Reversing the Logic: The Path to Profitability through Relationship Marketing

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

Research output: Contribution to journalArticle

36 Scopus citations

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.

Original languageEnglish (US)
Pages (from-to)147-156
Number of pages10
JournalJournal of Interactive Marketing
Volume23
Issue number2
DOIs
StatePublished - May 1 2009

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Marketing

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