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A study of 205 US commercial service providers, representing 31 two-digit SIC codes, identified companies' customer relationship-building objectives and practices. Of 42 possible relationship-building objectives, the four rated as top priorities were: encouraging customers to think of the firm first when considering a purchase; providing better service; encouraging customers to speak favorably about the firm; and encouraging customers to trust the firm. Answers to open-ended, exploratory questions revealed 18 categories of relationship-building initiatives. The findings suggest that customer relationship-building means different things to different people and that practices to build such relationships vary considerably. By inventorying the range of relationship-building objectives, quantifying their priority levels, and identifying specific practices used to build customer relationships, a greater understanding of current practices was achieved. Thus, the findings promise to benefit researchers, practitioners and consumers in terms of knowledge development, prescriptions for success, and enhanced value and satisfaction, respectively.

Customer-seller exchanges

Introduction

The study and practice of customer-seller exchanges have undergone major changes in the field of marketing. Historically, the exchanges were often viewed as arm's length and adversarial, pitting the customer against the seller in a battle in which each sought to maximize immediate returns, while minimizing costs. Growing a business was thought of in terms of acquiring new customers with aggressive marketing and sales efforts, by offering new goods and services that appealed to a different target market, or by expanding geographically with additional locations.

The perspective that gained momentum in the 1980s, however, was that, if marketing exchanges were developed into long-term, mutually satisfying relationships between customers and firms, this could be a strategic asset for companies (Webster, 1992). The interest in "relationship marketing" has continued through the 1990s and into the new millennium, prompting

Research for this paper was partially funded by Wichita State University through the Department of Marketing and Entrepreneuship and a W. Frank Barton School of Business summer research grant.

This paper was originally reviewed and accepted by Marketing Intelligence & Planning. It was published in Vol. 19 No. 6, 2001. This is a reprint of that article. prominent marketing scholars to dub the movement as a "paradigm shift" (Gronroos, 1994; Kotler, 1991, 1995) and leading one team of textbook authors to conclude that no other marketing topic has been written about as much during the 1990s (Mowen and Minor, 1998).

Tremendous growth opportunity

The new paradigm asserts that astute marketers should view existing customers as a tremendous growth opportunity. Today, these customer-seller relationships are recognized as pervasive, inescapable and highly interdependent, with ties between consumers and businesses vital to the interests of both parties. Consumers benefit in terms of enhanced value, better quality, and increased satisfaction with their purchases (US Department of Commerce, 1994; File and Prince, 1993), while firms benefit from greater sales volumes, better operating efficiencies, positive word-ofmouth publicity, improved customer feedback, and decreased marketing expenses (Buttle, 1996; Reichheld and Sasser, 1990; Vavra, 1992).

Relationship marketing perspective

The relationship marketing perspective provides the basis for the study of building and enhancing relationships with customers, whether it is couched in terms of customer/client/guest/patient relations, customer retention, relationship marketing, relationship management, goodwill, customer loyalty, partnering, after-marketing, defensive marketing, or something else. Whatever it is called, the outcome is the recognition that stronger relationships with customers result in a number of competitive advantages. Despite the growing volume of literature in support of relationship building and the espoused (anecdotal) stories by its proponents, marketing "relationship" concepts seem to mean different things to different writers and to different practitioners (Duffy, 1998; Harker, 1999). Depending on the individual, "building customer relationships" can imply something about interdependencies or mutual interests, repeat patronage, loyalty, emotional sentiments ("warm fuzzies"), personalized treatment, interpersonal rapport, targeted "one-to-one" communications, after-sale service, customer satisfaction, word-of-mouth, or doing something long-term, to name a few. In other words, the practices of building customer relationships are interwoven with the consequences of those relationships, because it is not precisely clear just what a "relationship" with a customer is. Not surprisingly, little research has been conducted to find out what "relationship building" means in a services marketing context or what service firms systematically do to build relationships with customers. An inventory of relationship-building objectives and practices is needed to sharpen the discussion and evaluate the arsenal of relationship marketing practices currently in use. In short, the purpose of this article is to investigate what relationship-building means to practitioners and what they do to build relationships with customers.

Benefits of ongoing relationship

Background

In recent years, an increasing number of businesses have recognized the benefits of establishing and nurturing ongoing relationships with their customers. Many have begun to shift their emphasis from discrete transactions toward shaping longer-term, mutually beneficial exchange relationships. Often referred to as "relationship marketing" or "relationship management," the foundation of this rapidly emerging business philosophy is the belief that strengthening ties with existing customers heightens customer satisfaction and businesses' abilities to serve customers. This avoids the high costs both parties might otherwise experience in the search for new, acceptable exchange partners. Thus, one-shot purchase transactions with limited profitability are transformed into continuous strings of repeat purchases with potential for greater long-term profitability (Arndt, 1979; Dwyer et al., 1987; Jackson, 1985; Levitt, 1986; Reichheld and Sasser, 1990; Sheth and Parvatiyar, 1995; Vavra, 1992).

