Marketing Relationships

Sorry to disappoint, but today I’m talking about forming relationships in a marketing context rather than marketing relationships, aka Match.com, e-Harmony, or another dating site.

Types of marketing relationships

Marketing relationships take many forms.

For instance, if you go to the same Starbucks every day, you may form a marketing relationship with the people who work there or with other customers who stop by for their cuppa Joe at the same time you do. A colleague chronicled the evolution of such a relationship among customers who met by accident at a local restaurant simply because they were all lonely.  Soon, these customers formally established the group, with meetings at the restaurant at a specified time every day.  They were also doing other things together *.  Marketing relationships like these are interpersonal relationships.

As a consumer, you might have a marketing relationship with a brand.

Brands have personalities, so your marketing relationship might be related to this personality.  Marketing relationships like these may look a lot like interpersonal relationships. Or you might have a marketing relationship with a brand that is less emotional when you feel the brand is superior in quality or performance.  Marketing relationships like these are structural relationships.

If you’re a supply chain firm, you might have a relationship with a partner

These marketing relationships may be interpersonal when you have a relationship with people who also function in the interface between the organizations.  Marketing relationships like these are interpersonal relationships.  Business marketing relationships may also be based on the value your firm gets from being in the relationship — such as improved profitability, improved performance, easier coordination, etc.  Marketing relationships like these are structural relationships.

The type of  relationship dictates strategic value

Interpersonal relationships

Interpersonal marketing relationships generate trust between the parties, which has a variety of benefits to the organization (and the consumer). You trust the quality and performance of the products.  You trust that your relationship partner will look out for your best interests.

Interpersonal marketing relationships also generate feelings of belonging, which is one of the higher elements in Maslow’s hierarchy of needs – social needs. Interpersonal marketing relationships may also provide a sense of self-esteem, an even higher element in Maslow’s hierarchy.

Interpersonal marketing relationships also reduce difficulties in making decisions.  Commercial friends recommend movies and restaurants, provide reviews of products, etc.  Interpersonal marketing relationships also reduce decision-making difficulties by reducing the number of options to consider.  Consumers have many choices and by choosing to frequent establishments and buy brands the consumer has a relationship with, it reduces difficulties in deciding between these options.

From the firm’s perspective, interpersonal marketing relationships provide loyal customers who often recommend the firm and its products.  Interpersonal marketing relationships also provide customers who are willing to overlook small failures by the firm, which is especially important in service firms where failure is inevitable sometimes.

Structural Relationships

Structural marketing relationships provide many of the same benefits as interpersonal marketing relationships, except they may not provide the same belongingness and esteem benefits.

Structural marketing relationships, because they are based less on emotion and more on functional qualities of the marketing relationship, may provide important collaborative benefits.  For instance, structural marketing relationships can lead to innovation when customers recommend new products or when firms work together to create new products.  For instance, I interviewed a business for an article and discovered a major benefit the company got from its structural marketing relationship. The supplier found an alternative supplier when they experienced a strike at their production facility.

How to build relationships

Given the benefits of having strong marketing relationships, the question is how to build them.  Here are some suggestions:

• be consistent – relationships don’t form when one party feels let down
• put the consumer (partner) first
• provide a supportive environment – comfortable settings, plenty of time for interaction
• hire friendly employees and reward this behavior
• creates an employee environment that is stress-free (or as much as possible) hurried employees don’t take the time to build relationships
• respect customers, employees and partners
• build a brand with personality
• use social networks to build marketing relationships

Do your customers (partners) have a marketing relationship with you or your brand?

Do employees feel they have permission and are rewarded for building marketing relationships with customers and partners?

Expanding on marketing relationships

I want to delve further into business marketing relationships.  Businesses form relationships for a variety of tasks.  Business marketing relationships also have various time frames — relationships may be evergreen (they don’t have a defined endpoint) or dissolve once they’ve completed the task.  Regardless of these features, business marketing relationships require the same attention and care as any other type of relationship — such as your marriage.  In fact, several authors, including myself, have used a marriage metaphor to describe business relationships in studies drawing heavily from the literature on marriage and the family*.

This is a big topic, so I’m going to break it up into several different posts.  The first will deal with communication issues.  Future posts will deal with additional aspects of marketing relationships, including power and influence, organizational culture, and collaboration.

Communication

Just like in your marriage, communication between the firms involved in a marketing relationship needs careful and consistent attention. Jakki Mohr describes communication as the “glue that holds” marketing relationships together**. According to this article, communication needs to be bi-directional (the parties talk to each other — and listen to each other), frequent, and through multiple channels — face to face, phone, email. Since the publication of this work, we can add social networks to the list of media channels.  And partners do “talk” to each other through Twitter, Facebook, LinkedIn, etc.  A colleague and I are currently collaborating on an article almost entirely through Twitter’s direct messages.

It’s not only important how you communicate, but what you say during those communication efforts.  Several tasks need to be accomplished during relational communications.

