5. Developing the Relationship Management Upper Mid-Range Theory

From the theoretical point of view, the overall message of this research is that if RBV (extended by the dynamic capabilities concept), SDL and RM are analysed as intertwined theories, employees emerge as the key internal resource, the mother of all intangible resources. Consequently, an ethical IRM capability emerges as a fundamental driver of sustainable competitive advantage, preceding customer (and other external stakeholders’) relationship management capability.

On the basis of the final proposal for the RM maturity model, nothing seems to be more important than excellent internal vertical and horizontal communication. Its existence would reveal itself in showing full respect to every person, sincere and sympathetic interest in each other’s well-being, being absolutely transparent about individual and group challenges, and demonstrating the willingness to learn and adapt. Whilst this applies to all employees, it is more of a personal challenge for the management. True leadership, in this context, does not end with managers’ factual knowledge, but extends to the very core of their humanity, which is a fundamental guiding reference for the team to follow. In turn, this attitude is transferred further into external relationships and consumed as a service (be it a consumer or business partner experience).

RM maturity exhibited in such a way should have a positive impact on both the cost and revenue sides of a business. In the case of management costs, savings may be a result of largely replacing the supervisor–subordinate mode of control by the much more effective mechanism of individual and group self-control (cutting red tape and reducing the corporate “game of deception” in favour of employee empowerment and engagement; Kegan et al. 2014). However, there is more. Sales, marketing, distribution and administration expenses are usually supervariable (they rise faster than sales volume), provided a company expands by traditional means of mass marketing and price promotions (Kaplan and Cooper 1998). If growth is more organic, largely by taking advantage of positive word-of-mouth and customer referrals, the customer acquisition costs are minimized, and the investment in infrastructure (people, processes, physical) keeps up with rising demand. On the revenue side, the use of customer-specific knowledge is likely to create positive sales and after-sales experiences (including co-creation experiences), which enhance the customer propensity to buy more, and more frequently (Reichheld and Teal 2001).

Hence, the existence of an RM-mature company is determined by its ability to co-create and share value with all its stakeholders, according to their merits and position in the value creating chain. Although a part of this value will have a transactional character, for example the basic utility value of a product or service against the price paid or salary against labour, the real difference is made by the value of relationships, for example manifested in the comfort of having a trusted partner/advisor, or a friendly work ambience. What may sound like a pipe dream is measurable on the bottom line, and this book is not the only one to say this. A notable example is the concept of the Service-Profit Chain (Heskett et al. 2008a). This linkage model shows the relationships between organizational performance and customer and employee satisfaction and loyalty (Sasser et al. 1997). Although there are very few companies who have continuously tried to explore all its linkages, its underlying ideas seem to clearly reflect the practices of leading global service organizations (Payne and Frow 2013). Moreover, even if the original model was publicized as an attractive managerial concept (Heskett et al. 2008b) and not as a theory-based contribution, it corresponds well with the notion of RM maturity. In contrast, the Gallup Institute claims customer and employee engagement potentiate one another and improve overall financial performance by up to 240% (according to the Gallup Q12 survey instrument, if both metrics score above 50% in comparison to companies that stay below this level (Robinson 2008)). And in the meta-analysis of 339 independent research studies, Krekel et al. (2019, p. 2) found a significant, strong, positive correlation between employees’ wellbeing, productivity and customer loyalty, which were ultimately positively correlated with business-unit profitability levels.

Figure 5.1 depicts the final proposal of the RM maturity model, which highlights the key elements of its preliminary version verified in the empirical research. It is evident that almost half of these elements are oriented to managing internal relationships (IRM). Hence, the final proposal of the RM maturity model strongly resembles the strategic dimension of the preliminary version. The main difference between Fig. 3.​7 ‘Strategic dimension in preliminary RM maturity model’ and Fig. 5.1 are three key ERM processes labelled as a quick RM-maturity test. All three processes have empirically proven legitimacy directly embedded in research items D03, D05 and D08 linked by the association rules R4 and R11–R16 in congruence with items A05 and A06 linked by the association rule R1. These three processes may function as a compact basic guiding reference for managers looking to achieve an RM-based sustainable competitive advantage.