Value of relationships in service sector

The value of customer relationships is particularly noteworthy in the service sector, for a variety of reasons. First, because services are intangible, customers often have little to evaluate prior to making a purchase commitment. The service provider may be the most tangible aspect of the service and, in the eyes of customers, may be equated with the service itself. Customers' perceptions of the quality of the relationship with the service provider may be commensurate with the quality of the service itself. Second, the difficulty of evaluating services prior to making purchase commitments often means that customers must rely on the credibility of service providers and their prior experiences with them to understand whether the promised service will meet their expectations. That is, customers generally do not purchase services, per se, but promises of services. A strong, healthy relationship between customers and service providers engenders the trust that is necessary for customers to commit to the service. Similarly, because it is often not possible to remove defective services before they reach customers, a strong relationship often helps to recover from inevitable mishaps. Customers trust service providers to take whatever corrective actions are necessary to ensure quality service and preserve the relationship. Next, the production of many services requires that customers and service providers interact with one another. Professional services, in particular, require a high degree of interaction. If rapport fails to materialize or if the relationship is otherwise strained, the quality of the interaction and the resulting service can suffer. Finally, many services are somewhat discretionary in the sense that customers can perform them themselves. For example, do-it-yourselfers often tackle their own income tax preparation, housework, lawnwork, and auto repair rather than seek the help of professionals. When customer relationships are strong, however, customers may be less inclined to perform the services themselves and may be quite hesitant to "fire" service providers they like and trust. For all of these reasons, customer relationships are critical to the success of service firms.

Increasing profitability of customer

In an analysis of over 100 service companies, Reichheld and Sasser (1990) confirmed the value of customer relationships in the service sector. They found that, the longer a customer stays with a firm, the more profitable the relationship to the firm. In all cases in the study, the profitability of the customer increased substantially in the second year and the years thereafter. Specifically, customer purchases rose and company operating costs (associated with establishing and servicing new customers and accounts) declined after the first year. Although Reichheld and Sasser found that the typical service firm loses about 20 per cent of its customers annually, those that can decrease their customer defection rates by 5 per cent (e.g. from 20 to 15 per cent) could increase their profits from 25 to 85 per cent, depending on the type of company. These revealing findings have prompted service companies to develop and implement marketing efforts aimed at establishing and strengthening ties with customers.

The study

Our investigation attempted to understand what customer relationshipbuilding means to service providers and what practices/programs service organizations use to develop and maintain relationships with customers. Data reported here are based on the ratings and comments offered by 205 marketing managers in response to three duplicate waves of a mail survey sent to 1,100 potential respondents (19 per cent response rate). The respondents represent 205 commercial service firms from throughout the USA and from 31 two-digit SIC codes.

Priority level

One part of the survey asked respondents to rate their priority level of 42 possible objectives for building customer relationships. The list was gleaned from an extensive literature review of more than 300 trade articles describing anecdotal accounts of relationship-building practices and a series of qualitative personal interviews with 83 service providers.

Another part of the survey was much more exploratory, using an open-ended question to ask respondents to list and describe the customer relationshipbuilding practices they used in their organizations. Here, our research goal was not to quantify precisely the frequency with which each practice is used, but to identify the range of practices that tend to be top-of-mind and likely formalized within the surveyed organizations. Therefore, the findings should be interpreted with some degree of caution, recognizing that most surveyed firms probably utilize more relationship-building practices than those they articulated (this limitation is discussed further in the "Conclusions" section). Research findings and discussion

Relationship-building objectives

Learning what service providers' specific objectives are for "building customer relationships" provides some indication of what the phrase means to them, and leads to potentially valuable insights as to their motivations for doing what they do to build customer relationships. Consequently, respondents were asked to rate 42 possible objectives on a scale ranging from one ("very high or top priority") to seven ("not a priority at all"). Rankings, mean ratings, and standard deviations are listed in Table I.

Wisdom of building relationships

Although the ratings clearly suggest that building relationships with customers means different things to different marketing managers, it is equally clear that very few of the respondents would question the wisdom of doing so. The respondents viewed the potency of relationship-building as multifaceted, capable of addressing an array of desirable marketing and service objectives. Recognizing the broad potential of relationshipbuilding, it is not surprising that no full consensus emerged. Still, more than 80 per cent of the respondents assigned high priorities (i.e. rating of one or two) to the first seven objectives listed in Table I. These seven items indicate that most marketing managers expect relationship-building programs to improve customers' memory of the business, enhance customer service, increase the likelihood of customers spreading positive word-of-mouth about the company, build customer trust in the company, and enhance customers' perceived value and enjoyment of conducting business with the firm.

Categories of initiatives

Relationship-building practices. Our next step in the study was to identify practices used by firms to establish and nurture relationships with customers. Although our efforts to inventory the range of relationship-building practices used by service providers resulted in a list of more than 900 specific tactics and myriad hybrid combinations, the multitude of practices was collapsed into 18 categories of initiatives - most having to do with the relationship between customers and the organizational entity as a whole, between customers and contact personnel, or between customers and products (as shown in Figure 1). A smaller number of service providers commented on the importance of relationship linkages between the organization and customer-contact personnel, suggesting that employees are likely to treat customers the way they are treated by the organization. A few mentioned tactics or programs pertaining to the relationships between customers and other customers, recognizing that customers can influence the service expectations, experiences, and evaluations of other customers. These 18 categories of relationship-building practices are described in greater detail in the sections that follow, beginning with those that were most frequently mentioned and proceeding to those less frequently mentioned.

