Relationship Marketing

Rob Morgan

Culverhouse College of Commerce & Business Administration

University of Alabama
 Relationship Marketing
What is relationship marketing?
 Satisfaction vs. Commitment & Trust
 The 3rd variable in services
 Outcomes of achieving commitment, trust, and
comfort
 How do we generate commitment, trust, and
comfort?
 The Moneyball phenomenon
 Multiple constituencies
 Research opportunities
What is Relationship Marketing?
 "Relationship marketing is attracting,
maintaining and - - in multi-service
organizations - - enhancing customer
relationships"

Berry 1983
What is Relationship Marketing?
 "Relationship marketing concerns
attracting, developing, and retaining
customer relationships."

Berry & Parasuraman 1991

What is Relationship Marketing?
 "Relationship marketing refers to all
marketing activities directed toward
establishing, developing, and maintaining
successful relational exchanges."

Morgan & Hunt 1994

 The Firm’s Potential
Marketing Relationships
Supplier Partnerships

Goods Services
Suppliers Suppliers
Lateral
Partnerships
Business Competitors
Units

Employees Focal Nonprofit

Organizations
Firm

Functional
Departments Government

Internal
Partnerships Intermediate Ultimate
Customers Customers

Buyer Partnerships
Commitment & Trust vs. Satisfaction
 Satisfaction is very unstable
 Satisfaction is a poor predictor of
outcomes
 Commitment & Trust are very stable
 Commitment & Trust are good predictors
of outcomes
Outcomes of Commitment & Trust
 Retention  Uncertainty
 Positive Word of  Functional Conflict
Mouth  Share of Wallet
 Cooperation  New Product Adoption
 Ease of Complaining
 Willingness to
Complain
 How do we generate
Commitment & Trust?
 Economic Content
 Resource Content
 Social Content
Understanding How Customer
Relationships Develop

Relationships’
Economic
Content Attitudinal
Outcomes

Relationships’ Relationship
Resource Attitudes
Content

Behavioral
Outcomes
Relationships’
Social
Content
 Building Relationships

First, let’s look at the

fundamental drivers of
Relationships’
Economic relationships, the
Content economic, resource, and Attitudinal
social contents. Outcomes

Relationships’ Relationship
Resource Attitudes
Content

Behavioral
Outcomes
Relationships’
Social
Content
 Economic Content

 The purely economic costs and benefits of participating

in the relationships

 Examples:
– Service fees
– Interest rates
– Costs saved due to superior management of customer’s wealth
 Resource Content
 Benefits gained that match/complement the needs or resources held by the
partner.

 Examples:
– Professional competence
– Comprehensive financial services
– Business development assistance
– Convenience (time as a resource)
– Tangibles
– Brand equity
 Social Content
 Psychic benefits gained due to feelings of compatibility --
similar values, goals, etc. -- that result in a feeling of comfort.

 Examples:
– Relationships with employees
– Fit of firm’s mission and actions with customers’ values
– High quality communication programs
 Building Relationships

Next, let’s look at the

ultimate outcomes of
Relationships’
Economic relationships, which impact
Content firm’s business Attitudinal
performance. Outcomes

Relationships’ Relationship
Resource Attitudes
Content

Behavioral
Outcomes
Relationships’
Social
Content
 Attitudinal Outcomes
 Customer beliefs that result from relationship
dynamics, these attitudes can go on to impact
behaviors and the development of even stronger
attitudes.

 Examples:
– Uncertainty
– Brand ambivalence
– Brand equity
– Brand personality
 Behavioral Outcomes
 Partner behaviors and intended behaviors that directly or
indirectly impact the firm’s performance.

 Examples:
– Retention
– Positive word of mouth
– Complaining
– Willingness to try new/other services
 Building Relationships
What’s missing? Intermediary,
relationship attitudes. These
attitudes are built from the
Relationships’
particular content of the
Economic relationship and go on to impact
Content critical outcomes! Attitudinal
Outcomes

Relationships’ Relationship
Resource Attitudes
Content

Behavioral
Outcomes
Relationships’
Social
Content
The Moneyball Phenomenon
The Moneyball Phenomenon
What factors make for a
successful baseball player?
Traditional Wisdom:
- 60 yard dash time
- RBIs
- Batting average
The Moneyball Phenomenon
What factors make for a
successful baseball player?
Traditional Wisdom:
- 60 yard dash time
- RBIs
- Batting average

Sabermetrics indicates:
- Slugging average
(total bases/at bats)
- On-base percentage
 Moneyball and
Relationship Marketing
 Example: Retail Banking
– Traditional wisdom: rates, fees, and calling
the customer by name
– Research indicates: responsiveness, reliability,
and brand equity
 Multiple Constituencies Approach
 Premise: Individuals develop commitment
to an organization through the
commitments that develop first to
individuals or groups of individuals.
Organizations do the same thing, as a
collection of individuals.
 Multiple Constituency Approach
 If we can understand who these
“constituencies” are, and how these
constituency commitments develop, and
their unique contribution, we can better
manage the overall relationship.
 FIGURE 2:
Constituency Commitments as Moderators in a
Multiple Constituency Model of Commitment and Trust in Relationship Marketing
SMC = 0.65
Top Man agem ent ***
Co m mitme nt 0.14
SMC = 0.57
****
Accou nt Executive 0.23
Co m mitme nt
SMC = 0.47 SMC = 0.75

Cre ative Tea m 0.10 * Agency

**** Co m mitme nt
0.81 Com mitme nt

SMC = 0.43 0.10 *

****
0.75 Media Team 0.54 ****
Co m mitme nt

0.69 **** 0.66

****
Agency
Tru st
Top Man agem ent
Tru st 0.34**** SMC = 0.73
Acco un t Executive
Tru st 0.32 ***
* p < 0.05
Cre ative Tea m 0.33***
** p < 0.01 Tru st 0.05
*** p < 0.005 Media Team
Trust
****p < 0.001
 Research Opportunities
 How are high levels of trust achieved
quickly?
 How do economic, resource, and social
content vary in importance over the
relationship life cycle?
 Implications for outsourcing?