Business Relationship Management and Marketing

Marketing in business relationships is a behavior scheme that relies explicitly on the existence and the significance of lasting exchange relationships between one supplying company and one customer, and that focuses its marketing measures on the repurchase behavior of the customer. This chapter gives basic insights into the characteristics and types of business relationships and explains the mechanisms that drive the behavior of the business partners involved. Here, a major differentiation is the one between a de-facto and a planned business relationship as these basic settings have a huge impact on the actors and their activities. Furthermore, aspects of internationalization of and responsibility in business relationships are covered.

To conduct business relationships successfully it is necessary to elucidate the forces that drive the business partners’ actions. Chapter 2 thus presents the most important theoretical insights related to business relationships as a basis for a better understanding of the actors’ behavior. As research approaches to marketing in business relationships are very heterogeneous, this chapter also intends to create awareness for the significance of the different theoretical perspectives. After behavioral approaches, the concept of Thibaut and Kelley as a social psychological scheme of explanation is presented. Furthermore, the basic economic indicators of business relationships, commitment, relationship value and switching costs, are explained and it is shown how they affect the business partners’ actions and what this means for business relationship management and marketing.

As a basis for successful business relationship management and marketing, managers need to understand the reasons for which customers keep on buying from the same supplier. This chapter uncovers those reasons based on the generic concept of a market transaction. To forego a transaction, the customer needs to perceive a customer benefit. In business relationships this customer benefit may come from either the elements of the exchange (as in spot market transactions) or from the bonds with a particular supplier. Both aspects are discussed in detail. Furthermore, the author takes the position of the supplier and describes how different contracting options can help its endeavors to bind the customer. The chapter is rounded off with the different phases of a business relationship and how the customer’s purchasing behavior may change over time.

The fact that the establishment and cultivation of business relationships require substantial resources, raises the question whether those investments are compensated by the earnings achieved. To answer this question, it is necessary to determine the value of single customers and to make decisions on how to select and shape the relationship with them. The chapter thus presents and explains economic-quantitative and non-monetary criteria to determine customer value. Moreover, it discusses the multi-dimensional approaches used in this field like customer contribution margin, customer lifetime value, customer portfolios etc. Finally, it shows how such customer evaluation models can be applied and what the basic principles of customer value controlling are.

This chapter sheds light on the strategic facets of business relationship management and marketing. Strategic decisions with regard to business relationships are often located somewhere in between pure competitive and pure marketing strategy decisions. They can be distinguished according to a time- and a competitive space dimension. Regarding time, strategic decision-making in business relationship management differs according to the phase of the relationship. Roughly, three different situations can be envisioned: Entering into a new relationship, defending an existing relationship or terminating an existing relationship. In consequence, out-supplier marketing, in-supplier marketing, or exit management come into the focus of business relationship management. Concerning the competitive space of a business relationship, we focus on the corporate network and two of its specific characteristics. Sometimes, handling parallel business relationships with competing customers demands extra attention. At other instances, employing one’s corporate network to create extra value for customers in a business relationship is an important strategic consideration.

Contemporary research of relationship marketing and management increasingly focuses on businesspeople and organizations, whose behaviors and interactions are greatly influenced by the cultural backgrounds. It is therefore crucial to understand the culturally determined behavioral patterns and values of foreign business partners for business people who are involved in international business. This chapter uses the European Union and China, the two most important economic powers in the world as examples to show how the two cultures differ and how these differences affect the business and business relationships between them. Moreover, we also introduce approaches to manage Sino-European business relationships. As Chinese business culture has its own specificity that is still not so well known by the westerners, managerial implications for doing business in China are provided at the end of this chapter, aimed at Western practitioners how to run their business relationships smoothly and successfully with their Chinese business partners.

This chapter presents and discusses instruments for implementing business relationship management and marketing toward the business partner, in our case the customer. The ultimate goal of applying those instruments is of course customer loyalty, i.e. enduring business relationships as long as they are desired by the supplier. Side effects of employing those instruments are also discussed. The presentation of the different instruments is organized according to the classical four marketing P’s: product (offering), place (distribution), promotion (communication), and price. Examples of offering-related instruments include moving towards a solution offering, product-related services, and cross-selling. Efficient consumer response and just-in-time delivery are two distribution concepts aimed at strengthening supplier-customer bonds. Complaint management and fostering personal relationships between supplier and customer personnel are discussed as important communication instruments. Finally, creating innovative pricing models can also help strengthen customer loyalty.

In order to be able to create one face to the customer, a supplier company needs to organize internally accordingly. In this chapter we discuss several options of how to organize key account management, i.e. the interface to important customers with whom the supplier has business relationships. Choices range from part-time marketing by top level managers in smaller firms to dedicated key account management organizations at various level of a bigger corporation. These options are discussed before we take a look into the skills and characteristics of the people who ideally fill these boundary positions, i.e. the key account managers. Since many business relationships necessitate interaction between a variety of supplier firm and customer firm functions, key account management teams and their specificities are also discussed. Finally, the chapter takes a look at how business relationship management can be monitored and controlled.

Business relationship management today often has a strong IT backbone, called customer relationship management (CRM). This chapter introduces CRM and discusses how CRM can contribute to successful business relationship management. It distinguishes operational, strategic, analytical and communicative CRM and introduces CRM goals. Based on the diagnosis that CRM, when first introduced, caused euphoria but often never lived up to the promises it held, the author discusses potential future developments with regard to the use of CRM in practice. Two potential developments are exposed: CRM supporting parts of the business relationship management process and CRM transforming all relationship related business processes altogether.