Chap 7- 6 Questions

234 Guffey and Loewy, Essentials of Business Communication, 12th Edition. © 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 234 Guffey and Loewy, Essentials of Business Communication, 12th Edition. © 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Building and Managing Customer Relationships

“You've got to start with customer experience and work back toward the technology, not the other way around.” – Steve Jobs

“A journey is like marriage. The certain way to be wrong is to think you control it.” – John Steinbeck

“Use authentic experiences to inspire.” – Howard Schultz, Founder of Starbucks

Building and Managing Customer Relationships

• Creating superior value is the first critical step in creating a sustainable competitive advantage.

• The customer's journey to making the purchase decision, having a positive experience, and remaining loyal must also be managed by companies to convert that offering of value into company profits.

• Managing the customer's experience throughout that journey is examined in detail, including measuring and improving the experience.

• Customer loyalty is considered in depth with a focus on the nature of customer loyalty, building relationships, and defending those relationships.

THE CUSTOMER DECISION JOURNEY Core Elements of the Customer Decision Journey

• The Customer Decision Journey: the set of stages customers move through as they evolve through a search process to being triggered to purchase and post-purchase states.

• The journey used to be a simple, linear, and unidirectional flow of activities in which brands were eliminated by customers as they built knowledge from retailers or salespeople and was persuaded to make a purchase.

• Customers in today's marketplace participate in a more complex, iterative, and bi-directional journey.

• Understanding the journey opens up important opportunities for the company to influence it.

The Traditional Customer Decision Journey

• This journey is a linear one-way push method of communication from companies to customers as they move through this process of eliminating brands at each stage.

• It assumes that customers go in one direction—from awareness to advocacy.

• Several factors challenge this traditional funnel. • New channels and technologies are

changing the ways in which companies and customers interact.

The Traditional Customer Decision Journey

• Empowered and web-connected customers can search for almost unlimited information and offerings from small and large companies around the world as well as gain access to information from other customers, curators, and critics.

• The traditional funnel has shifted from a push of information to a pull of information as customers actively seek information at every step of the journey.

• Communication is now a two-way dialogue between companies and customers.

The Complex Nature of Today's Customer Decision Journey

• Modified Customer Decision Journey: brands can enter and exit more easily.

• If a brand is not in the initial consideration set, it can enter later, expanding the pool of brands.

• Customers are more likely to consider additional brands along the way if the purchase is high involvement (important and/or expensive)

• if initial knowledge is limited or when companies have strong capabilities to trigger new searches even as the customer is moving through the process.

Trigger • Prior to an initial purchase, an event will trigger the Customer

Decision Journey to begin. • Internal triggers such as a change in roles like moving from

being a student to a working professional. • External triggers such as a neighbor buying a new car, a story

on the radio about a new film, or chatter about a new company in a customer's social media circle.

• A trigger is anything that a customer experiences that influences the desire to purchase something.

• Triggers do not end after the first information-gathering step.

• Triggers can occur throughout the Customer Decision Journey and influence which brands are being considered at each phase of the journey.

Information Gathering • In this stage, the customer obtains information either

actively or passively. • An active approach involves the customer pulling

information from various sources while a passive approach occurs when companies or their advocates reach customers with information those customers have not necessarily sought out.

• This stage has been called the zero moment of truth. • Exposure at this stage increases the chances a company

will make it into the customer's consideration set – “that moment when you grab your laptop, mobile phone or some other wired device and start learning about a product or service you're thinking about trying or buying.”

Consideration Set

• After customers receive information, they consider an initial set of brands.

• If they feels confident and informed in her choices, or if the purchase is time sensitive, they will move on to the next step.

• If the customer feels she still needs more information, she will stay in the information- gathering stage.

Consideration Set

• This continual information gathering can be thought of as a learning loop.

• In this mode, the customer is adding and subtracting brands to his or her consideration set based on the information processed.

• The loop can occur several times if the customer continues to gather information and revise her consideration set.

Consideration Set

• It can also happen during the preference formation and purchase stages as the customer browses options she had not considered.

• Companies in a customer's consideration set want to discourage more information gathering to prevent the customer from finding a better alternative!