Avoiding lengthy gaps in contact

Continuity of communications. Most service providers seem to subscribe to the principle that customers remember organizations that remember them. Thus, the most popular relationship-building practice seems to be the avoidance of extended periods of time during which customers are not contacted (Furlong, 1993; Lindgreen and Crawford, 1999). This was mentioned by more than 50 per cent of the survey respondents. The types of contacts mentioned varied greatly and involved both personal and non-personal media. Examples include the following: company newsletters to keep customers informed about updated capabilities, new products, new people, marketing trends, etc.; regularly scheduled personal letters and telephone calls; targeted direct mailers; management and sales representatives in the field calling on customers; mass media advertising designed to stimulate telephone calls about the firm's offerings; open houses for clients; attendance at trade shows and conferences in which clients participate; and quarterly and annual user conferences.

Organisation as a valuable resource

In addition to keeping the service organization "top-of-mind," ongoing contact with customers positions the organization as a valuable resource for them, and as a leader ready to serve and convenient to contact. The longer the typical time period between purchase and repurchase, the more important contact between sales seems to be. However, enhancing the effectiveness of the communications seems to involve more than just frequency per se. Several service providers recognized the importance of communications between sales efforts, for example: "Customers get tired of seeing us if the only time they do is when we want to make a sales pitch." Relationshipbuilding contacts involve following up on past sales to ensure that promised benefits have materialized, checking to see if customers' needs, interests or circumstances have changed, recognizing important events or celebrations in customers' lives (e.g. birthday and anniversary cards), passing along helpful information, or just saying "hello."

Making communications meaningful

Another key to enhancing the impact of continuous communications is to make them meaningful to customers. Creative hype may catch prospects' attention and entice them into a relationship, but helpful information nurtures the relationship and further enhances the credibility of the service provider (Fisher, 1998). Newsletter proponents in particular subscribed to this philosophy.

Finally, a number of service providers believed that the effectiveness of the communications is enhanced when the process is interactive (Murphy, 1996). Obviously, personal contact lends itself to engaging customers in dialogue, but less personal forms of communication can invite interactivity too. For example, newsletters, direct mail pieces, and trade advertisements can express the company's willingness to respond to customers' questions, encourage customers to fill out reply cards to receive additional information or surveys to help the company assess customer needs, invite customers to call or visit their store, log-on to the company's Web site, and so on.

Improving service performance

Service quality. Although promises of quality may attract customers, service providers frequently expressed the belief that delivery of quality is essential to building and maintaining customer relationships. Delivering on promises is the essence of mutually satisfying service relationships (Bitner, 1995). Service quality refers to the consistency with which customers' expectations are met and the general superiority of the service relative to that of the competition (Gilpin, 1996). Accordingly, this initiative includes any practices focused on identifying what services and service attributes customers want (doing the right things) and providing them to customers' satisfaction and better than the competition (doing things right). Comments referring to efforts to raise standards and improve service performance, listening to customers' preferences, and ensuring that customers' requirements are met are included in this category. Some of the quality initiatives mentioned dealt more with the technical aspects of quality ("what" is delivered), while others were more relevant to the personal aspects of service delivery ("how" it is delivered) (Gronroos, 1994).

Consistent, fair and reliable service

Clearly, if a service organization cannot consistently satisfy customers' expectations better than the competition, other aspects of a relationshipbuilding program are likely to accomplish little (Pine et al., 1995). As such, over 45 per cent of the survey respondents identified a service quality relationship-building practice. Respondents said that providing friendly, professional, courteous service that was consistent, fair and reliable is one of the best ways to establish and maintain customer relationships. This is exemplified by making on-time deliveries, supplying a wide range of goods and services, having a knowledgeable staff, and providing technical competence. Service quality also includes listening to customers - knowing the market and understanding customers' needs. The most common method associated with listening to customers was some form of gathering customers' ideas (e.g. telephone and mail surveys, focus groups, comment cards, advisory groups). Finally, consistently meeting customers' expectations includes responses focusing on providing high quality goods and services. About one-quarter of the respondents using service quality practices found that top management must support these practices and gain widespread cooperation throughout the firm to successfully implement the service quality initiative.

Each customer treated as unique

Personalization. Personalization refers to the customization of some aspect of the service or its delivery, treating each customer as a unique individual with a unique set of service requirements - thereby creating unique fits between customers and services (Goldsmith, 1999). As such, personalization initiatives provide direct linkages between customers and service personnel and between customers and services themselves. Of the survey respondents, 45 per cent identified personalization practices as part of their relationshipbuilding programs. Of those, over one-quarter identified personalization as one of their most successful relationship-building initiatives used.