In the case of the lead management process (D03), achieving RM maturity means adopting a non-waste lead policy. This translates into systemic utilization of every organically acquired or marketing campaign-generated customer contact across the whole communication process, starting with the first interaction and closing with the ‘deal won’ or ‘deal lost’ status. As a result, the investment in both individual relationship development and in marketing campaigns is optimally converted into sales. To ensure the lead management process runs properly, the interested manager should demand transparent reporting on conversion rates at all major stages in the sales funnel. This puts interdepartmental coordination and the quality of internal and external communication to the test (Deszczyński 2016a). For example, the marketing department may launch a campaign, which initially generates much resonance and leads, but the excessive promises used to lure potential customers, which are not supported by the factual attractiveness of the offer, clog the sales funnel with disappointed prospect buyers having no real propensity to buy. The result should be visible in heavy losses in lead conversion in the initial steps, extended waiting time for leads to be processed, and high lead drop-off ratio after passing them on to sales. The same can happen if, for example, the customer contact teams’ or sales organization’s work is in excess of their capabilities, fulfilling massive bureaucratic tasks or simply being too scarce.

The second area where an interested manager can quickly test the RM maturity of a company is by examining its means of communication (D05). An RM-mature organization should mainly use direct communication channels, because only then is there a possibility for a customer-specific dialogue based on customer-generated knowledge. It is also the prerequisite to co-creating value with customers in an RM sense. However, as indicated by the low scores in the empirical tests of the technological RM dimension, merely having a customer database is not enough. Therefore, a manager should ask whether the company has good answers to the basic yet fundamental questions: “Who are our customers?” “What do they expect from us?” and “When is the best time to tap into their demand?” (Deszczyński 2016b; Lusch and Vargo 2014). In particular, these questions should be addressed with a view to identifying the relatively small group of the most valuable customer relationships which, according to the Pareto principle, largely decide a company’s prosperous development (Buttle and Maklan 2019). The capacity to maintain selective, adaptable, largely autonomous interactions with these key customers should be the hallmark of an RM-mature company. This puts the motivation and engagement of the front-line personnel to the test. Much of the content of these highly satisfying interactions cannot be centrally set or controlled. Truly meaningful one-to-one interactions are only possible when both the customer and the employee are empowered to flexibly integrate the resources the company provides (Lusch et al. 2007). However, this means that the company partially loses control over the way its resources are allocated, which poses some problems to organizations not having developed a partnership with their staff (Mayer et al. 2010). First, the employees may not be ready to take on such a responsibility (Ahearne et al. 2005; Barner 1994). Second, they may use such an opportunity to commit fraud or for indirect personal benefit at the expense of a company (e.g., buying customer silence to spare excessive work or to cover up errors committed; Comer 1998; Hooks et al. 1994). If there is a high risk that one or both of these problems may occur, relational communication and relational selling will not be possible, and thus the company will not be capable of achieving sustainable RM-related competitive advantage.

Finally, the integration of customer feedback into a firm’s continuous improvement efforts (D08) has to be examined. For an RM-mature company, the willingness of customers to participate in a dialogue is a chance for further developing the relationship. There are, of course, varied reasons customers may wish to interact with the company. In fact, both lead management and selective direct customer communication are also processes built on interaction: the first mainly of a transactional type, the second of transactional and non-transactional types. However, an organization can only actively shape its future by seeing beyond the current customer loyalty cycle. Therefore, an interested manager should make sure that, as with leads, no customer request or complaint passes without analysis and response. The annual aggregated complaint statistics may expose some trends, for example in the general quality of customer encounters, but only short loop analysis by the responsible team gives the company a chance not only to restore the individual customer’s trust, but to mitigate the risk of committing the same mistakes again soon (Wirtz and Tomlin 2000). A strong indicator for making the management of customer feedback a priority among other business goals is its incorporation in the employee assessment system (Pollack and Pollack 1996). If a company recognizes and rewards only immediate sales increase or cost reduction, this sends a clear ‘it’s all about the money’ message to its employees. Such a tactic reduces their perspectives to the forthcoming bonus cycle and is an example of paraded RM (Lusch and Vargo 2014). Similarly, care for the quality of customer encounters may also take the paraded form if employees are only penalized for reported problems instead of treating this as an opportunity to learn from mistakes (Wirtz et al. 2010).