• Steps to preempt search, such as offering same day discounts for purchasing.same-day

Preference

After creating a consideration set from information gathering, the preference stage occurs. Here the customer undertakes a final review of her short list and whittles it down to a smaller number and ultimately, a final decision. Preference is internal to the customer and not yet acted upon. If enough time passes or circumstances change before the customer acts on her preference, she could move backward and make a different choice and/or resume active search for new information.

Purchase

In this phase, one brand is ultimately selected as the best option based on the information gathered. This phase is also known as the first moment of truth, the key moment when shoppers are converted to users. It is important that all aspects of the offering—whether it is on the web, in a showroom, in a sales pitch, or in a supermarket—fit the brand promise. If not, purchase is unlikely and more information gathering will commence.

Post-purchase

• In the post-purchase phase, customers experience and engage with the brand they purchased.

• This is also known as the second moment of truth because it reflects the customer's assessment of whether the promised value proposition has been delivered.

• If a customer has a positive experience, a relationship with the brand can begin.

• A positive preference for the brand is maintained and the customer is likely to repurchase it the next time the need for the purchase is triggered.

Post-purchase • This creates a loyalty loop between positive experiences and the

customer's purchase. • While in this loop, the customer is less likely to search and will

likely shun competitive companies' attempts to gain his or her attention in the marketplace.

• A satisfied customer can also become an advocate for the brand. • reviews • word-of-mouth • social media.

• Not all satisfied customers advocate • Companies can encourage this important behavior to trigger

new customer searches and feed the information-gathering activities of customers actively searching for solutions.

Post-purchase • A customer who is

dissatisfied or neutral will not enter the loyalty loop.

• They will reconsider her choice the next time a similar product or service is needed, this time including post-purchase knowledge.

• A dissatisfied customer will not consider the brand next time… they may even actively complain about the brand.

Managing the Customer Decision Journey

• All stages of the Customer Decision Journey involve a dialogue between customers pulling information and companies pushing information. • companies must be available at key moments of

communication. • 2/3 of touchpoints during evaluation are customer-driven

pull activities – online reviews, word-of-mouth recommendations, and in-store activations.

• If a customer posts a question or complaint on Facebook, for example, the company is expected to answer quickly and publicly through the same channel.

Managing the Customer Decision Journey

• According to HubSpot • 11 % of customers expect a response in minutes • 40% expect one in hours • 23% in days.

• For a brand to be well positioned, it must be attentive to conversations.

• Brands should think of customer as an ongoing relationship. • Companies can also use the Customer Decision Journey to

identify where they are most likely to lose potential customers – the area of focus will vary by company.

Identifying Weak Points in the Customer Journey is

• This process usually starts with the market research or consumer insights team assessing the journey. • which customers are progressing? • which are getting stuck in the journey? • what are the barriers to proceeding

along the journey? • what factors facilitate progression?

• Once areas of weakness are identified, more tailored research can be done at whatever stage of the journey needs analysis and improvement.

• Common metrics for assessing the different stages of the Customer Decision Journey are useful in a wide range of firms.

• Source, click—through rates etc… • Once a set of valid measures are selected, it is important to

collect these measures regularly to establish a baseline. • Then firms can identify recurring areas of weakness, when

unexpected changes occur, and establish the effect of new campaigns or initiatives.

MANAGING CUSTOMER EXPERIENCE The Different Meanings of Customer Experience • Customer experience is a

multidimensional concept that captures a customer's cognitive, emotional, behavioral, sensorial, and social responses to a firm's offerings and activities across the decision journey.

• Every customer touchpoint contributes to the customer's experience, including the website used to gain initial product or service information, the cleanliness of restrooms, product packaging, and the experience of using products.

MANAGING CUSTOMER EXPERIENCE The Different Meanings of Customer Experience • These experiences combine to form an

overall impression of customer experience and will vary by customer

• Companies should have a strong understanding of what matters most to their target customers.

The Strategic Importance of Customer Experience

• A great customer experience can help companies differentiate from the competition, resist imitation attempts, add value to core products and services, and build a memorable brand.

