Sunday, September 25, 2011

Business relationships in service settings

Bo Edvardsson, Maria Holmlund, Tore Strandvik (Initiation of business relationships in service dominant settings, Industrial Marketing Management 37, 2008) have looked into conceptualization of a relationship initiation process in service organizations.

The key question of the authors was what it is about relationships that are crucial for business growth; how can companies initiate new relationships or transform current relationships in a service organization. Or when and why does a relationship end?

The authors were looking into manufacturing companies, operating in highly competitive enviornments, transforming their business from product based offering to a service business. The core success factor in this setting is to understand how to manage and restructure customer relationships and co-creation in order to provide a successful change and transformation.

Edvardsson, Holmlund and Strandvik´s core concept for understanding relationships was explained through a new model on relationship initiation process, which suggests “statuses” with increasing likelihood of leading to a business agreement. The transition from one status to another may lead to a business relationship eg through an agreement. Relationship initiation requires and involves a number of activities and the dynamics of the process may be to move between positions either forward or backward.

What for me was one of the key thoughts was the authors´ view on customers working through projects rather than a process and how similar the way of working is between professional b-to-b companies and transforming manufacturing companies. According to the authors the earlier lifecycle models seem less adequate. If talking about a customer lifecycle and providing lifecycle value, have b-to-b companies created agile enough environments to work with customer from one status to another?

Is lifecycle management too broad term for increased value for customers? If companies split lifecycle process to relevant and detailed entities - from customer perspective - does that differentiate them better from competition? Moving towards a project based service model seems to be the key success factor, after identifying the core service levels and service experience models. The customer moves from one status to another. Service organizations cannot rely on traditional lifecycle process anymore but rather need to integrate services between customer statuses to provide project type services based on customer needs.