Let's Stick Together!

Headline findings:
Consumers are most eager to engage with businesses that have an impact on their financial status, and who traditionally enjoy high customer inertia - with Independent Financial Advisors and banks topping the relationship table, scoring 25% and 19% above average respectively

• Next in line were businesses that inspire a degree of emotional attachment. Leisure venues and fashion retailers (both 12% above average) were pegged in third position, followed by mobile telecoms and car marques (8% and 2% above average)
• Disappointingly, given their reputation in the field of customer loyalty initiatives, supermarkets, hotels and travel companies scored 2%, 10% and 10% below average respectively
• Car dealerships lagged well behind the marques themselves (10% below average compared to 2% above average), while in another intermediated industry - insurance - IFAs ranked top, showing a clear disparity between how well intermediaries in different sectors nurture their customer base
• Of least relationship interest to consumers are the price-driven, commoditised industries of insurance, utility providers and fixed telecoms (12% 15% and 23% below average)

Introduction
Businesses increasingly talk about fostering relationships with their customers. In a competitive global business environment, companies are attempting to re-learn the lessons of village traders and get up close and personal with their customers. The difference is that, instead of a few dozen customers, some modern businesses have literally millions of customers. So nailing that personal touch is no mean feat. Billions of pounds have been poured into customer relationship management systems over the last decade, in the hope that an overarching understanding of each customer and detailed, easily accessible customer information would enable consistent customer communication - whether the contact be made by phone, email, face-to-face or through direct mail.

Alongside this trend, research has also identified a shift in the balance of marketing effort dedicated to new customer acquisition and existing customer development, with customer development activity claiming a larger and larger share of total marketing spend. Today the emphasis is less on poaching and more on retention.

The commercial motivations for developing relationships are manifold. Establishing a dialogue with the customer base encourages loyalty; customers stay with the business for longer and spend more. The more effective a company's customer retention and defection management strategy, the less they need to plug the gap with new customers, who are expensive to recruit and generally more fickle. Establishing communication is also a key means of encouraging customers to share information about their habits, tastes and preferences - informing cross-selling and brand extension initiatives. Additionally, companies who enjoy strong relationships with their customers are more able to weather difficult times, such as company under-performance and negative publicity.

So, companies are clearly eager to nurture relationships with their customers. But is it one-sided? Have these companies stopped to consider whether their intentions are requited? Businesses need to understand the extent to which consumers want to engage with their brands. For some businesses, particularly those where there is either a strong natural need (IFAs, banks) or emotional attachment (Fashion retailer, car manufacturer), it will be relatively easy to foster strong relationships with customers. Others will need to work harder to alter the way in which their customers perceive them.

It is a fact that certain industry sectors will experience a natural cap on the extent to which consumers inherently desire a relationship with them. Yet, in many industries, the available potential to develop customer relationships is by no means fully exploited - if the business can find a means of presenting itself in way which encourages dialogue and mutual interest. Indeed, the way a business engages with its customers can have a significant bearing on the way in which the customer views the business. Central, therefore, to successful relationship building must surely be an understanding of the inherent interest customers have in the company.

This research report examines how consumers differ in their attitude to building relationships with companies within key industry sectors, in order that businesses can formulate relationship development strategies accordingly.

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