The rules have changed. The Internet has made it easier, faster, and more convenient for consumers to compare prices, quality, features, and previous customer experiences. With a suddenly level playing field for brand comparison of commodities, what is the new differentiation? Trust, confidence, and relationships the new differentiation. How well you connect with customers in marketing, sales, and customer service excellence are the essence of success.

Relationships are most important at either end of the spectrum, high price luxury, and low cost commodity. Most organizations rapidly acknowledge the importance of relationships for high price luxury items. There is an expectation that customers who pay more will receive a better customer service experience. It is expected that marketing and sales efforts will be more selective and personalized for the discerning consumers who are willing to pay a premium for a product or service. It is assumed that the relationship is part of the total package and price of purchase. So why is it so important to focus on relationships at the low cost end of the spectrum?

A consumer electronics manufacturer conducted a survey of existing customers to gather statistical information. When the results were returned, the manufacturer discarded the initial results as unbelievable and inaccurate. The survey was modified and conducted again, but the results were the same. After the third set of results were calculated, the customer opinion could not be denied. According to the customer survey results, nearly 65% of consumers who purchased the most expensive televisions indicated that price was more important than features in determining which product to buy. At the high end of the price spectrum, where product cost the most and the gap in prices was most significant, the most significant consumer buying decision was based on price and the perceived anticipated support associated with that price tag. By contrast, 78% of consumers who purchased the low priced commodity products indicated that features and anticipated support were more important than the price. Once the average selling price eroded to commodity level, the variation in price became less significant, and the importance of value became increasingly important to the consumers. The value of relationship and support was assumed with the premium price tag, but became the primary differentiation as the prices eroded and variation in cost decreased. How often to organizations mistakenly believe that relationships mean less to the consumers who invest in lower cost commodity items?

The value of a relationship is just as important when prices erode. Perhaps this is due to the phenomenon that relationship marketing, relation ships in sales, and relationships in customer service become less evident as the price diminishes. Simply being the lowest cost commodity is not enough, and it certainly is rarely a strategy to protect profitability. To preserve profitability and combat competition, develop and sustain relationships with your most loyal customers, not the most expensive ones. Expensive customers are those consumers that cost the organization the most money that is not offset by equivalent revenue. Demonstrating appreciation and reinforcing customer relationships does not require a significant monetary investment, but it does require a significant investment in integrity, honesty, and commitment.

There is a distinct difference between loyal customers and consumers willing to pay a premium price. It is not safe to assume that a consumer who pays more is also more likely to be a repeat customer. Technology, style, fads, and limited time discounts can play a significant role in the decision making process for consumers who are willing to pay premium prices. Loyalty exists in consumers who are willing to make repeated purchases, ignoring or distrusting the competition, and continually investing in your products or services. Loyal customers create repeatable business, and typically influence other individuals to try your brand. Loyal customers can be found at premium prices, and at rock bottom commodities, if a relationship is established with the consumer.

How can you influence loyalty and create the opportunity for your customers to bring friends, family, and peers flocking to your doors? It is all about establishing and maintaining relationships through communication, and acting with authenticity as a trusted advocate. Marketing relationships, sales relationships, and customer service relationships are the keys to sustainable growth. Measure the cost to acquire a new customer compared to the cost of keeping an existing one. Identify the financial value of a repeat customer, especially one that remains loyal for a lifetime of purchases.

2008 is the Year if the Customer

2008 has been cited as the year of the customer according to the third annual New York Stock Exchange CEO Report. With this in mind, it appears essential for companies to take focusing on and utilizing customer-related metrics seriously. The following statistics illustrate the current state of attention.
2/3 of the 140 business executives and marketing professionals surveyed, include metrics in marketing plans
only 8% track or measure share-of-wallet
less than 10% measure customer lifetime value, customer advocacy or customer tenure
78% track leads to conversion, but only 25% track and measure rate of customer acquisition
only 25% measure marketing's impact on business goals.
--VisionEdge Marketing/CustomerTHINK
Recognizing the importance of relationships is the first step to success. This is not a new paradigm shift, but it is merely a fundamental truth has become more evident with the increased consumer awareness available through Google, Yahoo, MSN, Blogs, and social media. The importance of relationships to sustain loyal customers and repeatable sales is a reality that has existed as long as sales and customer service have been around. The difference is that the value of the relationships can now be communicated, quantified and measured more rapidly than ever before.

The second step after recognition and acceptance is to create the metrics to measure the business on acquisition, conversion, loyalty, and advocacy.

Once metrics have been established, create strategies for developing Relationship Marketing, Relationship Sales, and Relationship Customer Service for advocacy, loyalty, and sustained profitable growth.


Words of Wisdom

"Assumptions are the termites of relationships."
- Henry Winkler

"Relationships of trust depend on our willingness to look not only to our own interests, but also the interests of others."
- Peter Farquharson

"Quality in a product or service is not what the supplier puts in. It is what the customer gets out and is willing to pay for. A product is not quality because it is hard to make and costs a lot of money, as manufacturers typically believe. This is incompetence. Customers pay only for what is of use to them and gives them value. Nothing else constitutes quality."
- Peter Drucker


Author's Bio: 

About the Author:
John Mehrmann is a freelance writer and President of Executive Blueprints Inc., an organization devoted to improving business practices and developing human capital. provides resource materials for trainers, sample Case Studies, educational articles and references to local affiliates for consulting and executive coaching. provides self-paced tutorials for personal development and tools for trainers. Presentation materials, reference guides and exercises are available for continuous development.