• As a differentiation point, a great customer experience can take an otherwise commoditized product and give customers a reason to choose it over others.

• The customer service experience at Zappos differentiates it from not only other shoe competitors but also generic e- commerce sites like Amazon.

• Imitation becomes difficult when firms take a holistic approach to creating a customer experience that cannot be boiled down to one or two activities that are fairly easy for competitors to observe and copy.

• Brands like Shoebuy have tried to imitate Zappos, but Zappos's entire activity system and commitment to putting the customer first has kept it ahead.

• Additionally, the added value of a great customer experience to a core product should not be underestimated.

• Customers are often willing to pay more if they receive superior touchpoint experiences such as customer service, social media interaction, post- purchase check-ins, or easy returns.

• Zappos's unique customer experience are shared on social media and in word-of-mouth discussions where reviews and ratings spread like wildfire.

• A great customer experience can make a brand more memorable and thus inspire loyalty.

• Anyone who has shopped with Zappos will tell you it is certainly a memorable brand!

Factors Affecting Customer Experience

• To understand, measure, and manage customer experience, it is useful to break the Customer Decision Journey into: 1. Pre-purchase experience involves touchpoints during information

gathering, consideration, and preference formation stages. 2. The purchase experience encompasses all aspects of the actual

exchange of money for the offering between the customer and the company.

3. Post-purchase experiences include the customer's experience after purchase that relate to the company. This might include how well the product performs, post-purchase engagement with the brand online, interactions for service requests, returns, and even treatment of customer purchase information.

Factors Affecting Customer Experience

• During any of these stages, many different factors will influence the customer's experience.

• Brands must recognize, monitor, and influence all of these factors. • Some factors are controlled by the brand or its partners • Some are controlled by the customer or outside forces.

Touchpoints Controlled by the Brand or Its Partners

• Customer experience is inherently personal and subjective, existing only in the mind of the buyer.

• Although no two customers will have exactly the same experience, their personal experiences are shaped by a variety of “clues” that firms and partners may be able to shape or control.

• The most obvious of these are functional clues related to the core features of a product or service. • Example – the taste of a hamburger at a

restaurant is a functional clue that McDonald's controls

• Humanic clues come from the behavior and appearance of other individuals involved in the customer journey – the friendly attitude of a Costco

• A hurried or distracted associate has the potential to affect overall customer perception of the quality of the product or service, while someone who is appropriately dressed, knowledgeable, approaches in a timely manner, and makes eye contact sends a different signal.

• Even the often-overlooked sense of touch can play a powerful role in retail environments, where a salesperson's appropriate touch could signal friendliness and build trust.

• Mechanic clues come from the physical, sensory experiences involved in the customer journey, such as the ambient light, sounds, and smells in a retail store or showroom.

• Manipulating the mechanic clues in the customer's environment can be a powerful tool for companies.

• By carefully designing the music, lighting, colors, textures, and ambient scent of a store, a retailer can make it more likely that customers will make a purchase, will be happy with their products, and will buy again in the future.

• Brands have found great success by taking a holistic approach to customers' sensory experience.

Touchpoints Controlled by the Customer

• There are many other factors involved in the customer experience that neither the brand nor its partners can control.

• Some of these are controlled by customers, who are fundamentally co- creators of the experience – the most critical being customer expectations.

• These expectations can be captured in two general questions.

1. What is the standard for the brand's performance? 2. What dimensions do customers expect the firm to do well on, and what

dimensions are they likely to ignore?

Touchpoints Controlled by the Customer

• Customers can also act as co-creators in more concrete ways.

• Deliberate co-creation can be especially useful when there is a lot of uncertainty about customer preferences, when the focus is on business customers who are experts in an area, or when a small firm with a limited budget is trying to innovate.

Touchpoints Controlled by Social/External Sources

• Other factors that shape customer experience outside of the brand's control may be outside of the customer's control as well.

• Experience can be determined by environmental factors, such as those occurring in the political and economic environment – A newly built and financed home may be experienced as less valuable if variable interest rates climb during an inflationary period.

