The sphere of marketing has experienced dramatic changes. Nowadays marketing varies remarkably from marketing of 50 years ago. Starting from customer marketing in 1950s and followed by industrial marketing, non-profit and service marketing, relationship marketing finally took its place in 1990s. In the following article the main factors that affect seller-buyer relationships as well as factors that cause relationships dissolution between the two parties are discussed. Moreover, recommendations how and why to maintain long-term relationships are given.
Authors: Anastasiia Krokhina and Minna Porasmaa
Definition of relationship marketing
Relationship marketing (RM) represents the new phase in marketing world. Coming from transactional marketing with attention to actual purchases, relationship marketing went one step further. In relationship marketing world, special attention is paid to end users. (Krokhina 2017.) In other words, the customer is the starting point of all operations. Therefore, utilizing RM strategies companies try to build reliable and long-term seller-buyer relationships. Instead of searching for new customers, companies try to listen to the opinions of their customers and to satisfy them. (Buttle 1996, 1-28.)
Dissolution represents the end of seller-buyer relationships. According to Dwyer, Schurr and Oh (1987), not all the relationships lead to mutual interdependence and trust. Furthermore, even well-established relationships might break up due to different reasons. These reasons may vary a lot from one situation to another. However, there are several important aspects to pay attention to in order to avoid relationships dissolution.
According to Demers (2016), there are 10 reasons why customers break up seller-buyer relationship. As presented in Figure 1, the most common reasons are closely linked with the price of the services/products, the value the customers gain, the attitude towards them and competition. Regarding prices, some companies may originally try to attract the customers with a temporary decline in prices, and once customers are gained they raise up the prices. This is an example of a so-called price trap. Many buyers fall into such traps and decide to break up relationships afterwards. Another reason addresses the problem of received value. All in all, both sides of interaction start the relationships keeping in mind the value that they might gain. Therefore, in case the customers do not receive the expected benefits, the dissolution is very likely to occur.
Figure 1. Reasons of dissolution (Demers 2016)
One more important reason is the sellers’ attitude towards the customers. In any kind of situation, even the most unexpected and unpleasant, sellers and buyers should stay calm and be respectful. Sometimes one minor situation might break up even long-term relationships. Finally, competition also plays an important role when it comes to dissolution problems. Customers have the freedom of choice and they might decide to try something new of other companies or even switch to another company on a permanent basis.
Summing up, there are a lot of cases that may cause a break up of relationships. Moreover, reasons of dissolution vary a lot from minor to very serious problems. This raises a question: What can be done to save the relationships from dissolution?
Ways of Avoiding Dissolution
It is crucially important to understand your customers. Having an image of what your customers are like and what they want, helps to treat them respectively. Moreover, different customers bring different value to companies. (Kong 2006.) Some of them often make small purchases, whereas others rarely buy something, but in case they do, it is something expensive. Thus, they all bring value to companies but the value varies in time spans, amount and frequency.
By understanding your customers it is easier to avoid break ups of relationships. However, there are a few more important issues to take into consideration.
The first thing to be paid attention to is customer satisfaction. The fact of keeping customers unsatisfied with prices/products/services is the most probable cause of relationships dissolution. (Egan 2011, 127-137.) Customer satisfaction depends on customers’ expectation. For example, if the quality of service they get is higher than what they expect or on the same level, then they are satisfied. On contrary, if the quality is worse rather than what is expected, the customers remain unsatisfied. Thus, a way to avoid dissolution of relationships is to care about and to be interested in your customers and their satisfaction when you execute your activities.
The second advice how to avoid the break up of relationships is getting closer and personal with your customers. Having emotional connections people tend to trust each other more. Furthermore, getting personal with customers bring the relationships to a new level. (Malone 2015.) It means that the purchase is no longer just an exchange of goods and money but it is also complemented by positive emotions. People are willing to come to such a place over and over again. Moreover, it is much harder to leave something you got used to and have personal linkage to – you would rather try to solve any potential problem.
The third recommendation is to organize loyalty programs. In order to be committed to a company, a customer should understand the benefits s/he will get. However, the same benefits are not enough to keep customers for a long time. Loyalty programs help a lot in maintaining reliable, long-lasting seller-buyer relationships. (Butscher 2002, 31-50.) In addition, loyalty programs make customers feel special. That is what needed in order to keep the customers and to maintain the competitive edge over the competing companies.
To sum up, relationship marketing deals with creating value for customers and receiving value in return for a long period of time. Even though RM is fully focused on customers, sometimes seller-buyer relationships might lead to a dissolution stage at some point of the relationships. Moreover, there are a number of reasons for this. However, it does not mean that the break up of relationships is unavoidable. Listening to customers and working with them in cooperation helps to avoid dissolution.
Butscher, S. 2002. Customer Loyalty. Programs and Clubs. 2nd edition. Aldershot: Gower Publishing Limited.
Buttle, F. 1996. Relationship marketing. Theory and practice. London: Paul Chapman Publishing Ltd.
Demers, J. 2016. The Most Common 10 Reasons Clients Leave. Entrepreneur. [Electronic magazine]. [Cited 10 May 2017]. Available at: https://www.entrepreneur.com/article/272978
Dwyer, R., Schurr, P., Oh, S. 1987. Developing Buyer-Seller Relationships. New York: American Marketing Association.
Egan, J. 2011. Relationship Marketing. Exploring Relational Strategies in Marketing. 4th Edition. [Electronic book]. Harlow: Pearson Education Limitied. [Cited 13 May 2017]. Available at: http://www.ssnpstudents.com/wp/wp-content/uploads/2015/02/Relationship-MaRketing.pdf
Krokhina, A. 2017. Relationship Marketing. Developing Seller-Buyer Relationships. [Online document]. Bachelor’s thesis. Lahti University of Applied Sciences, Faculty of Business and Hospitality Management. Lahti. [Cited 7 May 2017]. Available at: http://theseus.fi/bitstream/handle/10024/125389/Krokhina_Anastasiia.pdf?sequence=2
Kong, C., M. 2006. Relationship Marketing in a Globalised World. Kuala Lampur: Utusan Publications & Distributors SDN BHD.
Malone, C. 2015. It is time to get personal with your customers again. Fidelum Partners. [Cited 14 May 2017]. Available at: https://fidelum.com/insights/its-time-to-get-personal-with-your-customers-again/
Anastasiia Krokhina has studied International Business at Lahti University of Applied Sciences and will graduate and receive a BBA degree in the end of May 2017.
DSc. (Econ. And Bus. Adm.) Minna Porasmaa works as a Senior Lecturer at Lahti University of Applied Sciences, Faculty of Business and Hospitality Management.