• Directions and instructions – which must clearly outline what each party needs to do and how these tasks might be accomplished.  For instance, the alliance between Chrysler and Mercedes collapsed, at least in part, because the firms didn’t clearly understand what each party was responsible for.  This created a lot of tension between the 2 firms.
• Trust – you can do this by sharing complete information, answering questions honestly and completely, admitting mistakes, warning of impending problems, etc.  For instance, P&G uses graphical information to warn about potentially late deliveries to suppliers.  When these warnings are not enough to be able to avoid late delivery, they contact the buyer to advise them of the new delivery date.
• Connection building – this means sharing personal information, listening, and remembering facts about the other person.  Salespeople have used this tactic forever.  They add personal information such as spouses’ names, kid’s names, significant events such as birthdays and anniversaries, etc to their business information about buyers.  These little touches have a huge impact on sales.

*Wesley J. Johnston, Angela Hausman, (2006) “Expanding the marriage metaphor in understanding long-term business relationships”, Journal of Business & Industrial Marketing, Vol. 21 Iss: 7, pp.446 – 452

F. Robert Dwyer, Paul H. Schurr and Sejo Oh, Developing Buyer-Seller Relationships. The Journal of Marketing, Vol. 51, No. 2 (Apr., 1987), pp. 11-27

**Mohr, Jakki, Robert Fisher, and John R. Nevin (1999), “Using Collaborative Communication to Manage Dealer Relationships,” Marketing Management, 8 (Summer), pp. 39-45.

Power and Influence in marketing relationships

I’d like to expand on that conversation by discussing the role of influence and power on business marketing relationships.

Power

Power is defined as “the ability to evoke a change in another’s behavior”. * Based on his review of the literature on power, Gaski notes 5 types of power:

1. Coercive Power – this is the power to punish ie. cancel contracts, delay deliveries, etc
2. Reward Power – these are things like increasing orders, giving preferential treatment like better discounts, etc.
3. Legitimate Power – this is based on authority, such as that provided by contracts or other documents spelling out governance
4. Expert Power – this is based on superior knowledge or skills
5. Referent Power – this comes from admiration or respect the company holds with its partners and the market at large

Influence

Influence is exercised or exerted power.  Not all power develops into influence.  Some power is latent — in other words, it is there, but it’s not exercised.  That doesn’t mean it doesn’t affect the marketing relationship.  For instance, a franchisee (like your local McDonald’s) has a contract with McDonald’s corporation that specifies its duties and responsibilities.  Thus, the contract influences the behavior of franchise owners so they send a portion of their sales to corporate, they carry certain products and maintain certain standards to comply with this contract.  Corporate may use overt influence by sending letters or making phone calls or visits to change the behavior of franchisees.  For instance, they may tell them they need to improve the atmosphere in the restaurants to conform with the look McDonald’s wants to maintain.  There are 6 types of influence **:

1. Threats
2. Requests
3. Legalistic Pleas
4. Recommendations
   
5. Promises
   
6. Information Exchange

The first 3 influence strategies are considered coercive, while the last 3 are non-coercive.  In general, non-coercive influence strategies are considered better for getting partners to take a specific action without creating much conflict.  This ensures a good working relationship is maintained.  Coercive strategies are best when change is time-critical, as these strategies tend to be faster at getting partners to change.

Recommendations

Emerging evidence*** suggests the optimal strategy might be to modulate how the strategies are used — to mix them up a bit.  Specifically, using coercive strategies in moderation (especially using mostly requests), along with more extensive use of non-coercive influence (especially recommendations and information exchange) might produce the best results in terms of both the time necessary to achieve change as well as maintaining good working relationships.  Firms might also want to rely more heavily on non-coercive methods of affecting change and save more coercive tactics for certain situations that call for this type of influence.

Meanwhile, firms would be better served in developing certain types of power.  In social networks, referent power is especially appropriate.  Thus, firms should focus on providing services to their business partners — acting as coaches to make things happen for them.  Showing partners respect garners respect for your firm.  In exercising referent power, the golden rule really should govern your actions.

Expert power is also important in social networks.  Set yourself and your firm up as an expert in a particular field.  Narrow your focus and read extensively to develop your expert status.
How does your firm respond to efforts to exert influence on behalf of your business partners?

How do these principles affect the way your business tries to affect change in your business dealings?

Do these principles have some impact in social networks?

Are there other types of power of influence you’ve seen used in your business marketing relationships?

*John F. Gaski. “The Theory of Power and Conflict in Channels of Distribution,” Journal of Marketing, 48 (No. 3, Summer 1984), pp. 9-29.

**Gary L. Frazier and John O. Summers, “Interfirm Influence Strategies and Their Application within Distribution Channels“. The Journal of Marketing, Vol. 48, No. 3 (Summer, 1984), pp. 43-55

Brett Boyle, F. Robert Dwyer, Robert A. Robicheaux and James T. Simpson. “Influence Strategies in Marketing Channels: Measures and Use in Different Relationship Structures”. Journal of Marketing Research, Vol. 29, No. 4 (Nov., 1992), pp. 462-473

*** Angela Hausman and Wesley Johnston. “The impact of coercive and non-coercive forms of influence on trust, commitment, and compliance in supply chains”. Industrial Marketing Management, Vol 39, No. 3 (April, 2010), pp. 519-526.

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