Measuring Customer Experience

• Given that customer experience is internal and subjective, it can be very difficult to measure.

• Methods and tools can vary depending on factors such as industry or end customer.

Service Blueprinting

• Service blueprinting provides an overview of the customer experience. It establishes • when a service starts and stops • tries to visually show the types of customer actions • visible employee actions • backstage employee actions • support processes • physical evidence that play a role in that service experience.

• What part of the performance works well or not so well and what actions can the firm take to improve the quality of the experience?

SERVQUAL

Service Quality, measures key factors in service satisfaction reliability (ability to perform the promised service dependably and accurately) • assurance (employees' knowledge and courtesy and their ability to

inspire trust and confidence) • tangibles (appearance of physical facilities, equipment, personnel, and

communication materials) • empathy (caring, individualized attention given to customers) • and responsiveness (willingness to help customers and provide prompt

service) • Customers rate what they would expect from excellent firms in the sector

as a point of reference and then rank perceptions of the specific company in question.

• This allows companies to measure customer satisfaction, which is commonly viewed as the difference between expectations and perceptions.

Mobile Technology

• Mobile technology makes it possible for firms to get real-time assessments of how customers feel.

• Firms can assess customer reaction to all exposures to a brand using Real- Time Experience Tracking (RET).

• In RET, participating customers are asked to text a 4-character text message to the firm each time they come across the brand in the course of their daily lives.

• In the text message, they indicate their level of positivity toward the touchpoint—the ad, word of mouth, the experience of working with an employee, etc.

• Since the survey is very short and available on the customer's phone, the firm can get real-time customer responses to its actions.

Mobile Technology

• Firms can also use location analytics—programs that track and analyze where a product or a person using a mobile device is geographically—to answer questions about traffic flow in a business, wait time in lines, and when and where their customers use their products.

• Location analytics can tell rental car firms where their cars are at any time, technology firms whether a user is using a computer at home or work, and retailers that customers are avoiding the back wall of their shoe department.

• These new technologies are exciting for firms, but also raise concerns about customer privacy that must be considered when using them.

Attribution Models

• Firms want to know which touchpoints are influencing sales. • Current models examine this question online, but new models need to be

developed for offline customer behavior or for the common crossover behaviors of showrooming (search offline, buy online) and webrooming (search online, buy offline

• Companies should consider the extent to which the touchpoints are integrated around the brand image that the company wishes to emphasize.

Customer Journey Analysis

• It is critical to keep in mind the holistic journey instead of just particular touchpoints.

• Mapping the journey from beginning to end is essential to understanding what is happening to the customer is most important to the decision to purchase or repurchase.

• Adding together measures for a series of touchpoints can often lead marketers to miss the big picture.

• Issues can arise from failing to understand the weight that each touchpoint has in the customer's total satisfaction—a fact that can be determined in market research.

Customer Journey Analysis

• The weighting of different parts of the journey will vary across categories and across different types of customers. • customers enjoy experiences that improve over time more than ones

that plateau or get worse over time, even if the sum of their satisfaction at each touchpoint is the same.

• customers' evaluations and memories of an experience are subject to a peak-end bias. Overall satisfaction is affected most by the peak of that experience—the most intensely enjoyable or the most painful moment along the way—and the end of the experience, which could be within a stage or across the entire journey.

Improving Customer Experience Maintain a Customer Focus

Experience management without an orientation toward meeting customer needs is unlikely to produce satisfied customers. Disney uses an orientation, referred to internally as “Traditions,” that emphasizes customer service. Four key values underlie this employee training. For each, Disney sets a standard of behavior, including—safety (e.g., I practice safe behaviors in everything I do), courtesy (e.g., I go above and beyond to exceed Guest expectations), show (e.g., I stay in character and perform my role in the show; I ensure my area is show- ready), and efficiency (I perform my role efficiently so Guests get the most out of their visit). For Disney, it's clear that the focus of experience management is the customer, not the experiencea high note.