Interestingly, personalization practices were recognized on three different levels - interpersonally, operationally, and organizationally. Examples of interpersonal aspects include learning and using customers' names, building rapport by encouraging face-to-face contact between employees and customers, "getting to know" customers in informal social settings, and acknowledging customers' backgrounds and achievements (Fisher, 1998). The operational level involves efforts to obtain a detailed knowledge of customers' processes and requirements. This allows the service firm to provide unique ideas to help their clients. Additionally, employees are empowered to deviate from rigid procedures when serving customers who have special needs or unique requests (Bowen and Lawler, 1995; Ledford et al., 1995). At the organizational level, respondents said that their firms assigned employees the responsibility of serving specific customers (e.g. as personal bankers or project managers) rather than assign the responsibility of performing specific tasks. This encourages close personal relationships between the firm's representatives and the customer.

Although many aspects of personalization hinge on the interpersonal skills and enthusiasm of individual service providers, the choice to employ it is not entirely an individual decision. Rather, full implementation requires top management to structure organizationally the firm in order to assign employees the responsibility of serving specific customers, and to empower employees to treat each customer as a unique individual. Personalization efforts require widespread cooperation, as employees must work together to serve customers rather than focus on performing individually assigned tasks.

Memorable experience for customers

Service differentiation and augmentation. Service differentiation means enhancing perceived value by providing services or service attributes not provided by the competition. The closely related concept of service augmentation involves giving customers something extra (Gilpin, 1996). If points of differentiation and augmentation are meaningful to customers, their perceptions of value are enhanced (Duffy, 1998; Shaw, 1996). Also, some competitive advantages are gained. The idea is essentially to eliminate competition by meaningfully differentiating the company's goods and services to the point where, in the customer's mind, other companies' offerings are not comparable. This means that firms need to make the customer's experience more memorable than the competition. This is usually something customers appreciate but do not necessarily expect (Fisher, 1998).

Almost 40 per cent of the surveyed respondents identified service differentiation or augmentation practices. They commented on:

* [being] creative in what we do;

* developing a niche;

* offering services exclusive to us; and so on.

In addition, survey respondents identified practices that had to do with giving customers something extra in the form of "give-aways" such as sales promotions (i.e. sponsoring workshops and seminars of interest to customers, giving away gifts and trinkets, providing free training), entertainment (e.g. hosting breakfast, taking customers to lunch or sporting events), and affinity clubs (e.g. establishing senior clubs that offer travel opportunities). These practices were noted by almost 20 per cent of those using them as requiring top management support and being dependent upon employee cooperation.

Building additional value

Many of the personal interviews revealed a more generalized interest in building additional value in the service on a day-to-day basis - for example, by augmenting the service with warranties, maintenance checks, telephone helplines, and miscellaneous amenities such as restaurants that provide free after-dinner mints or sport medicine clinics that provide tips sheets to help injured patients treat themselves. Obviously, the success of this type of differentiation through augmentation depends on whether the augmentation is perceived as such and is truly valued by customers. The added value should exceed the added cost of providing it. Other

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considerations include: Can the augmentation be easily and quickly duplicated by competitors? How likely is the "augmentation" to become a customer expectation? If likely, is the firm prepared to retain the augmentation permanently or face disgruntled customers when it is removed?

Evoking emotional responses

Affective engineering. Affective engineering is the label we assigned to a range of efforts designed with the intention of evoking customers' emotional responses to make them feel good about the company and otherwise warm and cosy in the relationship with the firm. Research suggests that customers' affective commitment (i.e. emotional attachment to the service provider) is positively related to their willingness to remain in a relationship with a service provider (Shemwell et al., 1994). More than 20 per cent of the surveyed respondents identified practices that included community and civic events involvement, monetary sponsorship of community events, employee volunteerism, image advertising, and cause-related advertising as part of their relationship-building programs.

Involvement in community events and support for charitable organizations or social causes can generate favorable media publicity and word-of-mouth, thereby helping to position firms positively in their communities - as good corporate citizens interested in giving back to the communities that support them.

Image-related or "feel good" advertising frequently avoids rational appeals altogether (Alreck and Settle, 1999), for example, omitting any information about price or product attributes. Instead such advertising tends to engineer affect through associations between the business (or its products, employees, or good deeds) and family values, patriotic themes, holidays, nostalgic memories, and other emotionally laden contexts.

Vital role of employees

Employee relations. Employee relations refer to relationship-building practices designed to support the frontline employees who serve customers. About one of every six surveyed respondents mentioned some aspect of employee relations as part of their relationship-building practices. Most of the references were to well-trained employees. While this may be a broad or indirect view of customer relationship-building, it recognizes the vital role that employees play in the service delivery and relationship-building processes. Labor-intensive service firms that invest the necessary time, money and effort to recruit, train, equip and motivate their customer-contact employees are likely to enjoy stronger relationships with customers than those that fail to establish frontline employees as a top priority (Gilpin, 1996; Lindgreen and Crawford, 1999).

Importance of internal marketing

Not surprisingly, almost one-half of the firms using employee relations practices found them to be dependent upon employee cooperation and widespread cooperation throughout the firm. This recognition emphasizes the importance of internal marketing - a philosophy that views employees as internal customers who consume the roles and responsibilities of their jobs (Frost and Kumar, 2000; Gronroos, 1981). The philosophy is based on the intuitive notion that frontline employees are unlikely to cheerfully, enthusiastically and competently contribute to the process of satisfying customers, if they are not satisfied with their jobs. Just as it is common practice to aggressively seek out prospective external customers, it is also appropriate to take a marketing approach to find and recruit well-qualified job applicants (Reynoso and Moores, 1996). Similarly, just as it is appropriate to be sensitive to the needs and preference of external customers, it also pays to avoid a heavy-handed approach when dealing with employees.

