What is Customer Relationship Equity?

Image: Reena Kapoor (Instagram: @1stardusty).

Three Factors of Customer Relationship (CR) Equity

According to Palmier and Sridhar, there are three factors that contribute to such inter-firm relationships: quality, composition, and coverage. Together, these factors allow a company to understand the sum total of their relationships.

Relationship Quality

In a previous blog post, I mapped out the four key customer relationships for any business tech company. These four relationships — the relationship between users and product managers, buyers and sales people, marketplace and partner managers, and IT services and IT enablers — are the most critical ones for a tech business.The foundation of social capital a tech company builds with its customers is built through each such relationship, one brick at a time.

Relationship Composition

The second critical factor of inter-firm relationships is the composition of relationships between the tech company and the customer. Not all relationships are equal in power, even if they are equal in quality of trust and commitment between the two people. This is especially true for relationships surrounding technology products where we identified at least four different customer subtypes. We know that each member of this customer quartet (the user and the buyer from the business and tech domains, respectively) interacts with their tech company counterparts with a different purpose.

  1. A champion is a person who is positively inclined towards the tech product and can drive change. The kind of change may vary. For a senior buyer, this may be organisational change needed to manage disruption unleashed by the technology. In a large firm, a champion buyer can drive the change necessary to extract economic benefits from the technology. For champion users, the change may be to their work habits as the product simplifies or improves their job to be done. For critical developer tools, champion developers can make or break the tech usage inside a firm.
  2. A blocker is a buyer or a user who is negatively inclined to the product and has the power to resist change in the company. This is especially true for technology guardians in a company whose job it is to protect the firm from harm. These guardians are not just in IT or corporate governance but also in business functions. Many valuable consumer technologies take years or decades to be adopted by businesses simply because there are powerful interests that block their adoption. These interests and the people who serve them are most often legitimate — a fact that many tech companies do not fully appreciate or understand. (For a deeper discussion on this topic, see the section on Technology Guardians and Limits to Growth.)
  3. An influencer is a buyer or a user who is positively inclined to the product but has limited power to drive change. Often, tech companies make the mistake of building quality relationships only with influencers who have limited ability to effect change. Companies are later surprised when their sales or product adoption stalls inside the account. Marketing to influencers can be a valid pursuit, but a separate strategy for increasing reach or improving preference among champions and blockers is also needed.
  4. A detractor is a person who has negative opinions on technology but can neither stop nor drive change in the company. A vast majority of buyers and users for a new tech may fall in this category. If that is the case for a tech company, it is important to ignore or limit relationship investment among detractors. If detractors have power outside of the company in the broad marketplace, then a company may need a targeted communications plan to limit their effect on the market — the inverse of influencer marketing.

Relationship Coverage

The third critical factor of relationship equity is relationship coverage, which is the measure of reach a tech company has among its customers. To measure coverage, a tech company can audit the number of relationships they have in all their routes to market. While these can be summed up in many ways, it is important to map the relationships in line with the business model.

Key Takeaways

  • Customer relationship (CR) equity is the sum total of all the inter-firm relationships between a tech company and its customers that determine the company’s growth.
  • CR equity has three key factors: relationship quality, which measures depth; relationship composition, which measures power; and relationship coverage, which measures reach.
  • Social capital determines the depth of relationship quality between two individuals across the firms. It takes time to build this capital through trust and commitment.
  • The relationship power can be summed up based on a person’s capacity to drive change inside the company to adopt the technology and their attitude towards the company’s tech offering.
  • To measure relationship coverage, a tech company can audit the number of relationships they have in all their routes to market.

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Anurag Wadehra

Anurag Wadehra

B2B Marketer; From SaaS, APIs to Google Cloud; Across 6 industries. Dabbles in storytelling, drawing & poetry. https://www.linkedin.com/in/anur