Managing Customer Experiences and Relationships (AMGT 350)

Okay, welcome back to Volume four.

I had just gotten started with this slide, but I

just want to reiterate this part about customers of the

sole source of the company's rather right that if again,

this is why companies need to be customer centric.

Because if they don't add value to the customer and

you lose customers, you lose revenue, which means you have

less money to work with, which means budgets get cut.

People get fired, you go out of business, right?

So it's just important to make sure that everybody is

on that same page.

It's also important to understand that customers create value to

the business in a couple of different ways.

First of all, they're short term value, right that they're

the they're the ones bringing in money right now, right

sales to current customers is bringing in current profit.

If we don't make if we don't sell to customers

this month, right, we could have a negative profit and

have short term money issues.

But we also are looking at creating value with our

customers in a long term way, which is customer equity,

right? How likely is the customer to stick around and

how likely is the customer to recommend our company to

other people?

There's a lot of value in that again.

It's a lot cheaper to market and sell to somebody

who's a loyal customer and who knows how many people

are going to tell about us.

That's great long term value.

So we're looking at customers as yes, it's great that

you order from us today, and we appreciate the short

term profit.

But how else can we be managing this relationship to

make sure that there's some long term value there as

well? So in the in the business world, we're kind

of talking about two main types of business relationships.

Different studies have broken this down differently.

I just thought that this was a good one.

As far as like keeping it fairly simple, Um, which

just says there are transactional.

I want to focus more on the bottom part.

Transactional. Um, so yeah, right there.

There are transactional relationships on one side and collaborative, uh,

relationships on the other side.

And now there's everything in between.

It's just important.

Understand the two different spectrum.

So the examples that I have on this slide are,

you know, transactional relationship with the customer is like if

a customer is just buying fuel with cash, right, They

you know, you're not gaining any information from them.

You're simply taking their money and you're giving them gas

and they're on their way.

They're not there for any other reason, but the other

than they need gas to get to the next location.

A more collaborative business relationship.

Now, the traveler is buying some specific brand of fuel.

Maybe because they have a specific loyalty card or an

affinity card.

Um, and maybe they've been been coming to your brand

for a long time, so they have a good relationship

with the brand.

Um, that's a little bit more collaborative.

You can't see this bottom Parliament from my hour and

there. Here you go.

So I put this example here of, um, real quick

of like, this is supposed to be a little cartoon

of a guy looking at a car, potentially looking at

buying it.

And what I would ask you is this is like,

think about the difference between everybody hates buying cars, right?

I think pretty much everybody hates going to buy cars.

And the difference between a salesperson who treats you as

a transactional relationship versus a collaborative relationship.

What does that look like?

Right. So the transactional sale in buying a car is

the car salesperson who's just trying to get you to

sign on the dotted line and they'll tell you whatever

they have to tell you to, to get you to

walk out of there with that car.

Right? And none of us like that type of a

salesperson. And it's it's becoming a thing of the past.

Now, more collaborative sale says like, let me work with

you. Let me create more of a relationship here.

Let me find out what your interests are.

What are your preferences, right.

Are you looking for gas mileage, safety?

Uh, sex appeal?

Um, you know, what are you looking for in a

car? And let me find out more about you, right?

It's more relational.

More collaborative.

Let me let me like, instead of viewing me as

your salesperson, view me as your like, um, you know,

kind of, um advisor, right?

Like, hey, I want to help you get into the

best car possible because I know that if I'm transactional,

if I treat you transactional It's just gonna be a

short term win, and that's it.

But if I can, if I can sell you a

car and it's the car you want and it's for

the right reasons and I treat you in a collaborative

manner, I'm creating the short term value and the long

term value, and that looks very, very differently from a

car buying experience.

Um, so what does the process look like?

Um, and we could stick with the car buying example.

I think I had a different example, too.

But, um, first off is just it starts with awareness,

right? Just knowledge that each other even exists.

And so we can just say the knowledge of the

customer, knowing that the business exists in the business, knowing

that the customer exists, that has to happen first, right?

For there to be a relationship, they have to know

that each other even exists, right?

And then we search and we try things.

Um, so if we were, like, going into, um, you

know, a car dealership and you're dealing with a car

sales person and you know they're going to start kind

of searching for your needs, and then you say Okay,

so, yeah, you look, you know, you look really fit.

You look like maybe you're into outdoor activities.

That's them searching and trialing, and you might come back

to them and say No, not really.

I just You know, I just do CrossFit my in

the gym, and I don't really like getting outside.

And so no four wheel drives?

Not obviously.

Then the person is thinking like Okay, well, four wheel

drives. Not really for this guy.

Then, um then we start to expand the relationship.

So in the expansion stage were increasing.

Um, the relationship works, increasing the benefits that come from

the relationship, right.

More knowledge and interdependence.

Meaning like, um, dependence on that other person.

Like right.

So if you're in there and you're like, man, I

think I know what I want.

But if I really if I really want the best

advice, I'm gonna have to form this good relationship with

the salesperson.

I'm really gonna have to let them in a little

bit and give them as much information as I can

because I am really dependent on them to get the

right car today, right?

And so, um, so we get to the expansion stage,

then the commitment stage right where, um, you know, it's

become more apparent that like Okay, great, we have this

relationship. You're my car salesperson.

I'm your customer now We just have to kind of

figure out what it's going to take to make something

work, and then dissolution and dissolution is not necessarily a

bad thing.

But this is where the parties realized there's no real

importance in this relationship anymore.

And so the relationship just dissolves, right?

That being said, like, I bought an Audi in 2000

and seven and like that guy still sells, sends me

birthday emails and like, Hey, let me know if you

need anything else.

