Customer relationship management as we know it today is more operational than analytical. Businesses have mastered sales and marketing automation, and established service automations through issue management solutions and customer care centres. However, when it comes to analytical relationship management, most businesses have a long way to go. 

Analytical customer relationship management is steeped in the improvement of customer relationships through research, insight and analysis about customers – their information, behaviours, purchasing journeys, relationship models and loyalty habits.

In order to balance operational and analytical means of customer relationship management, best business practises will have to understand the roots and principles of communication, psychology and relationship management.

Relationship management fundamentally finds meaning in engagement, partnership and value creation, however it is evident that in today’s business world, relationship management has taken on a more transactional than relational ring, meted with the end – sales growth and income extraction – in mind first and above all. Not only does a solely transactional relationship management practice affect the durability of relationship cycles, it also has the tendency to increase attrition rate when one party to an interaction, in this case the customer, feels like their needs are not being met in the right way. It is, thus, important for businesses to pay attention to relational intelligence, as firms strategize on their relationship management solutions. Focus on interaction, communication and relationship must remain primary and focal.  

To understand the principles of relational intelligence, we are referencing academia,  specifically dissecting a case study of relationship models – their evolution and enhancement – promulgated by Mark I. Knapp, renowned for research on human interactions. Through Knapp’s 10-step model of relational development, lessons can be drawn on developing and maintaining relationships, to be applied in the customer-centric business environment. 

Mark Knapp’s model has two parts – the “coming together” and “coming apart” stages of relationships. At the former stage, relationships are initiated, experimented, intensified, integrated and bonded. At the latter stage, relationships are differentiated, circumscribed, stagnated, avoided and terminated. Naturally, businesses aim for the former, and maximize efforts to prevent the latter. Understanding how both stages work, and what they imply in business-to-customer relationships will be beneficial to all businesses in the dawn of the experience economy.

Knapp’s relationship escalation in practice: Winning your Customers.

Initiation: At the earliest stage, a business has to understand how it reaches customers, and how it creates awareness of its services and offerings. Relevant content and messaging is essential at primary touch points which determine whether customers progress to a secondary stage of relationship with the business. A business’s brand speaks to this greatly, as much as its visibility on social media, physical and online advertisements as well as word of mouth referrals.

Experimentation: What follows a show of interest? An exploration. Similar to dating in individual relationships, businesses have to show their customers what value they deliver. At points of sale, this can be done through direct interaction with the products and services offered. It can otherwise be done through live demos, calls and webinars. In the case of a direct referral through an existing customer, prospective customers can get a picture of a business’s offering by witnessing the direct experiences of existing users. The more interactive and visual this stage is, the better it is for businesses to show their real value.  

Intensification: This stage precedes value creation and exchange, as businesses and customers agree on the conditions under which their relationship will be deepened. Price considerations, negotiations, choice of plans, quantity, product classes, will be determined here. It is at this point that a business has to establish maximum customer awareness, to begin personalizing their offerings to best suit the customer. The depth and breadth of customer awareness at this point will signal how the rest of the relationship will factor out. It also drives post-sale marketing tactics. 

Integration: This is the point of optimal value creation and exchange between businesses and customers. It is the point at which transactions run their course, and customers purchase from businesses. Be it in-store or online, businesses have to ensure that there are no pain points along the purchasing journey. Using banks as a case study, processes of deposits, withdrawals, debit card issuance, loan application, and investment must be fast and reliable. As customers interact with banks through digital and physical touch points, their needs must be met and exceeded. Here, feedback comes into play, to a large extent.

Bonding: At this stage of the customer-business relationship journey, value is solidified. If a customer is satisfied with their experience, they will increase their interaction with the business. They will buy more, refer the business and become ambassadors of the business. Conventionally, businesses tend to inspire these bonds through loyalty programs and reward schemes.

In any case, the key to keeping the bond with customers alive is by offering them excellent experiences all the time. 

The next stage of Knapp’s relationship model goes beyond the primal development of relationships. It offers business lessons on the termination of relationships, showing what businesses should avoid in order to retain their customers.  

Knapp’s relationship termination in practice: Retaining your customers.

Differentiation: Following Knapp’s model, the points at which customers stay away from a business exist as points of differentiation, where different options, competitors and habits compete for a customer’s attention and patronage.  Typically, companies deploy marketing automation at this stage to redirect customers to their products. This must be matched with great, personalized experiences which can win back customers. Otherwise, the chances of circumscription, the second stage of relationship termination, will be high. 

Circumscription and Stagnation: This is the stage at which boundaries are set, and customers start drifting apart from companies. The relationship becomes stagnant, and customers perceive they are obtaining less value from the company. This can be caused by a lack of innovation, low standard of delivery, inconvenience during the customer journey and delays at touch points.

Avoidance and Termination: When a customer terminates their relationship with a business, the ripple effect of is highly detrimental to businesses.

Gartner reports that 48% of people who have a negative experience tell more than ten people.

In the digital era, negative reviews can be spread on social media leading to huge losses for companies. Augmenting operational customer relationship management which is dominant today, data and experience management solutions are allowing for analytical ways of meeting the needs of customers and tailoring excellent experiences to customers. Our data and management platform, RightCom XP, is a cloud-based technology solution which fuses customer data collection, customer data analysis, case management and business intelligence to help organizations prevent churn, win customers, and eliminate termination of their relationship with customers. We power experiences that keep the relationship between businesses and customers alive.

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