Marketing Strategy and Competitive Positioning pdf ebook

Figure 13.4
The relationship 
marketing ladder
Source: Payne, C., 
Clark, M. and Peck, 
H. (1995) Relationship 
Marketing for Competi-
tive Advantage, Oxford, 
Butterworth-Heinemann.
Partner
Advocate
Supporter
Customer
Prospect
Emphasis on winning
new customers
(customer catching)
Emphasis on
developing and
enhancing
relationships 
(customer keeping)
Client

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CHAPTER 13 COMPETING THROUGH SUPERIOR SERVICE AND CUSTOMER RELATIONSHIPS
result of poorly designed programmes based on weak value propositions (see Capizzi and 
Ferguson, 2005). In fact, a survey conducted by IBM of about 1,000 customers of 10 major 
retailers discovered that factors relating to overall customer experience were far more rel-
evant to customer satisfaction than price and value (Chu, 2002).
In other markets, firms may misjudge the value customers put on relationships. In finan-
cial services, for example, attempts to create closer relationships with individual clients may 
have been naive in assuming the client will automatically see a value in having a ‘personal 
banking manager’. Fundamental to establishing a relationship is to determine what each 
party gets, or could get, from that relationship, as well as what they value in such a relation-
ship. Too many organisations still look primarily from their own perspective, recognising 
the value to them of customer retention or loyalty, but not thinking through clearly what 
value the customer will get from the deal that would motivate them to participate.
In contrast, other firms are now coming to realise that the type of relationship custom-
ers want with a supplier can in itself be an effective way of segmenting markets around 
fundamental customer needs. This can lead to focusing relationship-building resources 
on those customer groups where this is mutually advantageous, and significantly cut the 
cost and the ill will created through more scatter-gun approaches. In business markets, for 
example, Narayanda (2005) suggests four types of customers depending on their location 
on the loyalty ladder and the sellers’ costs of serving them:
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