Adopt a Touchpoint Evaluation and Improvement Process

Five steps are recommended in this process

1. Create an inventory of touchpoints by mapping the customer journey.

2. Provide an internal evaluation of all of the touchpoints to determine which are managed well and which are deficient.

3. Determine which touchpoints have the greatest impact on customers' decision and experiences.

4. Prioritize touchpoints in the customer experience— the key is to focus on touchpoints that are most important to developing delivering customer value.

5. Develop a touchpoint action plan. For the priority touchpoints, the goals of the touchpoint and who is responsible should be clearly identified.

Bridge the Gap between Customer Expectations and Perceptions

There are many reasons why customers' expectations and perceptions do not align. 1. A company may not have enough information about what customers

expect. 2. Even if expectations are understood, the company may do a poor job

translating them into a well-designed set of experiences. 3. A problem arises when the company does not deliver on a strong

experience design. 4. companies run into problems when they do not effectively communicate

to customers what they should expect from the experience – poorly coordinated marketing communications, overpromising to attract customers, or inappropriate pricing that inflates expectations.

Bridge the Gap between Customer Expectations and Perceptions

McKinsey’s framework for addressing misalignment between customer expectations and outcomes that involves the following six steps:

1. Identify the nature of the customer journey — from the customer's point of view.

2. Understand how customers navigate across the touchpoints as they move through the journey.

3. Anticipate the customer's needs, expectations, and desires during each part of the journey.

4. Build an understanding of what is working and what is not. 5. Set priorities for the most important gaps and opportunities to improve

the journey. 6. Fix root-cause issues and redesign journeys for a better end-to-end

experience.

Leverage Technology to Manage Customer Experiences

Technology enables management and customization of each person's experience, even at a large scale. Mobile technology lets firms interact with customers in real-time as they search at targeted points in their journeys. This can be used for targeting coupons and advertisements at key decision points, or for getting feedback from customers in real-time, to name just a couple of applications. Online environments create new challenges along with these opportunities. The firm has less control compared to a sales visit or in a retail store—an online user, especially a mobile one, could be anywhere! Online marketing is also limited in its sensory breadth, offering only visual and audio information—although this could change in the future. Marketers should be aware of how this might affect their brand in particular, whether they are trying to sell clothing that shoppers can't feel or food that shoppers can't smell.

Manage the Extended Delivery Network

An expansive approach to managing the customer experience recognizes that many important factors are outside of the firm's direct control. There are three basic forms 1. the customer-coordinated network, where firms provide individual

products or services that the customer selects and pulls together into a unified experience.

2. the service-coordinator-based network, allows the customer to outsource coordination efforts to a professional such as a travel agent. This reduces the burden placed on the customer and also allows the coordinating firm to gain valuable insights into the holistic experience—insights that may be used to improve the experience or may be shared with other firms in the network to do so.

Manage the Extended Delivery Network

3. The firm-coordinated network places the burden of coordination on one of the firms already involved in the network, such as when a hotel concierge coordinates taxis or local restaurant reservations for hotel guests. In this type of network, the responsible firm incurs extra costs and takes the blame for any failures in the network, but it secures greater control, more credit from the customer, and valuable customer insights (due to the fact that is it present) in return.

Channel Challenges

• Different channels (catalogs, direct mail, online, etc.) provide different benefits and costs for both marketers and customers.

• People may research in one channel and purchase in another – Showrooming (searching offline and purchasing online), and its converse webrooming (searching online and purchasing offline), complicate the online/offline relationship and create a complex interplay of customer experience.

• Marketers are sometimes frustrated by this channel crossover behavior, it offers useful insights for improving multichannel strategy.

• Webrooming might be a sign that information presentation isn't as clear or efficient in-store as online, or it could be a sign that the online channel needs to better lock-in to convert browsing customers.

• On the other hand, showrooming might be a sign that the online channel lacks key information that shoppers rely on, particularly for highly multisensory products like clothing or home décor products.

Channel Challenges

• Marketers can embrace the potential synergies of letting customers leverage the different strengths of each channel, or they can respond by shoring up weaknesses to improve the single-channel experience (e.g., providing clear, multi-attribute comparisons of several laptop models at a retail store).