What might an interested manager do if facing such problems? Of course, they may try to tackle them at the operational level, but what this research suggests is that such problems are unlikely to occur without any fundamental reasons caused by lame IRM. A company that deprives salespeople of the willingness to cultivate long-term profitable relations or that is pretending to be satisfied by an tentative and undifferentiated ‘omnivorous’ sales approach is also most likely having problems with employee turnover, morale and widespread mediocrity caused by toxic corporate culture, devoid of inspiring goals and leadership. Probably the most concise answer to the question of what companies should do to achieve and sustain RM-related competitive advantage is the ‘Employees first, customers second’ transformation started by Indian IT-services giant HCL, which was publicized by the company’s former CEO V. Nayar in his similarly titled book (2010). By acknowledging that it is the employee/customer interface where the most value is created, companies like HCL find motivation to turn conventional management upside down and become a company of ‘ideapreneurs’—self-run, self-governing and highly profitable (HCL 2020).

Why corporate success may have IRM-based roots is also presented in two of the illustrative examples of RM practice provided in Sect. 5.3. The first (Illustration 1) shows the volatility of corporate culture in the example of ‘Medium-sized home décor online retailer’, where a single person undermined the very core of the firm’s identity in the shortest time. The second (Illustration 2) presents the redefinition of the roles of managers and employees in a ‘Large manufacturing company operating in the FMCG market’.

Defining the RM recipe for achieving sustainable competitive advantage begs the question: Why is it a relatively exclusive strategy? After all, even bringing together the ‘extremely strong competitive advantage’ group of companies with the ‘strong competitive advantage’ group (which includes companies having reported some of the long-term competitive advantage indicators while being able to report only one out of 16 rules characterizing RM maturity based on the 9/10-score level) only accounts for roughly 19% of the whole examined company population. Probably the best explanation of this phenomenon can be deduced from the nature of loyalty. Although the notion of loyalty has been addressed several times in this book, at this juncture a short recap is needed.

The state of being loyal to anybody or anything has to have strong reasons, because patronizing one object of some kind automatically implies refraining from others, thus narrowing one’s choice (Varelius 2009). In many product/service categories, the differences in utility (based on similar technologies) and in brand perception (following the homogeneity in marketing messages and loyalty programmes) are very small (Uncles et al. 2003). As all alternatives are likely to be satisfactory, there is little opportunity for anything more than superficial habitual loyalty (Wood and Neal 2009). This is because the perception of the purchase as a transaction that fully accommodates the exchange (based on the pure market-pricing mechanism; Fiske 1992) leaves no room for the important loyalty-driving equality-matching mechanism of reciprocal gratitude (Fiske 1992; Henderson et al. 2011;). Its occurrence is more likely when the customer has developed loyalty ties to (an) individual employee(s) (Palmatier et al. 2007). They, in turn, are related to a history of successful interactions incorporating value co-creation and partnership that appears to be benevolently motivated and offered just as the customer needs assistance (Palmatier et al. 2009). However, a randomized quality of encounters cannot evoke customer attitudinal loyalty, just as a friend who is only occasionally willing to help is not a real friend. Offering a ‘merely’ good level of service is only enough to become an acquaintance, alongside many others. Thus, the external manifestation of RM maturity that can be assessed by customers is either continuous, highly personalized, ‘intimate’ customer encounters or top-notch quality of individualized solutions based on a deep understanding of customers’ needs and purchase motivations, or, preferably, both (Payne and Frow 2013).

The issue of individual relationships between customers and employees is discussed in two further RM illustrations. Illustration 3 discusses the impact of informal relations on business relations and its changing characteristics over the last 30 years upon the experiences of Pamapol, a large ready meals manufacturing company. Illustration 4 shows the role of personal relationships between high-ranked managers in the example of ‘Medium production company representing chemical industry’.

The sketched dichotomy between delighting customers to develop relationships that last and ‘only’ fulfilling the expected standards and luring random customers to conclude a single transaction is clearly reflected in the Net Promoter Score (NPS) concept and methodology (Reichheld 2003). Labelled as a ‘highly aggregated RM capability indicator’ in the previous chapter, NPS precisely measures the ability of a company to deliver the high-end performance reflected in total customer satisfaction and in the willingness to repurchase and make referrals to other customers. The design of NPS with only 9/10 scores linked to customer loyalty reproduced in the RM maturity research methodology indicates that, unlike a typical maturity model, there is nothing like an RM maturation path (De Bruin et al. 2005), at least in the sense of establishing a linear relationship between subsequent levels of quality in customer encounter, customer loyalty and the company’s bottom line. Instead, the sharply curvilinear correlation (Reichheld and Markey 2011) supports the totality of the RM maturity model exposed in the empirical hypothesis H1e. However, this does not provide an answer to the next question: How is it possible that RM-mature firms did not outcompete the transaction-oriented ones and what limits their scale and scope? For example, in Forrester’s ‘Net Promoter Benchmarks, 2019 (US)’, the overall NPS scores ranged from +59 to −47¹ (Schmidt-Subramanian 2019); this means that the companies that achieved an almost 60% net predictive loyalty rate coexisted with those whose customer base predominately included detractors. Moreover, 25% of the interviewed companies in the research presented in this book reported growing sales, expansion to new markets or sometimes even scoring above-average profits without achieving RM maturity.

