Organisations today operate within a large competitive market so in order to maintain their current customers and gain further customers they must make their organisation attractive. Therefore they should focus on customer loyalty and the importance it plays within the organisation so creating and ensuring customer satisfaction is a very important factor. The general intention of this article is to explore the role played by interpersonal- relayed factors in gaining and developing customer loyalty to the company. Throughout the article we get to know how interpersonal relationships play a part in building customer loyalty and satisfaction towards the firm. We are able to appreciate the difference between customer-and-employee, and employee-and-employee relationships, and the impact they subsequently have on the organisation, both advantageous and otherwise.
The customer-and-employee relationship is shown in the article to make a positive input to the firm, as interaction between the front line workers and the customer creates an overall perception of quality provided by the service provider. The article suggests that the 'social bonding' between customer and employee makes the customer more committed and trust worthy of the firm, and consequently more loyal. It emphasises the importance of sales force skills and behaviour in gaining customer trust and developing long term buyer- seller relationships. This will not only develop the customer's relationship with the employee but also with the firm thus achieving positive results.
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The article also highlights reasons why this relationship could have a negative effect on the firm, as the customers would become too loyal to the front line workers. This would have an impact when the employee left the firm as the customer would follow that employee or find another firm, as the relationship the customer had was directly loyal only to the employee.
The other relationship which is portrayed within the article is customer-to-customer, which is said to contribute to the development of transactional satisfaction. This also plays a part in the development of long term relations within a firm, by their contact and interaction. Creating a strong bond, customers may interact at a regular basis and remain within their group of friends, this plays a positive effect on the intentional service. But again, same as the customer- to - employee relationship, if one of the group of friends leave, they would follow and break their loyalty with that firm.
This is a short summary of the main points in the article. It shows that customer satisfaction is a fundamental driver towards loyalty in the service market, and that monitoring the customer's satisfaction levels should be a high priority for the service managers. There are tables within the article that help the ideas become clear about the impact of relationships on an organisation. Also the article points out how customer and employee relationships could be improved in order to be even more effective by such methods as personnel selection of front line workers, training to increase relation skills, reward systems based on fostering customer satisfaction and loyalty, and attention being paid to the design of facilities and layouts to develop the interaction between front line workers and customers. But on the other hand nothing can control the risk of a strong social link developing, thus the risk of losing the customers. Therefore it is also important to concentrate on employee satisfaction in order to reduce turnover levels.
Why I chose the article?
I chose this article as I was intrigued as to how different relationships affect the customers' perception of the company. As this article puts theory into practise we can see the effect it has on the firm. It is set on results collected within a gymnasium. It is interesting to get to know how the firm builds on social bonding with the customers, where the front line workers build friendships and get to know each other on a social basis. In return they gain each others trust and commitment hence the customer is not only loyal to the firm but also to the employee. This shows that customer service must be of a high standard within this particular firm, and I can imagine plays an important role in other organisations too. It contributes to the understanding of the customers and thereby maintains their loyalty.
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'The essence of a salesmanship is the development of a social exchange relationship with buyers, such that economics and social benefits of mutual value can be traded' (Tarn and Wong, 2001)
The relationship creates a positive impact on the firm, both economically and sociably, and in return this makes customers loyal. Not only does the article show positive outcomes of the relationship, it also shows that problems can occur, thus making it realistic to read. Relationships can have a great impact on the social benefits of the firm, but can also backfire through employee loyalty rather than firm loyalty. Therefore, as shown in the article, if an employee would leave the firm the customer would follow them, as they have created a strong bond. This is interesting to know as it shows how relationships can have a beneficial impact on an organisation, but on the other hand can also be detrimental. This shows the dynamic effect a relationship plays on the firm, therefore firms must handle these situations very carefully and try to overcome the problem by making not only the customers satisfied with the firm but also the employees as well. The article shows that the firm has satisfied customers as they have fixed membership fees, which they pay for frequent use of the service. But on the other hand it states in the article they found that,
'…the link between 'social benefits' (which require the existence of a friendship relationship between a front- line employee) and the share of purchase in the point of sale is fully mediated by the overall customer satisfaction with the store' (Reynolds and Beatty, 1999)
This shows the importance of the customer satisfaction levels which generate their loyalty towards the firm. Important to always improve the firm by keeping up with the environmental changes within the industry which plays a competitive role against firms, where each tries to keep their existing customers and gain new ones by making sure they offer the best satisfaction levels of service and thereby enhance their loyalty.
The articles role in marketing.