Uh, and I'm like, Dude, I sold that out a

like eight years ago, and it doesn't matter.

He still thinks there's some value in that relationship with

me, and I'm like, I don't live in California anymore.

It doesn't matter.

I would say there's no relationship.

There's no value in that relationship.

The relationship is no longer worthwhile.

I think it's worth dissolving at this point, right?

The other thing to note is just when you're developing

a relationship with a customer.

Or if you're a customer trying to develop a relationship

with the business, there are some things that can be

done to enhance the relationship.

Right? So good communication is absolutely vital.

There's nothing worse than having bad communication with a business.

Right then their cooperation is important, right?

So you gotta you gotta be, you know?

Hey, like, I'm gonna help you.

Kind of like making sure that you're cooperating with them

and not trying to shove something down their throat and

then conflict resolution.

There's always going to be conflict in the business world.

And with customers, right?

You just can't avoid it.

How will you resolve the conflict is going to have

a huge effect on your long term relationship.

And that's what we're after, right?

This says relation, relationship, development process.

What I'm after is a business is long term relationship

development process, right?

I want to keep these customers for a long time.

So there's there's more building blocks than this, but these

are the two main primary relationship building blocks.

The first one is trust.

Okay, we've got to have trust if we're going to

have a good relationship.

Um, you know, if if if we have a trustful

relationship, cooperation is easier.

Commitment is easier to come to.

Uh, it means our relationship should last longer.

And the quality of our relationship will be much better.

Right? That's just, uh, you know, granted there.

Um So what contributes to trust?

A lot of times, it shared values.

In fact, I will share that in the discussion this

week on, like, my shared values with Patagonia's values and

how that makes it so that I trust them, um,

a lot more than I might trust.

A different clothing brand, um, Interdependence again, knowing that you

depend on them.

And they depend on you That creates a strong, binding

trust. Uh, good quality communication, right?

Not just your, uh, you know, mass email.

But, like, Hey, Ryan, we notice that you are on

our website earlier.

You didn't find what you wanted.

Is there anything we can do to help you?

Or how about good quality communication?

Post sale, where they say, Hey, we saw that you

bought this.

Uh, you've had it for a week now.

We want to know if you're enjoying it.

If there's anything we can do to help you get

more value out of it.

And then last but not least, is a non opportunistic

behavior share a quick story with you guys like so

So we are talking about car sales people, and we

know that they react that they, uh, work on commission.

Right? So they get paid based on how many cars

they sell or how the value of the cars they

sell. A lot of jewelers in the same way.

Right? Um, if you go to a jewelry store and

you buy, you know, you always feel like they're looking

for some opportunity to Upsell you and sell you more

so that they can make more money.

There was a big There's a big jewelry chain in

California. They used to always, uh, promote on the radio

about how their sales people were not paid on commission.

And guess what?

I bought that and I went in and I dealt

with those people because I just felt like, right off

the bat, I could trust them more because they had

a more non opportunistic behavior.

I just felt like, uh, you know that they would

have my best interests in mind.

They'd be more cooperative with me.

I could trust them more then somebody who I would

think is just looking for, uh, more money, right?

Uh huh.

The other big building block in building a relationship is

commitment. Okay.

And this is an interesting way to think about it.

There's really a couple of different two different main types

of commitment.

One is calcula tive, uh, commitment and the other is

effective commitment.

Okay, um, and the main contributor to commitment is trust.

Okay, So calculated commitment reflects a relationship that's largely going

to be based on an exchange between the employee and

the company or the customer and the company.

Um, right, So So customers develop commitment towards the company

because they see it as beneficial regarding like costs, uh,

and rewards like, Hey, if I If I go, you

know, Hey, if I give them my commitment, I'm going

to get a good deal here.

That's calcula tive right there doing quick mental math.

They're like, yeah, you know, it's this brand versus that

brand versus Here's their price.

There's their price.

Here's all the features blah, blah, calculated at Boom.

That's the one I'm going to commit to.

What's interesting.

There is it's negatively correlated to trust it says that

A you know, uh, you know, it doesn't shows that

when we have when we use calcula tive commitment, it

actually means that when we make a decision based on

that means we don't really trust that company very much

at all.

Now, customers who experience effective commitment to a brand tend

to be very emotionally invested in the business.

Okay? They love the product, the products that come from

that business, right?

They identify personally with the brand typically again.

And that's what I'm gonna talk a little bit about

that and my discussion this week with my relationship with

Patagonia, you know?

So I identify personally with that brand, and, you know,

sometimes the customer might even regard that brand is like

a close friend.

Or maybe it's an extension of their self.

It's an identify where, Okay, so, um, we're really after

that type of commitment and business.

If we can get there.

Okay, so let's keep moving And let's talk about customer

loyalty. I am running up against the clock, so let

me just start us off here.

Custom. There's two different definitions of customer loyalty.

The first one is attitudinal loyalty, which is loyalty is

in just the customers.

State of mind.

Um, in other words, would be like, uh, you know,

customers that are loyal because they love a particular brand,

right? They just they just, you know, they're just so

pumped up.

It's just it's just part of who they are.

And there's behavioral loyalty, which relies on to customers actual

conduct. So these are customers that are only loyal because

they feel like they're trapped in the situation.

I'm gonna give you guys an example right after to

start off the next volume.

I'm run up against the clock right now, so I'll

start off Volume five.

I think it is with the example.

And then we'll finish out the rest of these slides

for this week.

Thanks.

Managing Customer Experiences and Relationships (AMGT 350) - vol. 4

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