The coexistence of companies applying different business models and strategies, having diverse corporate cultures and structures, servicing different industries and market segments, and achieving varied business results has been the reality noted by many researchers (Romanowska 2014). One of the most fruitful research traditions in this respect is configuration theory, which posits that, for companies to be successful, they have to match their organizational characteristics with the adopted business strategy (Slater et al. 2011). Prominent representatives of this tradition, O. Walker and R. Ruekert, in their award-winning article (1987) defined companies in terms of two dimensions:Their findings based on theoretical and empirical evidence were that the strategic fit between the adopted generic marketing strategy and its internal characteristics (structures, policies, programmes, procedures) heavily impacts business performance regardless of how the adopted strategy fits the changing external environment (1987). Interestingly, the detailed characteristic of Differentiated Defenders strongly resembles the RM-mature company (Olson et al. 2018; Slater and Olson 2001):

What is also particularly noteworthy is that in O. Walker and R. Ruekert’s empirical research and the work of researchers that followed them, among three identified types of companies, the Differentiated Defenders scored best in terms of return on investment (ROI), while being less successful with market share and new products; the Prospectors were quite the opposite; whereas the Low-cost Defenders were fairly successful when it came to ROI, but very poor in new product development (1987, p. 20).

Also, diversification theory explains the coexistence of differently performing firms. Its foundational premise links expansion with excess capacity of productive factors and stipulates that the wider a company diversifies, the lower will be its average margins (Teece 1982). Further on, diversification theory links the average margins with the specificity of these factors. The more specific the factors (in RBV terminology, the more these factors resemble VRIO resources and dynamic capabilities), the higher average margins can be generated in new markets, provided the new market entry opportunities are located ‘nearby’—that is, the new application of company resources and capabilities does not require them to be modified extensively (Chatterjee and Wernerfelt 1991). Therefore, companies with specific, idiosyncratic resources and capabilities will generate high average margins when diversifying narrowly or not diversifying at all, while companies with less specific resources and capabilities will generate medium average margins when diversifying narrowly and low average margins when diversifying widely to ‘distant’ new market opportunities (Montgomery and Wernerfelt 1988).

By combining what configuration theory and diversification theory have to say about resource specificity, market focus, and business performance and by relating it to RM-mature firms, one can assume that these entities are likely to adopt a niche strategy. Traditionally, niche marketing strategies were associated with small innovative firms concentrating on product innovation matching new technology with unmet customer needs (Pavitt 1990). However, the definition of a niche market does not explicitly imply that its borderlines are of a technological nature (Stankiewicz 2000). It is enough that a niche is sufficient in size and shows the potential for profitable growth based on the goodwill of customers who expect special treatment and who have been, up to now, ignored by companies supplying the broad volume market (Dalgic 1998).

How about a relational niche? A subdivision of a market with only one company focused on a niche of customers, which has built an ecosystem of mature relationships stabilizing and growing its business through an RBV-style mechanism of isolation that prevents imitation (Galvão et al. 2018; Lepak et al. 2007)? Such a company could largely coexist undisturbed with neighbouring major players fighting for market dominance in a pursuit of a monopolistic rent (Teece 1984), while building its own sustained competitive advantage on a relationship rent (Dyer and Singh 1998). Consequently, instead of wasting resources on analysing and counteracting rivals’ activities (strategizing), it could concentrate on co-creating superior value (economizing; Williamson 1991) and generating excess surpluses, which could be shared with its partners.