Reading this article has enhanced my understanding of the importance that interpersonal relationships play within an organisation in relation to the satisfaction and loyalty of the customer. It has shown that marketing can be put into a very complex situation by the different environmental factors within the organisation and that customers change their way of living according to current trends in the market. The different relationships which develop within the firm have different effects on the performance of the company, which has been discussed within the article. Other authors such as Bolton and Lemon (1999) have likewise said:- 'Firms seek ways to manage customer relationship over the long term, understanding the dynamics of the service provider- customer relationship becomes a key priority'.
They believe that the customer relationship should be an important aspect for the organisation to develop and manage correctly in order to gain the best customer loyalty and create the best satisfaction standards. The organisation should understand how customers use the information and experience in deciding their level of usage, which inspires the organisation to use interpersonal relationships. This is especially important in service industries,
'Companies have begun to embrace the concept of customer life time value (CLV) and have begun moving towards devoting more dedicated resources such as formal and informal selling teams, to manage these precious customer relationships' (Jones, E et all. 2005)
This highlights the fact that customer satisfaction is important to maintain as it would also contribute to a positive word of mouth for free advertising for the firm, as the relationship which is established between the firm and its customer is critical its survival and success. The other important factor within relationship is communication between the customers and employees to enhance their understanding,
'Effective communication is seen in employees collaborating, interacting, and engaging with others in ways which help them understand the importance and meaning of that engagement', (Pace, R et all. 1989)
This enhances my understanding again of the pressures which are placed on the organisation by dynamic competition, therefore creating a strong relationship with customers can play a very effective and positive role in the organisation. They affect the customers' attitude positively towards the organisation, and the reliability and validity of the organisation's performance. This is agreed by another author, Buendapudi and Berry (1997), the importance of interrelationship within a firm, they stated that,
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'Relationship marketing has also expanded beyond it's initial conceptualisation as a firms efforts to attract maintain and enhance relationships with it's customers'.
This shows the importance of an organisation maintaining a strong relationship with its customers, and the best way of creating that bond is through the front line workers and the customers. This has been called a 'social bond' within the article. It generates the organisation's awareness of what the customers want to gain from the organisation and how it should be developed by more knowledge and understanding of the customer's needs. This will give the organisation a strategic advantage within the market place.
'The customer- orientated firm is committed to relationship marketing and employees work together to solve customer problems. Employees morale is a critical success factor in the customer- orientated company, especially for employees who deliver some aspect of a products service bundle' (Beatty et all. 1996)
This shows that the organisation's true mission is to establish an environment that creates value for the customer, employee and the investors. Therefore the importance of the orientation working within any organisation is the importance that the managers must be committed not only to the employees but also to their customers. This would therefore generate relationships within the organisation, and enhance interaction, which is a key variable to maintain the customers. Again this shows the advantage and importance of establishing a strong relationship with customers.
The article also showed me that there are disadvantages in creating these strong bonds with customers and employees, and that they could have a negative economic effect on the organisation. If the employee decides to leave the organisation the customer might follow, as they have developed a customer and employee loyalty, not firm loyalty. This is also shown in research that Beatty, Mayer, Reynolds and Lee, (1996) undertook within sales, as they found that organisations lost their customers as they followed an associate who went to work for a competing organisation. The trust and honest relationship the customer had built with the employees within the firm had led the customer to depend on their Sales Assistant, which is a huge disadvantage for the company if the employee left,
'Firms engaging in relationship selling as a key strategy need to develop and implement specific policies and programs aimed at retaining their customers when successful relationship- building Sales Assistance choose to leave the firm.'
The strength of a relationship can be very powerful and create difficulties for an organisation to maintain their customers once an employee leaves. Further research is needed within this field, and also the issue of customers' ability to maintain a relationship, either with a firm or employee.
Not only does the fact that an employee leaving the company may remove the customer's loyalty from the firm, but there are other factors that weren't included in the article. The behaviour of another customer will affect another customer's experience within an organisation. For example Grove and Fisk (1997) found that,
'standing in line is a serious challenge for many people, extended waits that often accompany many service encounters can put people in a bad mood, tempers can flare and disruptive behaviour can result'.
This could have a huge impact on a customer's attitude towards the firm. But satisfying all customers is impossible as everyone has a different idea regarding what is appropriate in any situation. Therefore in this particular situation line managers were suggested to entertain customers while queuing to ensure that problems among customers didn't occur. To help recover from difficult situations such as these and to stabilise relationships,
'… recruitment, subsequent training and appraisal methods should also be focused on the service works customer orientation' (Bove et all, 2000).
This brings together all the different ideas I have developed and understood about how important relationships can be within an organisation, but yet again, on the other hand, a disadvantage.