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October 11, 2001 Good business has the human touch



by Sylvain Comeau

From Sept. 24 to 26, the 9th International Relationship Marketing Colloquium took place at the university under the auspices of the John Molson School of Business.

Relationship marketing is a buzzword in the business world that boils down to: Give, and you shall receive. “Relationship marketing is not new, but it has become more important in the past 10 years,” said Management Professor Ronald Ferguson, who co-chaired the conference with Marketing Professor Michèle Paulin.

“Traditional marketing is focused on how you sell a product; relationship marketing emphasizes the belief that the long-term returns come from customer loyalty. It’s an approach we teach at the John Molson School.”

This approach rejects the arrogant and sometimes shabby service that plagues many companies big and small, and emphasizes occasionally making short-term sacrifices to gain that loyalty.

“The idea is that if you treat the customer well and establish a relationship, you generate good word-of-mouth and repeat business. The customer will talk about you, recommend you, and in some cases, actually become your advocate.”

That takes extra effort, but indifferent service easily generates the opposite reaction: negative or hostile word-of-mouth. “We know from research that a very dissatisfied customer talks to, on average, 12 other people, and says negative things about you. Satisfied customers don’t tend to talk to as many people, but at least they’re not saying anything bad about you.”

The last day of the colloquium was a seminar on relationship management, a related idea that emphasizes good relations with customers, employees and business partners. Ferguson quoted one of the speakers, Robert Spekman, from the University of Virginia.

“He said that relationship management and marketing do not follow the banker’s idea that you have to balance the books at the end of the day. You may pay more out at the beginning, and the payback may be a year or more later.”

Executives from “benchmark companies” which exemplify relationship management spilled some of their secrets. These include Daryl Urquhart from the Shouldice Hospital in Toronto, and Steven Wiggs from the BB&T Bank in North Carolina.

“If you asked people on the street, ‘Can you really get satisfied employees and customers in health services? In commercial banking?’ I think nine out of 10 people would say, ‘No, you can’t.’ That’s one reason those companies were chosen; they provide an example for sectors which are not known for effective relationship management.”

BB&T Bank does it by giving considerable autonomy to their employees. “They enable and empower their employees; they believe that their competitive advantage is their employees’ knowledge. By doing that, they stay close to their market and serve the customer better.”

As for the Shouldice Hospital, Ferguson learned a lot about its employee relations in a visit to the facility. “There was a film crew shooting on the premises that day; I later learned that any profits from the filming was going into a fund to help pay for the education of the employees’ children.”

The seminar also heard from Gaetan Morency, Senior Vice-President of Public Affairs at the Cirque du Soleil. The circus company, which is based in Montreal but has become an international phenomenon, was ahead of the curve in embracing relationship marketing and management long before it was taught at business schools.

“We are citizens who get involved in the communities in which we work,” Morency explained. “We raise funds for causes, work with street kids, and so on. It was not intended as a business strategy; it was natural for the founders of the company to do this. They were idealistic and wanted to change the world. Our results show that it works.”

It sounds like common sense, and it is, but it may be revolutionary in today’s shaky service culture.