It seems that virtually every industry offers a room for a relational niche even in, to date anonymous, B2C markets. Let’s take the breakfast cereals segment as an example. End-customers have traditionally purchased this product via extensive FMCG (fast-moving consumer goods) retailing distribution networks. Yet, some of them are now ordering breakfast cereals online from specialized providers, who offer a number of product variations which no shop shelf would ever accommodate plus individualized nutrition advice, recipes, and customer care powered by online behaviour tracking. In contrast, let’s examine the roots of success of a small grocery shop. For a number of clients, the proven freshness of food and its traceable origins, the convenience of individualized orders, and the comfort of personal chat with the shop assistant could be the arguments prevailing over the competitive price and the wide availability of merchandise offered by retailing giants. Both entities may successfully operate in niches separated from the surrounding volume markets, through major distinguishing characteristic of high quality-oriented customers.

The two examples provided may leave the impression that relational niches are, by definition, very modest in size. However, a company servicing a relational niche does not have to remain nominally small provided the demand for personalized customer encounter and/or highly individualized quality offerings is sufficient high, or its relationships can be extended or used in other market segments. The example of Konimpex-Invest (Illustration 5), a medium-sized real estate development company, demonstrates that a company can even place the bulk of its operations in the volume single transaction market, while proactively catering to the needs of these customers, whose special preferences create room for separating a profitable relational niche.

Figures 5.2 and 5.3 will be helpful in further discussing the coexistence of RM-mature and RM-immature firms. They depict two market situations. The initial one is a model of a market with two transaction-oriented rival companies T1 and T2.² These companies devote a great deal of resource to acquiring new customers; however, as they conclude a transaction, their interest in customers sharply disappears. In turn, most of their newly acquired customers are dissatisfied or find no strong reasons to stay loyal and migrate to the ‘floating customers’ pool.

Therefore, to sustain their business, companies T1 and T2 have to concentrate even more on acquiring new customers whom they, by definition, do not know well. In consequence they often communicate by using very simple and unspecific arguments (e.g. price promotions) via mass marketing channels trying to appeal to an ‘average customer’. By continuing this modus operandi, they sustain a vicious cycle of mutually ‘exchanging’ dissatisfied and indifferent customers at a cost of high marketing spending aimed in counteracting their rivals’ offers (strategizing) in a relatively homogenous market (Peteraf 1993). This is a familiar picture perfectly depicted in M. Porter’s Five Forces Model (1979). The notion of RM-maturity implies that this model of competition will not substantially change even if rival companies were to temporarily gain a partial competitive advantage based on low-scaled RM-resources (e.g. a single highly-engaged sales team or an individual employee). One can expect that within a short time, any major customer-centric initiatives in such companies are likely to be dragged down by the dominance of their volume-oriented focus, which implies the need to compensate excessive marketing costs by cutting expenses on customer care. In the end neither these companies nor their customers (and presumably most of their employees) create optimal value.

Alternatively, it is also possible that due to some market or macroeconomic policy failure these companies will refrain from competing and will instead fix prices, limit or control production, markets, technical development, or investment. Oddly enough, such collusions are also the outcomes of corrupted RM aimed at satisfying the interests of corporate elites only. Such RM-based collusive practices are illustrated by the example of the bidding process for water rescue services for Termy Maltańskie, the biggest waterpark in Poland (Illustration 6).

Figure 5.3 shows the same market occupied by transaction-oriented rivals T1 and T2. In addition, a third player, the RM-mature company (R1), enters the market. However, although R1 offers superior quality of customer encounter, it does not seize the whole market. Instead, it isolates a part of the market populated by the most demanding quality-oriented customers, who can afford to pay a premium on an offer that optimally caters to their needs (relational niche-customers). To differentiate by effective offer personalization, company R1 is virtually immersed in the niche its serves by receiving even faint signals sent by its customer base. Occasionally some customers leave and some enter its relational niche, but it remains stable as long as the company cultivates its relationships and no major external shock occurs (e.g. radical technological change which the company was not participating in). Company R1 does not expand more than its relationship resources and the demand of relational niche-customers allow. Thus, companies T1 and T2 may continue their competing strategies, barely noticing that the market they operate in is now somewhat smaller. They may also try to attack the position of company R1, but as they fundamentally lack the RM competitive factors these attacks can only appeal to the peripherals of the relational niche, where relatively more price-sensitive customers reside.