Rewarding loyal customers

Relationship pricing. Rewarding loyal customers with better prices may be the oldest tool for relationship building (for example, see Gilpin, 1996, and her discussion of the hospitality industry). Several survey respondents (over 15 per cent) referred to some type of special or competitive pricing as part of their firms' relationship-building practices. Relationship pricing was specifically mentioned by respondents in terms of special deals based on the strength of customers' relationships with the firm, preferred customer programs for the 20 per cent of the customers who generate 80 per cent of the business, loyalty programs (e.g. discount services for loyal customers), and special pricing for customers who use multiple services.

In addition to cementing relationships with customers by rewarding them for their loyalty, many of these programs generate enormous amounts of useful customer and purchase data. Customers may be required to complete a "membership application" prior to receiving discounts and present an ID card that is electronically swiped prior to each purchase (Duffy, 1998). Thus purchase patterns can be linked to customer characteristics, and specific advertising and promotional efforts can then be customized for specific groups of customers (Clayton-Smith, 1996; McMillin, 1999).

Top management support

Of those identifying relationship pricing as an initiative, over one-third said that it is typically dependent on top management support, because it requires discounts on prices to select customers. Furthermore, sophisticated relationship pricing programs that involve establishing, maintaining and mining a database do not run themselves (Clayton-Smith, 1996). They require management direction and dedicated resources.

Easy and convenient

Systems friendliness. Systems friendliness refers to practices that make it easy and convenient for customers to conduct business with the company. This involves making company representatives accessible, removing contact barriers, ensuring that customer interfaces with technology are not overwhelming, and not making customers wait for service unnecessarily or perform tasks (e.g. fill out paperwork) they would rather avoid (Peppers et al., 1999). Understandably, customer relationships can suffer when unfriendly systems leave customers feeling frustrated, unwelcome and convinced that there must be a better way to acquire the service. Ideally, system interfaces should leave customers with a sense of looking forward to doing business with the company in the future (Shapiro, 1988).

Of the survey respondents, 15 per cent identified system-friendly practices as part of their relationship-building philosophies. Specifically, they mentioned the following:

* quick decision making by local decision makers;

* 24-hour a day, seven-day a week service; "hot" lines;

* toll-free telephone lines;

* customer support staffs;

* convenient locations of new facilities;

* lobby greeters whose job it is to educate customers;

* free parking;

* prepaid and pre-addressed return envelopes; and

* fast response to customers' inquiries.

Difficult to lure away

Pioneer advantage. Formulating programs to reach and cultivate relationships with prospective customers before competitors approach them can create a "pioneer advantage" in that, once the relationships are established, it becomes increasingly difficult for competitors to lure satisfied customers away (Shaw, 1996). Indeed, classic studies investigating consumers' relationships with specific brands have found that people first exposed to brands as children are more likely to be loyal to those brands as adults than are consumers not exposed to the brands until adulthood (Guest, 1955, 1964).

A total of 12 per cent of the surveyed respondents specifically sought to create pioneer advantages by beating competitors to new consumers (e.g. children, teens), to consumers new to the community, or to consumers with new needs. Specific examples mentioned included banking programs for children who some day will need a broad range of banking services, using "welcome wagon" services to reach new residents, and holding "coffee talks" about trust accounts at senior centers.

Promises of service

Trust. To build trust is to ensure that customers know that the business will stand behind its promise of service and honor its commitments (Buttle, 1996). Trust is often described as the cornerstone of any healthy relationship (Scanzoni, 1979). In the service sector trust is particularly relevant, because customers often do not buy services per se. What they buy are implicit and explicit promises of service - for example:

* promises that insurance companies will honor future claims;

* promises that banks will accurately process checks;

* promises that home security systems will promptly contact the police when burglars break in, and so on.

Customers must trust service providers before they are willing to pay for promises. Therefore, trust is an important element of a relationship-building program, because it builds confidence, fosters cooperation, and gives the service provider a second chance when inevitable mishaps occur (Morgan and Hunt, 1994). It may not be possible to rebuild customer relationships when trust is broken (Gilpin, 1996).

Keeping commitments

Accordingly, more than 10 per cent of the survey respondents acknowledged the importance of trust, when they mentioned or alluded to trust-related concepts such as trustworthiness, honesty, integrity, or ethical behavior in their list of relationship-building practices. More specifically, service providers build trust by keeping their commitments, not overpromising (e.g. keeping advertising claims and sales pitches realistic), otherwise managing customers' expectations (e.g. clearly clarifying what the service does and does not entail), maintaining open channels of communication with customers so that misunderstandings and mishaps can be quickly identified and remedied, and establishing codes of ethics to promote trustworthy actions throughout the organization.

