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Understanding Relationship Dynamics

A relationship is composed of a series of interactive episodes between two parties over time. Key aspects of relationships include emotional content in interactions, a move from independence to interdependence between parties, and relationships being social constructs that exist if both parties believe in and act according to the relationship. Relationships change over time and typically progress through stages of awareness, exploration, expansion, commitment, and potentially dissolution. Trust and commitment are important to building strong, long-term relationships. Companies seek to develop relationships with customers for economic benefits like reduced marketing costs and better customer insight that comes from increased customer tenure.

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Pratibha Rohal
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10 views27 pages

Understanding Relationship Dynamics

A relationship is composed of a series of interactive episodes between two parties over time. Key aspects of relationships include emotional content in interactions, a move from independence to interdependence between parties, and relationships being social constructs that exist if both parties believe in and act according to the relationship. Relationships change over time and typically progress through stages of awareness, exploration, expansion, commitment, and potentially dissolution. Trust and commitment are important to building strong, long-term relationships. Companies seek to develop relationships with customers for economic benefits like reduced marketing costs and better customer insight that comes from increased customer tenure.

Uploaded by

Pratibha Rohal
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

Understanding

Relationships

What is a relationship?

A relationship is composed of a
series of interactive episodes
between dyadic parties over
time

What is a relationship?
Interactive episodes : Episodes are time bound
(they have a beginning and an end) and are
nameable

Example: Salesperson-Customer

What else?

There needs to be some emotional content to the


interaction (Jim Barnes )

Move from a state of independence to dependence or


interdependence.

Example:

Relationship

is a social construct.

relationship exists if people believe that a


relationship exists and they act accordingly.

Relationships

can be unilateral or reciprocal;


either one or both of the parties may believe
they are in a relationship.

Change within relationships

Reationships change over time.

Awareness

Exploratio
n

Expansion

Dwyer
Model

Commitme
nt

Dissolutio
n

Awareness

Awareness is when each party comes to the attention of


the other as a possible exchange partner.

Exploration

Exploration is the period of investigation and


testing during which the parties explore each others
capabilities and performance

Expansion

Expansion is the phase in which there is increasing


interdependence

Commitment

The commitment phase is characterized


by increased adaptation and mutually understood roles and
goals

Dissolution

Trust and Commitment


Trust
One

is a generalized sense of confidence and security.

party may trust the other partys

benevolence

: a belief that one party acts in the


interests of the other

honesty

: a belief that the other partys word is


reliable or credible

competence

: a belief that the other party has the


necessary expertise to perform as required.

The development of trust is an investment


in relationship building which has a longterm payoff.

Commitment

Commitment is shown by an exchange partner


believing that an ongoing relationship with
another is so important as to warrant maximum
effort to maintain it; that is, the committed party
believes the relationship is worth working on to
ensure that it endures indefinitely

Relationship quality
May differ

Why companies want relationships


with customers
The fundamental reason for companies wanting to build
relationships with customers is economic.

Reduced

marketing costs

Better

customer insight

As customer tenure lengthens, companies are able to


develop a better understanding of customer
requirements and expectations

Lifetime value

Customer should not be viewed as a set of


independent transactions, but as a lifetime income
stream.

Lifetime value is the present day value of all net


margins earned from a relationship with a customer,
customer segment or cohort.

Customer satisfaction, loyalty and


business performance

Customer satisfaction

Customer satisfaction is the customers fulfilment


response to a customer experience, or some part thereof.
Customer expectations and perception (expectations
disconfirmation model)

Customer loyalty : Behaviour and Attitude

RFM

measures of behavioural loyalty.

R= Recency of purchases ,

F= Frequency of purchases

M= Monetary value of purchases

Attitudinal loyalty is measured by


reference to components of attitude such
as beliefs, feelings and purchasing
intention

Dick and Basus model

Business performance
The

recent trend has been away from simple shortterm financial measures such as quarterly profit or
earnings per share.

Leading

companies are moving towards a more


rounded set of performance indicators, such as
represented by the balanced scorecard

Balanced scorecard

financial,

customer,

process

and learning and growth.

Customer-related

Customer satisfaction levels,

customer retention rates,

customer acquisition costs,

number of new customers acquired,

average customer tenure, customer

loyalty (behavioural or attitudinal),

sales per customer, revenue growth,

market share and share of customer (wallet)

Satisfactionprofit chain

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