The idea of the relational niche equally explains the coexistence of transaction-oriented (RM-immature) and RM-mature companies as well as the somewhat limited scale and scope of the latter. As the relational rent resembles a Ricardian type of rent, it is generated at maximum output. Thus, the growth of an RM mature company is limited by the uniqueness and scarce supply of its relationship capital (Peteraf 1993). The rapid elastic growth is, therefore, impossible unless the company decides to finance expansion at the expense of relationship capital. This may yield additional volume and short-term financial benefits; however, as the isolating mechanisms of the firm’s niche are the relationships it maintains, these barriers will disappear once those relationships weaken. In this context, the most likely threat to the comfortable position of an RM-mature company is the company itself. After all, it does not take long to destroy what was previously an unconquered fortress from the inside, for example, by hiring some new managers who pull their weight, instead of motivating their teams (this risk is showed in Illustration 1) or by doubling the number of customers served per employee. This is probably also one of the reasons for the ambiguity of links between RM and company performance highlighted in the introduction, in the theory-methodic hypothesis H1tm, and generally throughout this book. When a company has abandoned its relational niche some time ago (e.g. for the sake of realizing ambitious volume expansion plans) and it faces unstable or price sensitive demand, but still classifies itself as RM-oriented, this can be misinterpreted as evidence for RM-strategy failure.

What still remains unaddressed is the size of the relational niche. Admittedly, there will be markets where the process of cultivating a relational niche will be easier and others where the potential niche will be ‘by nature’ very small. This seems to be a boundary issue between the RM upper mid-range theory and the RM mid-range theories of particular market types (compare Chap. 2 Fig. 2.​4). The latter may address more specific, e.g., industry-based factors affecting the characteristics of the relational niche, while the RM upper mid-range theory may discuss the universal ones.

An analysis of the universal external factors having an impact on the size of a relational niche should begin by examining whether a company may have direct access to the customers. Based on social network research, such as M. Granovetter’s work on the “strength of weak ties” (1977), one can assume that the better this is, the more likely a significant relational niche could be developed. More precisely, in line with the media multiplexity theory (Haythornthwaite 2000), the level of interdependence between the actors in a relationship is positively associated with the number of media used in that relationship (Haythornthwaite 2005; Ledbetter 2010). If a given market is anonymous, companies can only observe general trends in demand and may eventually try to establish a brand preference through diverse marketing activities. This situation applies to the aforementioned FMCG market as well as to all industries where the suppliers (mainly manufacturers) sell their offers through independent intermediaries (Payne and Frow 2013). Even if they may occasionally connect to their end-clients by organizing prize competitions or surveys, these companies were traditionally not in a position to maintain a dialogical communication. However, some of them may break the impotence of mass communication by virtualizing their operations, just as indicated in the example of specialized breakfast cereals suppliers. Still, the additional logistics costs and the inability to purchase all the complementary products (e.g. milk, to stay with the cereals example) or the unavailability of the broad merchandise that is conveniently offered together (e.g. food in the supermarket, which is situated in the shopping mall that accommodates other types of shops) should normally significantly reduce the potential size of the relational niche such companies can tap into. In other words, there will be fewer customers potentially interested in developing relationships with a specialized supplier/provider, the more inconveniences such relationships demand.

Four issues are worth commenting on at this point. The first is the role of online shopping platforms such as Allegro and Amazon. Their intermediation removes the inconvenience of separate shopping for different types of products. Some product categories may be even better represented, compared to traditional distribution channels (while others, such as fresh food, are worse). However, these platforms do not provide tools for developing end-customers’ loyalty towards their merchants, as this would undermine their position as intermediaries. Therefore, they help in achieving volume goals rather than in cultivating relationships (Dolata 2017).

The second issue is the role of social media technologies. Although useful in creating online brand communities, these tools do not have (at least currently) the potential to effectively integrate and manage all points of customer contact, including transactional contacts. Nonetheless, in the case of fully virtual communication modes, the integration of social media with other online tools, such as e-commerce platforms and CRM systems, may open the gate wider to connecting to niche customers and nurturing relationships with them (Chatterjee et al. 2019).

The third issue is that every company can try to develop relationships with its direct business customers, who may well have very specific needs that can be best met by a specialized partner. The inexistence of fundamental barriers in locating and communicating to B2B customers makes the relational niche an even more likely phenomenon than in the B2C market setting, where the large number of customers necessitates, for example, the investment in CRM systems implementation to effectively manage all the interactions (Buttle and Maklan 2019).

