Integrating Relationship Marketing and Lifecycle Perspectives: Strategies for Effective Relationship Migrations

Jonathan Z. Zhang, George F. Watson IV, Robert W. Palmatier, and Rajiv P. Dant, 2013, 13-121

Firms spend in excess of $12 billion annually on customer relationship management, in efforts to understand how to target and sell to customers across various relationship stages. Academic researchers offer two main perspectives: relationship marketing research reveals the most effective strategies for building relationships to enhance performance, while lifecycle research indicates how the effectiveness of relationships varies at different stages of development.

In this report, Jonathan Zhang, George Watson, Robert Palmatier, and Rajiv Dant integrate these research streams to capture the differential effects of relationship marketing on performance as relationships evolve.

Using dynamic statistical modeling techniques, the authors employ a longitudinal survey data set of 346 business-to-business relationships maintained by a Fortune 500 firm across six years. They uncover four distinct latent relationship states (transactional, transitional, communal, and damaged), each with substantial differences in relationship performance. Although three of the four statestransactional, communal, and damagedare consistent with past research, the authors newly identify a “transitional state,” where performance is growing rapidly but managers must either invest to bond more tightly or miss the window of opportunity to move to a higher performance communal state.

The authors propose and test three positive (exploration, endowment, recovery) and two negative (neglect, betrayal) migration mechanisms to describe how these relationship states change over time, and empirically test state-specific migration strategies.

Their analysis provides managers with insights on relationship stages with their customers, as well as guidance on the optimal strategies to deploy in order to improve the financial performance of these relationships.

Based on the empirical results, managers would be able to infer the latent relationship state of a channel partner based on the change in his or her relationship survey response, and then employ, in a just-in-time fashion, state-specific strategies to migrate the customer to a desirable state (e.g., focusing on communication and competence to move a customer from transactional state to a rapidly growing transitional state), or to prevent a potential decay into an undesirable state (e.g., being cautious about being perceived as “unjust” in a conflict, as it might quickly wreck even the strongest of relationships).

Jonathan Z. Zhang is Assistant Professor, George F. Watson IV is a doctoral student, and Robert W. Palmatier is Professor of Marketing, all at the University of Washington. Rajiv P. Dant is Professor of Marketing, University of Oklahoma.

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International Relationship Marketing
Stephen A. Samaha, Joshua T. Beck, and Robert W. Palmatier (2013) [Report]


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