Cross-selling. The sale of additional services to existing customers accomplishes obvious objectives such as building total sales volume and profitability (Ennew and Hartley, 1996). From a relationship-building perspective, however, cross-selling also tests the strength of the relationship in that dissatisfied customers are less likely to purchase additional services than are satisfied customers. Customers' hesitancy in purchasing additional services provides opportunities to identify and remedy dissatisfactions that threaten the relationship. Cross-selling also builds the relationship in that the sale of each additional service encourages the customer to incrementally invest more resources, more time, or more trust in the relationship (Worthington, 1996). When customers become bored with some services or outgrow the need for others, cross-selling promises to rekindle or extend the relationship.

The relationship potency of cross-selling was highlighted in one study that found a 0.15 likelihood that banking customers who used only one bank product would remain in the relationship for five years. In contrast, a 0.45 likelihood of a five-year relationship was found among customers who purchased two products and a 0.80 likelihood for those with three (Furlong, 1993).

Consequently, 10 per cent of the survey respondents mentioned cross-selling of products to meet customers' needs as a relationship-building practice. These responses included exposing customers to the firm's full product line, using direct mail to let customers know about additional products, and training employees in cross-selling techniques.

Consumption chain

The concept of the "consumption chain" is a particularly appealing crossselling tool. It is based on the notion that customers' needs, interests, and possibly spending power often evolve in a logical, predictable sequence, and that a "chain" of products can be developed to satisfy those needs and preferences. Using the concept, sales staff first locate a customer's position on the chain and then focus cross-selling efforts on adjacent links in the chain (Slight, 1995). For example, relationships with teenaged banking customers may be initially established with passbook savings accounts or checking accounts. As their lives unfold and they progress along the chain to develop interests in credit cards, car loans, IRAs, home mortgages, business loans, brokerage services, estate planning, and so on, sales reps assist them at each link. Further, understanding these links, their sequence, and the growth of the chain reduces the likelihood that customers may outgrow the business's ability to serve them and thus sever the relationship.

Simple act of thanking customers

Reinforcing "thank yous". Reinforcement practices are those that encourage customers to repeat desirable behaviors and are based on the principle that reinforced behaviors are more likely to be repeated than those not reinforced. In the context of serving customers and strengthening relationships with them, the seemingly simple act of thanking customers may be the most potent reinforcement tool available to service businesses. For example, one study found that insurance customers were more likely to renew their policies, if they received a thank you letter prior to receiving a renewal notice (Bergiel and Trosclair, 1985). In another study, jewelry store customers were more likely to purchase additional items within the next 12 months, if they received a follow-up phone call thanking them for their original purchase (Carey et al., 1976). Still another study found that thanked customers were more likely to be satisfied with their shopping/service experience than non-thanked customers (Martin and Adams, 1999a). Although the practice of thanking customers would seem to be commonsense, studies involving mystery shoppers estimate that between 14 and 34 per cent of customers are not thanked (Martin and Adams, 1999b).

In the present study, 8 per cent of the surveyed respondents specifically referred to relationship-building practices that thanked customers for their business or their suggestions. Of course, as mentioned previously, it is quite likely that many service providers do reinforce customer behaviors in general and thank customers in particular, but may not consider it as a formal part of their relationship-building programs.

Rekindling tired relationships

Innovations. Innovations can play important roles in establishing and building relationships with customers (Kandampully and Duddy, 1999). For example: innovations help position firms as market leaders or "winners" with whom customers want to associate. They enhance customers' perceptions of value when customers know that they are purchasing the "latest" and "most advanced." They rekindle tired relationships when product lines become too familiar, and they extend the relationship life cycle, as customers' needs change and outgrow the current line. Innovations give customers reasons to continually revisit, overcome boredom, and repurchase. When innovations are introduced and others are promoted as being on the horizon, customers are reminded that the present is not an opportune time to sever the relationship. But customers will deliberately try to seek variety by exiting a relationship if they get bored (Sheth and Parvatiyar, 1995). As a result, 7 per cent of survey respondents indicated that providing innovative product lines and offering the latest technology are part of their relationshipbuilding programs.

Rewarding customers for loyalty

Linking of purchases. Linking of repeated purchases is a broad category of practices mentioned by 6 per cent of the survey respondents. The result is connected purchases designed to reward customers for their loyalty and to ensure that transactions are not discrete. When purchases are linked, there is no opportune time for customers to sever relationships (Liebermann, 1999; Worthington, 1996). Often there are customer benefits or incentives to link purchases - a form of relationship equity that is lost if the relationship is broken (Gilbert, 1996). Examples from survey respondents include rewarding multi-service, long-time customers with special advantages (e.g. free computer link), bundling products and services (e.g. bank package account including a variety of services), offering product of the month promotions, offering frequent shopper programs (e.g. free haircut program purchase eight haircuts, get the ninth free), and reminding customers about renewals (e.g. certificate of deposit renewals). Other examples include membership packages such as season tickets to sporting events, bounce-back coupons distributed at time of purchase but not redeemable until the next purchase, collectible promotional items such as tableware pieces that are more valuable as a complete set than as individual pieces, and frequency promotions that reward purchases with points or "miles" that have value only if accumulated (Albert, 1997; Gilbert, 1996).