Finally, the fourth issue is that even relatively easy access to customers does not automatically imply the existence of a relational niche. Take telecommunications and cable television providers. As these services are predominately offered on a contractual basis, their providers are in a superior situation compared to, for example, durable goods manufacturers. Still, this industry has traditionally suffered from one of the highest churn rates, even if the average loyalty cycles sanctioned by these contracts are relatively long (Ahn et al. 2006; Kotler and Keller 2009). However, as the main focus of these firms is placed on attracting new customers, the relatively frequent direct contacts they maintain with their customers (based on monthly billing) do not necessarily create customer satisfaction. The most evident proof for the illusion of fake contractual loyalty was the mass defection movement as soon as governments across the globe introduced wireless number portability laws (Eshghi et al. 2007).

Two companies from contractual industries showcased in the RM-Illustrations are currently coping with the challenge of maintaining a true focus on their relationships. Sugar-refining group (Illustration 7) discovered how undeveloped its business relationships were as soon as the sugar market was deregulated in the European Union. By contrast, Aquanet (Illustration 8), a water and sewage processing municipality-owned company, decided to improve its relationships with individual and corporate clients by starting first to improve its relationship with its employees.

Another universal factor that should have an influence on the potential size of an RM-niche is the relative importance of the given offer category for the customer’s overall value creation chain. It should be significant and enduring enough so that interested firms could develop a performance gap reflected in the relationally-affected key buying attributes of their offer that make true difference to their targeted customers (Bharadwaj et al. 1993). In the case of B2C markets, it will be the extent to which the offer impacts the lives of individuals based on the personal psychographic and behavioural context (Zhang et al. 2017). In the case of B2B markets, it will be the share that the offering may have in the corporate value adding process (Hakanen and Jaakkola 2012). Although price may be regarded as only a simplified measure of that influence, one can assume that the higher the monetary value of single transactions or alternatively the cumulated value of frequent transactions that are typically concluded in a given market segment, the more important the offer category and the more likely a relational niche can be developed. On the one hand, a nominally high price implies that customer offer evaluation is likely to be complicated and involve a time-consuming learning process necessary to acquire enough knowledge and skills to effectively assess the offer and integrate resources to facilitate value-creation (Hibbert et al. 2012). For example, while consumers tend to choose casual garments on impulse, tailored clothing necessitates some search for the craftsman, advice taking, and active cooperation as measurements is taken and the suit is sewn. Similarly, the procurement department can autonomously acquire standard machining blades replacement, but if a new manufacturing line is being designed it will be the whole team of specialists that work together with the vendor to search for new ways of reducing time and waste, and increasing the reliability of the new solution. In both advanced situations the intensity of interactions and the individualized value they produce open the way for capable companies to create their own relational niches. Simultaneously, high price creates room for high premiums, which can be partly reinvested in the relationship (e.g. customized technical solutions or process design, preferential treatment policies, and individualized communication). Such special commitments further stabilize the relationships and make creating and sustaining the relational niche even more probable (Pervan et al. 2009).

An additional factor that can indicate the relatively high importance of the given product category, especially in B2C markets, is its potential to emotionalize communication. If consumers become somehow bonded to the brand or can admit that they feel something akin to love or friendship for the brand, they substantially increase usage and purchase of the brand (whether product or service; Morrison and Crane 2007; Rossiter and Bellman 2012). Obviously, not every brand in a category will manage to advance beyond rational perception. For example, some cars are bought mainly for mobility reasons, while others are a symbol of success and prestige as well. Nonetheless, thanks to a relatively strong person-product relationship, car manufacturers have a generally much better starting position for emotional communication than, for example, photo camera producers (Mugge et al. 2005). They, in turn, may generally count on more customer emotional attachment than manufacturers of cosmetics, and so on. Therefore, for consumer markets, where emotional attachment for products may exist for a significant group of customers, a relational niche may well also exist, provided these customers may be effectively directly contacted by the company.

Through the discussion so far on the universal external factors that impact the existence of a relational niche, the issue of services has been left unaddressed, except to place it in the context of the other factors. Owing to the classification of RM-mature companies as being basically similar to Differentiated Defenders and the extensive explanation of the overlaps between RM and SDL provided in Chap. 3, one can stipulate that the likeliness and the size of a relational niche will be also dependent upon the degree of ‘servicization’ that can be applied in the given market segment.

