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Relationship Marketing in the Digital Age

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Relationship Marketing in the Digital Age
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How Has Relationship Marketing Changed in the Digital Age?
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Customer-company relationships are increasingly conducted via internet-based technologies. In this video, LENA STEINHOFF explains her work towards developing a theoretically grounded and managerially relevant framework for managing customer relationships online. * Focusing on current business practices and extant research, Steinhoff identifies five aspects that distinguish the online customer-firm relationship from its offline counterpart. Suggesting that companies will only reap the full benefits of online relationship marketing if they pay attention to its inherent risks, Steinhoff calls for further research into the opportunities and challenges presented by emergent technologies like artificial intelligence and augmented reality. This LT Publication is divided into the following chapters: 0:00 Question 1:16 Method 3:27 Findings 5:36 Relevance 7:08 Outlook
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Transcript: English(auto-generated)
So the question behind our research is, how can firms manage relationships with their customers online? So it is estimated that by 2020, we as consumers will manage about 85% of our relationships with companies online,
meaning that there is no more human-to-human interaction, but we will interact with a firm mediated by internet-based technology. Relationships between customers and companies are still in vogue, so consumers are really seeking such relationships with firms.
So firms are getting ready for this and have an ever-increasing toolbox at their disposal, starting with e-commerce channels, then there is social media, smartphones and mobile applications. Or nowadays, as consumers, we're even starting to interact with robots. However, research on these instruments and on online relationship marketing is fragmented so far.
The goal of our research is that we would like to provide a theoretically grounded and managerially relevant framework for understanding how online relationship marketing works. Our paper is conceptual in nature and we try to gain a deep understanding of the current business practices
and extant empirical research findings on online relationship marketing. We structure our analyses among the four major technological milestones that we're observing in the development of the internet,
so starting in the 1990s with the hypertext web, often referred to as web 1.0 also. So this era has been dealing with a start of e-commerce and research, for example, finds that in e-commerce relationships between firms and customers that reciprocity and trust,
actually similar to offline relationships, play a pivotal role in the performance of relationships. Then we proceed to the social web, also referred to as web 2.0, and here, for example, extant research finds that electronic word of mouth has a positive effect on company sales.
The next developmental step in the development of the internet was web 3.0 or what we would also refer to as the semantic web. This is where smartphones and mobile applications came up and also big data. So, for example, there is research on customers' privacy concerns showing
that data breaches, for example, have a negative effect on company performance. As a last developmental step, we look at the symbiotic web or web 4.0. This is when artificial intelligence and augmented reality came up. For example, there is now one of the
first studies in research dealing with service robots and showing that these robots can foster eeriness among us as consumers. We look at the state of the art of business practices and empirical research, and from that, based on that, we distill five key elements that are unique
to online relationships. So, these five characteristics really capture the essence of online relationships and online relationship marketing. First, online relationships are seamless, meaning that nowadays customers can access the company and the relationship at any time and at
any place. If you consider e-commerce, for example, so at any time during the day customers can shop at the firm with no obstacles, no opening hours or such. Second, online relationships are networked. So, today companies need to be aware of the huge customer-to-customer networks
that, for example, we find on social media. So, the company needs to pay attention on what it does to one single customer, because this customer may spread the word quickly via social media. Third, online relationships are omni-channel, meaning that customers can easily switch
between devices or even within devices. There are different channels, like they could access the company's Facebook page, the company's Instagram page or open the company's mobile application, for example. Fourth, given all these technological opportunities, online relationships are much more
personalized than offline relationships have been. So, based on customer profiles, companies can really customize their offers on a one-to-one basis. Fifth, online relationships are getting anthropomorphized, given that nowadays when customers call customer service,
they may not interact with a human being, but they may talk to a chatbot, to a machine. Depending on the circumstances of their call, this may have positive or negative implications for their relationship, given that for some contexts they may prefer a chatbot or a human to talk to.
So, overall, firms need to take into account all of these five aspects to comprehensively approach their relationship marketing in the digital age. What our proposed theory shows is that companies
need to pay attention to all of these aspects, to all these five essential features of online relationships, because customers simply expect that they can interact through whichever channel they want at whatever time of the day, for example. So, companies should make use of all of
these instruments, but on the other hand, companies should also be well aware of the potential dark sides of all of their relationship marketing instruments. When they, for example, dissatisfied one of their customers, who will then potentially spread the word. So, another big thing is privacy, of course. So, companies need to take care of and be aware
of customers' privacy concerns. So, one important aspect in all of their online relationship marketing activities is transparency. Whatever instruments they use to manage their relationships, firms should openly and transparently communicate to customers what they are doing. So, which data
are they collecting, for example? How are they using the data? So, if the customer can gain trust in the firm and feels that the company communicates openly about what they are doing in their online relationship marketing approach, then the positive effects of online relationship
marketing potentially get leveraged, while any potential dark sides can get alleviated. So, the goal of our conceptual research was to pave the way for a lot more of online relationship marketing research. Future research could focus on two areas, for example. So, first,
there should be more research on the different instruments and tools of online relationship marketing and their effectiveness. So, for example, our analysis of the literature has shown that much of extant research on online relationship marketing pertains to e-commerce or
social media, for example. Much more research is still needed on the more recent advancements in technology, such as artificial intelligence. So, I, for example, find it fascinating to look at the role and the relational role of chatbots, for example. What happens when a
customer calls customer service and interacts with a chatbot? So, under which circumstances may the customer even prefer to talk to a chatbot rather than a human being? And under which circumstances is the reverse true? Second, apart from these instrument level research,
future research should definitely try to make holistic and comprehensive assessments of the overall relationship marketing strategy and approach that a firm is using. So, in business practice, of course, many relationships are hybrid, such that they may not be 100% online, but they may still contain human-to-human interaction when I go to a local store, for example.
So, I would be really interested in seeing what impact does the offline component versus the online component have on overall relationship performance.