The dark side of relationship marketing
|Topics:||Business Ethics, Marketing, 🛒 Consumerism, 🤳 Social Media, 🙋♂️ Management|
One major role of marketing in a company is obtaining and retaining customers. This role is one of the most crucial parts of a company or brand since customer loyalty usually ensures steady sales are maintained through a long period (Grönroos, 2013). To promote customer loyalty, where a customer gained is retained in the company for a long time, it is important to have a conducive relationship marketing section, which focuses on long-term customer engagement rather than the acquisition of customers on a short-term deal (Biswas, 2014). This is important since it ensures the customers of a company are always buying the company’s products, ensuring the target market is acquired and maintained. This, however, causes certain problems for the company, since the target market itself usually has a varied and differentiated view on how the product affects their life. Relationship marketing has major hindrances on its processes, and if left unattended, this problem may cause the brand to fail at times. This shows that the effect of relationship marketing in every company should be assessed by looking at the strengths and weaknesses it has on a product or company’s principles (Christopher, Payne, & Ballantyne, 2013). There are certain theories used in understanding the dark side of relationship marketing and they include the Social Exchange Theory (SET), Resource Based View & Dynamic Capabilities, and Resource Dependence Theory.
Firstly, the social exchange theory is a sociological perspective that focuses on social change and stability. This theory is related with business-to-business relationships since it explains how to parties are involved in relationship marketing. Precisely, relationship marketing is a field of marketing that focuses on the long-term relationship between a customer and a company (Payne, 2012). This is usually affected by the company’s principles and how their products or services are crucial to making it a famous brand in their market. A feature that has grown due to this field is customer service, where companies offer direct communication with their clients to get feedback and complaints on their products (Payne $ Frow, 2015). According to the social exchange theory, maintaining a good relationship in business involves enhancing the interaction between the two parties: buyer and seller. The role of customer service in a company has grown in the recent past, with companies investing in this sector to ensure their customers can always be helped. Customer care centers have been set up to operate 24/7 to satisfy customer queries, and this has led to certain brands growing, along with certain technology becoming important (Soltani and Navimipour, 2016). The internet has led to the growth of relationship marketing, with communication important for the growth of bonds between the brand and the customers interested in the brand.
Despite its importance to the field of marketing, relationship marketing has disadvantages that have caused certain companies to fail. A major disadvantage of relationship marketing is the cost (Shahin & Rahim, 2014). Services such as customer care usually need a lot of money to maintain the all-around service provision. The maintenance of personnel all day usually means that the wage bill of a brand increases and the company has to consider the effect of having two different shifts of workers (Brink & Berndt, 2015). Customer care also requires trained professionals who know how to handle disgruntled and confused customers (Alshurideh, 2016). With a company having different departments who have different roles, the pool of clients seeking information on the company is huge, meaning the customer care personnel should have complete knowledge on the company they are dealing with. This information requires to be stored and readily available in case it is needed, meaning that the company should invest in a system that helps the trained customer service personnel use information to help the customers.
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Another issue that relationship marketing has is gaining new customers. According to the theory of Resource Based View & Dynamic Capabilities, certain competencies are required in order to enhance the relationship between customers and the business firm. This theory asserts that relationship marketing usually focuses on the capability of customer retention rather than customer gain, meaning that new customer may opt for other competitive brands with marketing strategies that acquire more customers (Al-Hersh and Saaty, 2014). To retain the existing customers, the firm’s employees should have the capabilities required in meeting their needs. The resource-based theory explains that if a brand fails to balance the need for new customers with the need to retain them, there will be a deficit that will affect them, and this may cause losses in the process. The focus on retaining customers means that new customers may be neglected, and this may cause companies to lack new customer markets by which they may increase profits. The over-reliance on old customers to make a company better means that it will stagnate, and it will only be serving a certain market that may cause it to have fewer sales (Morgan & Hunt, 2014). Also, certain customers may leave a brand once a better product enters the market, meaning the relationship marketing that was initially set up was not effective. The volatile nature of customer markets makes relationship marketing hard since the society changes spontaneously (Hennig-Thurau & Hansen, 2012). An example noticed is the change in phone technology. Nokia, the cell phone giant during the Symbian era, lost its greatness once smartphones came since they did not address the needs of the society, and many of their customers went to use wither the IOS or Android platform, with the iPhone and Samsung now the major phone dealers worldwide (GrüNewäLder, 2015). The customer service given did not serve its purpose, with no old or new customers in the sales records of the company.
The Resource Dependence Theory also plays a critical role in explain business relationships within a competitive environment. Precisely, this theory focuses on how some of an organization’s external resources affect its behaviour. For example, a new problem that has occurred due to technology in relationship marketing is the protection of private data. Customer service usually requires personal data of people to be able to track their communication progress and use this information to make their products better or service conducive to their customers (Harrigan, et al. 2015). The company usually acquires Names, emails, phone numbers and addresses and stored on their servers to provide the customer a profile through which their transactions with the customer are stored to relay certain marketing information to the clients. This information, which acts as the external resource, is private, but hackers try to leak and sell the data to other companies to make ads, which implies that it is not fully protected (Berry, 2011). In this case the theory highlights how external resources can manage the business relationship between customers f not well handled. The information may be used to target certain sections of the community when advertising, which may create a biased community. This information may also be used to cause harm to the customer, who may be hacked and stolen from. Relationship marketing, therefore, requires a lot of security to ensure their clients are safe.
Overall, relationship marketing, which is the focus on customer retention and satisfaction rather than customer sales in a company, is an important aspect of marketing. The feature is usually important since it shows brands the target market they have, and the dynamics that these markets usually have in relation to the product. The major role of this type of marketing is customer service, where customers directly interact with the company through personnel who advise them on different aspects of the brand. Customer service involves trained people who are skilled in handling queries on customers that are based on products and services such as repair or refunds. However, this factor means that relationship marketing can be costly, with the equipment needed to sustain this department in companies being costly and difficult to understand due to the complex nature each company has. It also has problems attaining new customers since the focus is on the old loyal buyers to make the company successful. The lack of new customers may cause it to lose sales once the customers decide to change to another product from the competitors. This may cause future losses and finally bankruptcy, leading to the demise of the brand. Finally, relationship marketing may lead to the leaking of private information on customers, causing them to be targeted by hackers or other brands through ads. This leads to the safety of their customers being compromised, and this issue requires to be addressed to ensure relationship marketing is upheld with ethical prowess for any brand.
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