There are four basic categories of services, which are directed at (Lovelock 1983):While the first two categories are tangible actions whose effects are visibly projected in, for example, a new haircut or shipping a parcel, the other two are intangible actions. Apart from being standalone service categories (e.g. education and banking), they may be an ingredient of every offer (Wirtz and Lovelock 2016). For example, 17 out of 22 questions employed in SERVQUAL—one of the widest applied instruments for evaluating service quality—have an intangible and usually employee-related focus (e.g. “Excellent [companies] will give customers individual attention”, “Employees of excellent [companies] will always be willing to help customers”; Parasurman et al. 1988; 1991).

While tangible characteristics of the offer can be relatively easily researched and compared before purchase (e.g. price, location, technical equipment, ingredients), the intangible ones constitute the most variable and flexible part of the offer that is rich in experiences and credence-based (Parasuraman et al. 1985). Therefore, they usually dominate value creation and its overall perception because they incorporate such attributes, which are difficult to evaluate even after consumption. Their evaluation process necessitates adopting some kind of a proxy, which is commonly a matter of having belief in the benevolence and skills of the offer provider (Lovelock et al. 2014; Schumann et al. 2010). For example, the hairdresser has to master their craft which, in fact, most hairdressers do. However, whether the client feels comfortable, is amused, and appreciates the work done largely depends on the small-talk concerning client-relevant topics and the personal aura given off by the hairdresser. This suggests that value perception is phenomenologically determined by the temporal, spatial, and social context (Vargo et al. 2020). This, in turn, implies the need for ongoing micro-adaptations, which can be best applied at the employee-customer level. Figure 5.4 lists all the discussed external factors having an impact on the likelihood of the existence of a relational niche.

At this juncture, however, an important remark has to be added. The intangibility of service elements should not be artificially applied just for their own sake. For example, banking (especially internet banking) is probably one of the most intangible types of service (Shostack 1982), and yet financial institutions are believed to suffer from exceptionally high annual churn rates ranging from 20% to 27% (du Toit and Burns 2014; Kotler and Keller 2009). However, if the two intangible service categories can be balanced and effectively designed in the overall offer, the chance for cultivating a relational niche by capable companies should be higher. This is because the intangible elements of service are simultaneously the essence of CRM (Grönroos 2017), which in its highest form is both knowledge-based and dialogical (Payne and Frow 2013), and ultimately co-creative (FitzPatrick et al. 2015). Hence, although the emergence of a relational niche is influenced by the discussed universal external market factors, its development is, in the end, a function of a company’s ability to effectively differentiate on the basis of customer-perceived individualization. In other words, it is primarily the maturity of company’s relationship management activities and approaches that creates a relational niche.

Further discussion on the characteristics of a relational niche leaves the area reserved for the RM upper mid-range theory and enters the realms of the RM mid-range theories of particular market type. These should, inter alia, address the following issues:To address these issues, a series of programmatic industry-specific research is needed. In this book, a small contribution to achieving these broadly-set research goals are the following illustrations which complement this chapter.

In course of the RM-maturity research project the author of this book visited several firms in search for stories of RM ‘in motion’, which could deliver first-hand observations illustrating some of RM-facets and challenges companies face in implementing RM business model. Although they do not have a theory-building or theory-confirmative role, they may help the reader to comprehend and interpret the theoretical material and the qualitative empirical evidence provided in Chaps. 2, 3, 4, and 5. This book contains eight such RM-Illustrations, which were briefly announced in this chapter. They were chosen upon the criteria of their horizontal compatibility and the quality of presented examples dealing with a particular RM-area.

The material was collected in course of direct face-to-face and/or telephony interviews with up to four employees currently employed by the company. Their positions and work experience as well as other details concerning the companies are provided within every illustration. Every interview lasted between 60 and 90 minutes. The interview was semi-structured upon the RM-maturity questionnaire, which was sent to the interviewees in advance. Nonetheless, by evoking subsequent elements of the preliminary RM maturity model reflected in the questionnaire the author aimed in involving the interlocutors in a deeper analysis of one or two most important features of their corporate reality with a clear RM context. As mentioned in Chap. 4, the interviews had also helped to test the questionnaire before the field research started.

The filled-in questionnaires and the author notes were used to compose the texts that were all sent back for review and (where needed) to be supplemented. In several cases this involved consultations with other than the originally interviewed persons. For internal firm policy reasons, some of the illustrations had to be anonymized what, however, made it possible to leave the material classified as sensitive intact. Although RM-Illustrations are generally separate contributions, some of them include comments, which repeatedly link the observed phenomena.