While it has since subsided, I guess it was no surprise that this past summer featured a proliferation of products and services that pushed the CRM label. Every day it seemed the office was inundated with magazine covers, WSJ articles, press releases and spam trying to sell customer relationship management solutions as the latest, greatest management tonic separating companies from profits. As well, every new and old business guru trying to make a name for themselves seemed to be jumping on the bandwagon. ERP vendors started adding it to feature lists. Perhaps I'm the only one that thinks "good customer service" (which is what the majority of CRM seems to be about) is not merely a new idea waiting for a technology, but a business standard that somehow gets exhumed every few years.

One trouble this presents is the advice it breeds. You may have heard experts implore you to "monetize all relationships." I read one consultant's website that criticized a restaurant for not setting up an information system to track regular customers’ takeout order preferences. This, of course, is mostly hogwash, and is another example of the danger of blindly following a 'best practice.' The truth is that not all relationships are equivalent, not all should be monetized, and frankly, with some relationships you have no business trying to cultivate or profit from them. Those who approach things this way will spend a lot of money for negligible benefit.

The following is an outline of four basic types of customer relationships. While not a definitive model, these categories help expose the very different types of behavior that customers can exhibit, which is critical information when deciding how to capitalize from relationships. Remember that many other types of relationships exist as shades between these. The four categories are:

• Adversarial
• Transactional
• Affectionate
• Intimate

ADVERSARIAL - Adversarial customer relationships typically emerge in situations when there is little choice among suppliers, such as monopolistic markets like airlines, cable TV and PC operating systems. Adversarial customers make these purchases begrudgingly, with little affection and sometimes hostile intent towards the supplier. The opportunity theory is that such dissatisfaction opens the door to a worthy competitor who will ride in on a white steed to save the oppressed consumers, but in reality, this has rarely worked out as hoped for, such as has been experienced in the many recently deregulated industries. A better hope is that incumbent suppliers realize that an investment in improving this relationship could potentially generate even higher profits while providing better service.

TRANSACTIONAL - The majority of your relationships as a customer live in this space, consisting mostly of routine, single-use, infrequent and impulse purchases like newspapers, candy bars, toothpaste and lunch. Transactional customers are very easily satisfied because their expectations of the relationship are typically low - they just want to buy something with minimal fuss. A critical thing to remember when developing a relationship is to understand what is valued. In a transactional relationship, anonymity is often valued as highly as convenience, so it may not be a smart idea to construct an IT system that remembers and calls attention to the adult diaper preference of an individual consumer at point of purchase.

AFFECTIONATE - Affectionate customers have made a defined choice and exhibit loyalty towards suppliers that have earned their trust. Most people read the same newspaper their whole life. Harley-Davidson sells customers a way of life. I've met women who have oddly high levels of admiration for their shampoo. Obviously, this is the most desirous type of relationship for companies to pursue, and is what truly drives the invaluable word-of-mouth marketing that so many people are trying to engineer, to make happen on purpose. It remains to be seen whether or not any company can generate customer affection through formula, or whether it's just a result of a company's service culture, and should be taken advantage of when it happens naturally, rather than being forced.

INTIMATE - Many people mistake customer affection for intimacy, the difference being similar to the difference between dating someone and living with them. A relationship with a customer becomes intimate when they assume an equal role in the product's development, either by steering requirements, supplying technology, or maybe even sharing expenses. Intimate customer relationships represent the true next generation in product development, taking such things as mass customization and partnership to the nth degree.

In the October 2001 issue of MRT's Best Practices Report, we examine research by MIT's Center for Innovation in Product Development that describes new tools being developed to give customers direct influence over development decisions earlier in the process than ever before imagined. Using the web and the Internet, companies in the near future will allow customers to interact with virtual prototypes of products, with the ability to play with multiple configurations, price options and other "what if" product scenarios. Of course, this is done under close supervision of the host company, and the data will be used directly in the product design, and close to real-time. This represents the cutting edge of customer intimacy.

Clearly you can see how the myriad of potential relationships rejects the notion of universal monetization, which to me sounds like a sneaky way to legitimize things like ATM transaction fees. Also, with the majority of things I purchase, I don't necessarily want the salesperson to know my name, where I live, and the last time I purchased diarrhea medicine. In fact, such an experience may frighten me away as a customer. Do this for me at the car dealership so it gets me in and out in half the time, and bingo, that's the correct application. Good relationship practices enable some new value to the customer that is other than proving that you have a database. These are important mistakes many people are already making in the name of CRM.

I wasn't Mr. Popularity in high school, but one thing I definitely noticed was that it was always the people who tried too hard that didn't have any friends. Don't let the same thing happen with your customers.

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Relationships are not just about customers. At MRT, we've actually been discussing the issue of relationships in product development for the last 7 years. On our website, you can download free copies of our two white papers that discuss the relationship role in product development, written by PDBPR editor, David Vermette:

(1) "Product Development in the 90s: Communication and Integration"

(2) "Product Development in the 90s: Relationship-Based Organizations Generate Success"

There are many gems in this list of over 35 tours that you can take in from the comfort of your web browser. There are many different industries represented here, from automotive companies to cheese and jelly bean makers. You'll also find links that will show you how Bic makes pens, how Rickenbacker makes guitars and how Tom's of Maine cranks out their eco-friendly toiletries.

Know a website we should review? Send the url to gregg@roundtable.com

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Management Roundtable, Inc.
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