Long-term commitment required

Many of the continuity, collection and frequency programs that link purchases together require a long-term management commitment. Not only do many of the more elaborate programs require establishing and maintaining an extensive database to keep track of each customer's status in the program, but also typically the commitment must be sustained over a much longer time period than that involving typical coupon promotions. Otherwise such programs can backfire when customers become disgruntled after they have accumulated a significant number of points, punches or miles, only to have the program terminated unexpectedly.

Service recovery. For most service businesses there are simply too many details involved in service delivery to expect flawless operations at all times. And, unfortunately, when mistakes do occur, it is not uncommon for customers to find out before service providers. While efforts to minimize occasional (but inevitable) mishaps are appropriate, efforts to enable both the business and customers to recover from the errors are needed as well (Brown et al., 1996). Researchers have found that 91 per cent of unhappy customers will never buy again from the company that dissatisfied them and, furthermore, they will tell nine other people about their dissatisfaction (Vavra, 1992).

Service recovery involves practices companies use to aggressively correct mistakes when they occur and offset customers' inconveniences and other negative consequences caused by these mistakes (Fabien, 1997). Through service recovery, service failures can be transformed into positive acts that strengthen customers' attitudes toward the firm (Bejou and Palmer, 1998; Bitner et al., 1990). In fact, customer satisfaction with the process of service recovery is often more important than the initial service attributes in influencing overall customer satisfaction, future purchase intentions, and positive word-of-mouth communication by customers (Spreng et al., 1995). In the present study, only 6 per cent of the survey respondents explicitly recognized the necessity for customer complaint procedures and quick follow-up action to resolve problems as part of their relationship-building programs.

No excuses of hurdles

Unconditional guarantees. Related to service recovery systems are unconditional service guarantees that provide and honor commitments to customers without excuses or hurdles. In other words, companies guarantee services without excessive conditions, limitations, excuses, or hurdles for invoking guarantees (Fabien, 1997; Hart, 1988). Some service providers guarantee a broader concept than the service itself by guaranteeing customer satisfaction with the service. A total of 6 per cent of the survey respondents mentioned consistently honoring commitments to every customer, guarantees of performance with financial remuneration for errors, and following-through on customers' requests.

Further assurance for customers

Although many firms, especially smaller ones, may not have formally articulated and promoted unconditional service guarantees, they do stand behind their products through refunds and exchanges as if they have. It may be that promoting their practice would provide further assurance to customers and thereby strengthen relationships (Davis et al., 1995).

Customer-to-customer relationships. Customer relationships are generally thought of in terms of the relationships between customers and the firm (or the firm's representatives or products/services). Indeed, most of the relationship-building initiatives focus on these three linkages (see Figure 1). Another linkage that also influences customers' experiences and their inclination to patronize the business in the future is the relationship between customers and other customers. Customers influence one another in at least two interrelated ways:

(1) through word-of-mouth communications; and

(2) by customers' degree of compatibility with one another.

Word-of-mouth communications

Word-of-mouth communications between customers are rich in information and opinions, and referrals are generally perceived to be among the most influential and unbiased sources of marketplace influence. For example, in a study of retail store shoppers, Davies et al. (1995) found that consumers were more likely to seek reassurance from other customers than from employees. Such communications affect customers' purchase decisions, consumption experiences and satisfaction. Word-of-mouth is particularly influential when the quality of service varies or when services are difficult for customers to fully evaluate prior to purchase (Langeard et al., 1981; Quelch and Ash, 1981; Schlissel, 1985). Thus, one would expect service providers to be interested in influencing the content and transmission of word-of-mouth communications - stimulating positive and minimizing negative word-of-mouth.

Customer compatibility

Customer compatibility refers to the extent to which customers get along with one another in the service environment (Martin and Pranter, 1989). The management of customer compatibility involves influencing customer-to-- customer interaction - largely by fostering desirable, while minimizing undesirable customer behaviors (Pranter and Martin, 1991). In retailing, the relevance of the positive social dimension of shopping with others has long been recognized (Tauber, 1972; Woodside and Sims, 1976). For example, one study revealed that 42 per cent of the 600 mall shoppers surveyed reported having "socialized with friends or others" while at the mall and 23 per cent "had a conversation with other shoppers I just met today" (Bloch et al., 1991). However, an undesirable negative dimension exists as well. Customers may feel uneasy, threatened, or otherwise dissatisfied, if they find themselves to be incompatible with other customers with whom they share the business's physical environment. For example, patrons may not be willing to tolerate other customers who smoke, shout, have strong body odor, stare, jump the queue, have an untidy appearance, or fail to supervise their children (Grove and Fisk, 1997; Martin and Clark, 1996). Because the degree of compatibility between customers can spill over to affect the relationship between the firm and its customers, proactive efforts to shape or manage customer compatibility are highly relevant.

Slightly over 5 per cent of the survey respondents mentioned their efforts to influence or manage customer-to-customer relationships. Specifically mentioned were the use of referrals from customers, testimonials from customers, and visits to customers' sites by potential customers as relationship-building practices. These word-of-mouth behaviors both perpetuate and foster customer compatibility, because existing customers are prone to communicate with others with whom they are compatible and new customers learn from the existing customers about appropriate customer expectations and behaviors.

