Exchange relationship is the core business strategy that integrates internal processes and functions, and external networks, to create and deliver value to targeted customers at a profit. It is grounded on high quality customer- related data and enabled by information technology (Barnes, 2000).
Exchange relationship as defined by Day and Van Den Bulte (2002) is a cross functional procedure for achieving a continuous conversation with customers, across all their contact and access points, with personalized treatment for the dearest customers, to increase customer retention and the effectiveness of marketing initiatives. On the other hand Ricardom, (2006) on exchange ...view middle of the document...
Furthermore, back-office functions such as operations and finance can learn from and contribute to customer-related data. Access to customer-related data allows members of a business's 'external network' - suppliers, partners, distributors - to align their efforts with those of the focal company. Underpinning this core business strategy is IT: software applications and hardware.
2. COMMERCIAL CONTEXTS OF EXCHANGE RELATIONSHIP
Exchange relationship is practiced in a wide variety of commercial contexts, which present a range of different customer relationship management problems. We'll consider four contexts: banks, automobile manufacturers, and high-tech companies and consumer goods manufacturers.
2.1. Banks deal with a large number of individual retail customers. Banks want exchange relationship for its analytical capability to help them manage customer defection (chum) rates and to enhance cross-sell performance (Barnes, J.G. 2000). Data mining techniques can be used to identify which customers are likely to defect, what can be done to win them back, which customers are hot prospects for cross-sell offers, and how best to communicate those offers Quelch, John A and David Kenny (2002). Banks want to win a greater share of customer spend (share of wallet) on financial services. In terms of operational exchange relationship, many banks have been transferring service into contact centers and in an effort to reduce costs, in the face of considerable resistance from some customer segments (Shepherd, and Sherman, 1998).
2.2 Automobile manufacturers sell through distributor / dealer networks. They have little contact with the end-user owner or driver. They use exchange relationship for its ability to help them develop better and more profitable relationships with their distribution networks (Singh, and Sirdeshmukh, 2000). Being physically disconnected from drivers, they have built websites that enable them to interact with these end-users. This has improved their knowledge of customer requirements. Ultimately, they hope exchange relationship will enable them to win a greater share of end-user spend across the car purchase, maintenance and replacement cycle.
2.3. High-tech companies manufacture complex products that are generally sold by partner organizations. For example, SQL innovative software developers have traditionally partnered with companies such as IBM to obtain distribution and sales. However, companies like Dell have innovated channels (Shepherd, and Sherman, 1998). They go direct-to-customer (DTC). Exchange relationship helps these DTC companies to collect customer information, segment their customer base, automate their sales processes with product configuration software and deliver their customer service online. They have also developed automated relationships with suppliers, so that they carry no or low levels of inventory, which are replenished frequently in rapid response to order patterns (Barnes, 2000).