• it is important to recognize that channels' relative strengths and weaknesses are sometimes unavoidable. • Mobile shopping allows for supplemental search in-store, which

desktop browsing can never match, but the mobile interface is also limited in how much information can be examined compared to a computer monitor. Mobile also creates an opportunity for firm- initiated, location-based touchpoints through tailored advertisements or promotional offers delivered in real time.

TOWARD LONG-TERM CUSTOMER RELATIONSHIP

The Loyalty Funnel

• A simplified Customer Decision Journey is often captured in a company's purchase funnel used to organize, measure, and manage customers throughout the purchase process.

• Loyalty is essential to the long-term value of a customer. • To build loyalty, companies must take extra steps to ensure the

customer progresses to this state.

Satisfy the Customer with an Offering

• For a company to have any chance at loyalty with a customer, its product or service must meet customer expectations after purchase – the “second moment of truth”

• If the offering fails here, the prospects for loyalty are bleak. • Offerings that perform as promised or exceed expectations breed

satisfied customers. • to meet this requirement, companies must identify the proof points

used by the customer to make their judgment.

Connect the Product or Service Performance to Deeper Customer Outcomes

• To build loyalty, companies should work to link the product or service to important outcomes valued by the customer.

• These “jobs to be done” are why the customer “hires” the product in the first place and they are often the differentiating factor that helps the product stand out.

• Whether the goal is personal, such as being a good grandparent, or commercial, such as becoming a market leader in a category, these outcomes should be communicated and associated with the brand.

Give the Company Credit

• Customers must attribute the outcomes they experience to the offering—they must give credit to Special K for the weight they have lost, or to Rogaine for the hair they have gained.

• This attribution should not be left up to chance. • Chevron Energy Solutions, a division of Chevron that designs and

implements energy efficiency and renewable energy projects charges clients nothing upfront. It gets paid when customers save on energy bills, which ensures that customers link their savings to Chevron's green designs.

Remember the Need and Offering

The objective at this point is to ensure that customers stay aware of their needs and keep the company or its brands at the forefront of their consideration set. Advertising and sales efforts can keep information fresh and relevant so their brand is top-of-mind to the consumer.

Build Habit

• Loyalty can be converted into a habit and further cement bonds between the customer and the product.

• Loyalty programs, remind customers and give them the nudge they need to make repeated purchases.

• Promote high-volume purchases • Get the customer to make investments – Weight Watchers does

• sunk costs are a reminder of the customer's commitment to the company. As such, they can prompt the customer to repeat behavior.

Raise Customer Switching Costs

• Related, firms can make it very difficult for customers to walk away from a relationship by raising switching costs – The classic example is frequent flyer miles.

• Lock-in can also occur because customers do not want to incur the costs of learning to interact with a new firm.

• Challengers need to reduce the costs of trial or offer large incentives to induce trial in order to offset these learning barriers.

Deepen Commitment

• As the customer builds positive experiences with the company, deep affection, trust, and a sense of commitment to the relationship will follow.

• Success in the long-run depends on trust, which is built with transparency and frequent, open communications.

• Trusted partners are transparent and honest. • Sales or service personnel often develop very strong relationships with

individual customers. • These individual relationships are an important part of building and

maintaining trust, but can be risky because employee turnover makes customer defection more likely

• When employees leave the firm, they often do not transfer what they have learned abd new salespeople must then re-learn all that the departing employee has gathered over the years.

Defend the Customer Relationship

Given their financial importance to the company, customer relationships need to be protected over time. What actions should companies take to safeguard loyalty from competitor challenges? Differentiate Value

When the offering provides exceptional value that is not replicated elsewhere, customers will return. The jeans that fit, the familiar computer setup, the components that are compatible with the aircraft engine design, the consultant who knows the business strategy, and the vacation spot that thrills are not easy for customers to replicate. Differentiation of offerings is the most defensible form of customer lock-in. It is a key to providing value and it is a key to maintaining loyalty.

Defend the Customer Relationship

Consider how American Express handles its most elite customers. In its “By Invitation Only” program, American Express might observe that a customer likes to frequent upscale restaurants, and then offer a free dining experience at a new restaurant. The customer wins through a valuable offer from a merchant. The merchant wins because important customers are introduced to the restaurant. And American Express wins by connecting the two and deepening its relationship with its Card members and merchants.