Reciprocity

Vulnerability. Building and maintaining customer relationships may mean accepting some risk, trusting customers, and giving customers something of value without any certainty of making a sale or receiving any sort of reciprocal consideration or commitment. Free samples, diagnoses, advice, meals, gifts, and personal or confidential disclosures are typical vulnerabilities (Martin, 1996). Although somewhat risky, the practice is based on the established principle that people frequently do feel compelled to reciprocate in some way after someone else has helped them or given them something of value (Christensen, 1983).

Of the survey respondents, 5 per cent reported vulnerable practices as part of their conscious relationship-building efforts. They indicated that their firms provided consultative advice and technical support prior to customer commitments to purchase. The implication is that these service providers believed that this was the "right thing to do" to show that they want a partnership with the customer.

Choosing the right combination

Concluding thoughts and recommendations

There seems to be widespread agreement that long-term business success depends on organizations' abilities to build positive relationships with their customers. However, as our research indicates, there are numerous objectives available for specifying one's definition of "relationship-building" and myriad potential practices from which service firms can choose and blend to customize unique customer relationship-building programs for their firms. Although we have attempted to inventory the objectives and practices that service firms consciously employ, each service firm must decide which combination is right for its organization - given its unique circumstances involving resource constraints, health of existing customer relationships, competitive environment, growth opportunities, internal strengths, and so on. In much the same way as a generic marketing mix cannot be justified for all firms, it would be inappropriate for us to recommend a single recipe or "cement mix" for service organizations to cement relationships with their customers.

Still, our inventories provide frameworks for developing customer relationships - from which a number of recommendations stem. First, the range of possible relationship-building objectives and their priority ratings (Table I) challenge service providers to more fully articulate what "relationship-building" means or could mean to their firms. Is relationshipbuilding defined differently throughout the organization? Is it defined too narrowly? Are the firm's relationship-building objectives clearly communicated throughout the organization? Given the variation in priority ratings among respondents in the present study, it is only a small inferential leap to suggest that service providers within a specific service organization are likely to vary substantially too. Until relationship-building priorities are clearly established and uniformly recognized throughout the organization, relationship-building practices are likely to be misdirected and their effectiveness impossible to measure.

Full range of linkages

Second, service firms should consider relationship-building practices in light of the linkages they provide. As shown in Figure 1, some of the relationshipbuilding practices represent direct linkages between customers and the organizational entity itself, while others link customers to the organization through its products, personnel, or other customers. A comprehensive relationship-building program that reinforces all of these linkages would seem to be more capable of producing stronger relationships than programs that focus on less than the full range of linkages.

Third, firms should examine their repertoire of specific relationship-building practices. Although most surveyed firms recognized that opportunities to build customer relationships extend far beyond simply being nice to customers, most reported a limited range of initiatives, begging questions such as: what emphasis do they place on some of the most frequently reported practices, such as continuity of communications, service quality, personalization, and service differentiation/augmentation? If appropriate, are these practices fully utilized? The reality that these four categories of relationship-building practices were mentioned more frequently than other practices implies that there is enough merit to them for other firms to consider their use. The review of other practices mentioned less frequently may be highly relevant as well. They may be adopted outright, combined with other practices, or their underlying principles creatively applied in a unique fashion.

A fourth recommendation is implied by the study's chief limitation, the limitation being that the survey's open-ended format used to identify relationship-building practices tended to evoke responses primarily related to only formalized or "top-of-mind" practices. For example, although not frequently reported, we suspect that many respondents' firms do make an effort to thank customers, or introduce innovative new products to keep customers interested in the firm, or leverage word-of-mouth communications, but that these and many other practices were not thought of in the context of relationship-building and therefore were omitted by many respondents. Given the exploratory nature of this part of the study, we accept this sort of inherent limitation. However, to the extent that it suggests that service providers are not fully aware of the range of relationship-building practices or possibilities in their respective firms, we recommend that service firms conduct systematic, company-wide relationship-building audits of their organizations. Indeed, the range of relationship-building practices that was collectively identified by the 205 respondents seems to justify such an audit in that the practices cut across numerous functional areas - involving marketing, operations, customer service, R&D, human resources, and accounting. The head of any one of these functional areas is not likely to realize the full extent and the full potential of company-wide relationship-building efforts without such an audit. Further, such audits promise to elevate the entire organization's consciousness of relationship-building and lay the foundation for fully integrating and coordinating relationship-building practices throughout the organization.

Benefits of findings

To conclude, the findings of this research promise to benefit both service firms and the interests of the customers they serve. Service providers will benefit from the inventory of relationship-building objectives and initiatives, as they consider developing, implementing or expanding their efforts to build relationships with customers. As a result, customers will see the benefits of dealing with firms that seek stronger relationships - benefits such as enhanced value, improved product quality, open communication with service providers, and greater satisfaction.

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[Author Affiliation]

W. Frank Barton School of Business, Wichita State University, Wichita, Kansas, USA

[Author Affiliation]

Charles L Martin

W. Frank Barton School of Business, Wichita State University, Wichita, Kansas, USA