Reversing the Logic: The Path to Profitability through Relationship Marketing

V. Kumar, Ilaria Dalla Pozza, J. Andrew Petersen and Denish Shah

Journal of Interactive Marketing, 2009, vol. 23, issue 2, 147-156

Abstract: Many firms have experienced greater success through implementing relationship marketing strategies. This is achieved by gaining knowledge about their own customers through database marketing and about the general marketplace through marketing research. Over time, this has led firms to adopt a general framework which we call the conventional path to profitability. This conventional framework suggests that new product innovation leads to acquisition, acquisition combined with a rich experience leads to satisfaction, satisfaction leads to loyalty and customer retention, and loyalty/retention leads to profitability. However, we show that some of the links in the framework are weak based on both academic research and marketplace realities. Consequently, we reverse the logic of the conventional path to profitability. We introduce a new approach that starts the customer relationship management strategy with customer profitability and the notion that different customers should be rewarded and satisfied differently. In addition, we outline a strategy that relationship marketing firms can implement, leading to higher levels of customer profitability and offer directions for future research.

Keywords: Customer relationship management; Relationship marketing customer life time value; Profits (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:joinma:v:23:y:2009:i:2:p:147-156

DOI: 10.1016/j.intmar.2009.02.003

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