DISCUSSION QUESTIONS
1. Discuss how relationship marketing or retention marketing is different from the traditional emphasis
in marketing.
The traditional focus in marketing has been on getting new customers and building the customer base
through adding more first-time customers. While it is still important to attract new customers, the
Strategies supporting a relationship focus will affect everything from service design to segmentation,
as well as all elements of the service marketing mix. For example, one of the challenges in
2. Describe how a firm’s relationships with customers may evolve over time. For each level of
relationship discussed in the chapter, identify a firm with which you have that level of relationship
and discuss how its marketing efforts differ from other firms.
Four different relationships are discussed in the chapter, including:
Customers as Acquaintances – Those customers where awareness and trial with the provider
Customers as Friends – Those customers who continue to make purchases from a firm and to
Customers as Partners – At the partnership stage the firm has the ability to organize and use
information about customers more effectively than competitors. Thus the relationship has
In answering this question, students should be able to identify different providers for which they have
3. Think about a service organization that retains you as a loyal customer. Why are you loyal to this
provider? What are the benefits to you of staying loyal and not switching to another provider? What
would it take for you to switch?
This question makes a very nice in-class exercise. Students can be asked to answer the three
[Note: For a more in-depth discussion of such benefits, see Gwinner, Kevin, Dwayne D. Gremler,
and Mary Jo Bitner (1998), “Relational Benefits in Services Industries: The Customer’s Perspective,”
Journal of the Academy of Marketing Science, 26 (Spring), 101-114.]
4. With regard to the same service organization, what are the benefits to the organization of keeping you
as a customer? Calculate your “lifetime value” to the organization.
This question focuses students on the benefits to organizations of retaining customers (pp. 153-154):
increasing purchases over time; lower costs; free advertising through word-of-mouth; and employee
retention. Before asking students to calculate their own lifetime value to the organization, the
instructor should review with them the material on pp. 154-156. In calculating their lifetime value,
5. Describe the logic behind “customer profitability segmentation” from the company’s point of view.
Also discuss what customers think of this practice.
From the company’s point of view “customer profitability segmentation” is extremely logical.
Essentially the idea is that not all customers are equally profitable, and determining the profitability
of different market segments can help the firm to decide where to invest its limited resources to build
From the customer’s point of view, profitability segmentation, while logical, may not seem fair.
Customers may resent receiving a lower level of service (e.g., automated) than they had previously
A productive discussion can be focused around the logic of segmenting customers based on
6. Describe the various switching barriers discussed in the text. What switching barriers might you
face in switching banks? Mobile telephone service providers? Universities?
Customer inertia is one of the switching barriers discussed in the text. This is the idea that some
Switching costs are costs both real and perceived that customers believe they would incur in switching
providers. Such costs, which also serve as barriers for switching, can be either monetary or
For banks, some switching barriers could include paperwork required in closing accounts, paperwork
For mobile telephone services, switching barriers might include a fee for early termination of the
contract (i.e., contractual costs), purchase of a new telephone (i.e., setup costs), notifying friends and
For universities, switching barriers might include application fees (i.e., setup costs), higher tuition
7. Describe the four levels of retention strategies, and give examples of each type. Again, think of a
service organization to which you are loyal. Can you describe the reason(s) you are loyal in terms of the
different levels? In other words, what ties you to the organization?
The four levels of retention strategies (see Figure 6.6) are: Level 1—Financial Bonds; Level 2—
Social Bonds; Level 3—Customization Bonds; Level 4—Structural Bonds. Clearly the higher levels
A Level 3 strategy focuses on building ties through service customization. The assumption is that
A Level 4 strategy is the hardest to imitate, and the most difficult from which a customer can
8. Have you ever worked as a front-line service employee? Can you remember having to deal with
difficult or “problem” customers? Discuss how you handled such situations. As a manager of
front-line employees, how would you help your employees deal with difficult customers?
A discussion of this question can be injected into a lecture/discussion of the idea that “The Customer
Is Not Always Right” (pp. 166-170). This general topic is an important one to cover since many
organizations still refuse to acknowledge this fact. It is important that students understand that not all
A fun story to tell in this context relates to Nordstrom. If Nordstrom notes from its credit card records
that a particular customer is buying and returning expensive clothing on a regular basis (obviously