE. IT MEASURES WHETHER A BUSINESS HAS MET OR EXCEEDED
CUSTOMER EXPECTATIONS.
• UNDERSTAND CUSTOMER REQUIREMENTS -THIS MEANS THE SUPPLIER MUST
CLEARLY IDENTIFY AND COMPREHEND WHAT THE CUSTOMER NEEDS IN TERMS OF
PRODUCTS, SERVICES, AND EXPECTATIONS.
• MEET CUSTOMER EXPECTATIONS -THIS MEANS THE SUPPLIER MUST DELIVER
EXACTLY WHAT THE CUSTOMER NEEDS — ON TIME, WITH THE PROMISED QUALITY
AND SERVICE LEVEL.
• DELIVER CUSTOMER VALUE - DELIVER CUSTOMER VALUE MEANS TO PROVIDE
PRODUCTS, SERVICES, OR EXPERIENCES THAT THE CUSTOMER SEES AS WORTH
MORE THAN WHAT THEY PAID — IN TERMS OF QUALITY, USEFULNESS, SUPPORT,
AND SATISFACTION.
KEY ELEMENTS THAT AFFECT CUSTOMER SATISFACTION
Element How It Impacts Satisfaction
Product Quality Must meet or exceed expectations.
Customer Service Fast, friendly, and helpful support.
Price Fairness Customers feel they get good value.
Ease of Use Products/services should be simple to use.
Delivery & Timeliness On-time delivery builds trust.
Problem Resolution Quick and effective handling of complaints.
1. BEHAVIORAL LOYALTY - BEHAVIORAL LOYALTY REFERS TO A CUSTOMER'S
CONSISTENT PURCHASING BEHAVIOR TOWARD A PRODUCT OR BRAND,
REGARDLESS OF EMOTIONAL ATTACHMENT OR DEEP PREFERENCE.
2. ATTITUDINAL LOYALTY - REFERS TO A CUSTOMER’S EMOTIONAL
ATTACHMENT, POSITIVE ATTITUDE, AND COMMITMENT TO A BRAND, EVEN
WHEN ALTERNATIVES ARE AVAILABLE. IT GOES BEYOND REPEATED BEHAVIOR
— IT’S ABOUT BELIEF AND PREFERENCE.
BUSINESS PERFORMANCE MANAGEMENT (BPM)
BUSINESS PERFORMANCE MANAGEMENT (BPM) IS A CONTINUOUS PROCESS
USED BY COMPANIES TO MONITOR, MEASURE, AND IMPROVE THEIR BUSINESS
OPERATIONS AND RESULTS.
1. REVENUE GROWTH - REFERS TO THE INCREASE IN A COMPANY’S SALES OR
INCOME OVER A SPECIFIC PERIOD OF TIME.
2. SHARE OF CUSTOMER -(ALSO KNOWN AS SHARE OF WALLET) REFERS TO THE
PERCENTAGE OF A CUSTOMER’S TOTAL SPENDING IN A PRODUCT CATEGORY THAT GOES TO A
PARTICULAR BRAND OR BUSINESS. EXAMPLE: IF A CUSTOMER SPENDS ₱1,000 PER MONTH ON
COFFEE, AND ₱600 OF THAT GOES TO YOUR COFFEE SHOP, THEN: SHARE OF
CUSTOMER=₱1,000 ₱600×100=60%
CUSTOMER TENURE - REFERS TO THE LENGTH OF TIME A CUSTOMER HAS BEEN PURCHASING
FROMOR DOING BUSINESS WITH A COMPANY.