CUSTOMER SATISFACTION

Relationship Value in a Connected World

By Tim Bailey

Does it feel like consumers are fickle and customer loyalty is fleeting? The vast universe of information and infinite number of choices available to today’s consumers is making it challenging for a company to successfully “lock and last” with customers. As a result, the concept of “relationship value” has taken on a critical role for leading brands.

A Sense of Belonging
A basic emotional need for humans is a “sense of belonging” and with unlimited options only a mouse click away, today’s consumers seek out companies that they feel they “belong” with. As a result, companies that are connecting with customers at the deeply personal level of values and relationships are differentiating quickly from the competition. People have always bought from companies they “like” but now the reasons that a company is “liked” are more complex than the just product, price and service.
Yesterday’s “wow” factors of reasonable price, quality product and great service that separated the leaders from the laggards have now become the expected “musts” to most consumers. Adding value to the transaction in the form of genuine connections and relationships is the super-glue between leading companies and loyal customers today.

Value in Various Forms
Value comes in many forms. Marketers use acronyms such as “CLV”—Customer Lifetime Value— to assign a dollar value to a customer relationship. It is the present value of projected future revenue that stems from a customer. The benefit of this concept is that it encourages a focus on longer-term customer relationships. Unfortunately it often gets blurred with the goal of making customers more valuable to the company by selling them more products and services. Making customers more profitable to a business is crucial; however, it shouldn’t be confused with building genuine customer relationships.
Another form of value is “functional value,” which is based on attributes and functional utility gained by customers when they make a purchase. In home building, functional value involves managing a series of effective transactions and interactions with a customer, on route to delivering a home that will provide them with increased functional benefits. Functional benefits may include more bedrooms or a larger yard for a growing family. Or maybe a spa-like ensuite for a busy executive couple to retreat to after a grueling workday and commute in traffic. Unfortunately functional benefits often fail to differentiate a home builder’s brand, as these benefits are easily copied by competitors. In addition, functional value lasts only as long as a new home meets customer expectations or circumstances. Functional value should not be confused with creating relationship value with customers.

Ties that Bind
Relationship value is based on deep emotional ties. At a personal level, relationship value is what forms and maintains friendships and those elements translate directly into the needs of today’s consumers. Many friendships form based on similar values, beneficial connections, genuine trust and enjoyable interactions. Those same fundamentals are deeply understood by successful companies today and are being used to create a fan-base of loyal customers.
Some key elements that friends garner from relationships that similarly build relationship value between companies and their customers include:
Trust: long-term relationships don’t survive without it
Honesty: sharing the truth and working through the challenges
Communication: two-way ongoing dialogue
Knowledge: mutual give & gain by sharing information
Enjoyment: pleasant interactions in a positive environment

Rally for Relationships
The foundation of relationship value is emotional and its framing structure is caring. The challenge with relationship value is that it can’t be manufactured. It takes a team of caring individuals that desire to “know” each home buyer as an individual. That genuine culture of caring will form relationships that grow and flourish like great friendships. Once those connections form, other attributes of relationship value can be developed to enhance the “sense of belonging.” Décor meetings may become fun interior design sessions or warranty service calls may become educational “coffee visits.” Harley Davidson takes relationship value to a larger scale with their H.O.G. (Harley Owners Group) Rallies throughout the world. What better way to feel emotionally connected to a brand than to have “family reunions” with others that are also connected to the brand?

The Difference Maker
It is easy for a competitor to copy a product or replicate a process, but it is impossible to imitate emotional connections. Friends are loyal and eager to introduce you to more friends. Nurturing relationship value with customers creates enjoyable experiences for everyone and builds an incredible culture for referrals in today’s connected world.

Tim Bailey is Division President of Avid Ratings Canada, a leading provider of customer loyalty research and consulting to the home building industry. Through the Avid system, industry-leading clients improve referrals, reduce warranty costs, and strengthen their brand. He can be reached at tim.bailey@avidratings.ca.