Rebuff Competitor Challenges

When Walmart bought the U.K.'s grocery chain Asda, its competitor, Tesco expected a price challenge. In a brilliant strategic maneuver reported in the Wall Street Journal, “Tesco searched its database and singled out price- shoppers who buy the cheapest available item. Tesco figured they were most likely to be tempted by Asda. Tesco identified 300 items these price-sensitive shoppers bought regularly. One was Tesco Value Brand Margarine. Tesco lowered its price along with other products with similar profiles. Shoppers didn't defect.” Outmaneuvering competitors in this and other ways is essential to building long-term customer relationships

Increase Investments in Customers

There are inherent risks associated with making dedicated investments, such as human resources, capital equipment, and information technologies, in customers. As a result, customers are likely to view these investments as a signal that the firm is interested in a long-term relationship. Better yet, when firm investments stimulate reciprocal customer investments, partners are in a “mutual hostage” situation. With incentives aligned, the relationship is even stronger. Reciprocation is a powerful norm that guides nearly all strong relationships. Most companies forget about this norm when managing customer relationships. When the company exceeds expectations with exceptional service, such as a flight attendant rushing to deliver a purse left on an airplane to an unwitting customer waiting at the baggage carousel, customers experience a sense of reciprocity that compels them to return the relationship.

Resolve Need for Variety

Some customers want a great deal of variety. Regardless of the value the firm provides, these customers may switch simply to have different experiences. Food and entertainment are areas where customers experience a strong desire for variety. Many firms defend loyalty against this threat by extending their product and service lines so they can offer customers that variety.

Refresh the Relationship

Customers may also want multiple relationships or a reasonable level of switching in order to ensure they continue to learn new things. In areas where innovation is important, such as product design, consulting, advertising, and market research, customers may reach out to find new relationships in order to overcome the problems of stale knowledge. Companies should manage this problem by systematically infusing new insights into the relationship. Adding new and varied talent to a key account team is one way to bring new ideas to the customer. Regular knowledge-sharing, brainstorming, or co-creation efforts with a client can also rejuvenate relationships.

Foster Customer Co-creation

If customers co-create products and services with a company, it increases involvement and commitment to the offering and company. For example, in B2B co-creation relationships, value-leading suppliers rely on leading-edge customers for help in developing new products. This process can increase customer interest in the success of the new offering, which should translate into higher investments.

The Internet has created an ever-increasing array of ways that customers can deepen their involvement with companies. Whether offering new code for open source software, rating books, or designing their own sneakers and t-shirts, all of these approaches help facilitate a stronger relationship with the company. Customers want to know they matter, and invitations to participate are key ways that companies can signal a desire to co-create with customers.

Create Multiple Relationships

It is increasingly common for B2B firms to form multiple relationships with their customers. In 2002, Brocade Communications set up a marketing alliance and a joint venture with HP for manufacturing switches in addition to selling HP servers, an R&D alliance, and a licensing agreement. As the depth of interaction increases, the risk of relationship termination decreases. Customers gain a greater sense of shared interest and solidarity with the firm because of the number of shared relationships. Partners also learn to use the relationships in a compensatory manner, trading benefits and costs so that both parties' interests are served.

Grant Exclusivity

When the company makes pledges or signs contracts that give the business customer exclusive rights to territories or products, those commitments wed the customer to the company.

FOR DISCUSSION

Trace the Customer Decision Journey for a customer buying a new mobile phone.

Analyze how social media could influence each stage of the Customer Decision Journey for a customer deciding where to go on vacation.

Walgreens is trying to better understand its customer experience from the perspective of its elderly customers. What can it do in order to achieve this goal?

You have been tasked with assessing the current customer experience at a big-box store. Which tool(s) would you use to do this and why?

Identify two ways a grocery store's relationship with behaviorally loyal customers could be at risk. How could the store reduce this risk by strengthening attitudinal loyalty?

Discuss three ways Netflix might defend its current customer relationships against new entrants.