Relationship Marketing Basis
What is relationship equity?
The overall value created from a firm’s relationships with customers, employees, and networks linked to its offerings or experiences.
What does the phrase “bad is stronger than good” mean in relationship marketing?
Negative experiences have a stronger impact on relationships than positive experiences. A single conflict or failure can outweigh multiple positive interactions.
Name one customer behavior that results from strong relationship equity.
Loyalty, Referrals, Cooperation, or Empathy.
What are social RM programs?
Programs that strengthen personal bonds with customers through trust, reciprocity, and special treatment.
Why is Relationship Composition often more valuable than Relationship Breadth in B2B?
Because having decision-makers in the network is more influential than having many low-level contacts.
How does gratitude influence customer decision-making?
Gratitude makes customers feel valued, leading them to reciprocate through repeat purchases, loyalty, and positive word of mouth.
Why are referrals (word-of-mouth) often more effective than advertising?
They are more credible, spread faster, and reduce acquisition costs.
Why is simply investing in RM programs not enough to build relationship equity?
Because programs only succeed when they are aligned with customer needs, not just implemented.
Why might a firm overinvesting in brand equity risk losing long-term advantage compared to one investing in relationship equity?
Brand equity can attract first purchases, but without relationship equity customers switch easily. Firms relying only on brand image may face churn, while relationship equity drives retention, referrals, and higher CLV.
How do power imbalances between firms and customers affect the success of relationship marketing strategies?
When firms dominate, customers may feel exploited and disengage; when customers hold power, firms must over-invest to retain them. Balanced power fosters mutual trust and sustainable, long-term relationships.
During a brand crisis, which equity-driven customer behavior is most critical for survival, and why?
Empathic behaviors, because customers forgive failures and support the firm instead of switching.
Why does measuring RM programs with CLV provide deeper strategic insight than relying on satisfaction scores?
Because CLV captures long-term financial value and customer behavior, while satisfaction scores only reflect short-term sentiment without showing impact on profitability.