Building Customer Relationship

Sanskriti Rao
Sep 27, 2019 · 6 min read

United Services Automobile Association (USAA) is a company built around developing long term customer relationships with its members. USAA provides insurance for current and former U.S. Military personnel and their families. The company manages more than $110 billion in assets and still manages to be ranked number 1 or 2 most years in BusinessWeek’s annual list of Customer Service Champs and on Fortune’s list of the 100 best companies to work for in America. USAA’s member retention figures approach 100 percent. Members stay members pretty much until they die.


USAA takes a comprehensive approach to training and keeping employees, centered on helping them drive member retention. Empathy for their members is emphasized as a major part of every employees’ work day. The company focuses on building long term relationships with members and employees, enabling USAA to Hit the Bullseye.

Table Of Contents

  1. Relationship Marketing

1. Relationship Marketing

Relationship marketing is a facet of customer relationship management (CRM) that focuses on customer loyalty and long-term customer engagement rather than shorter-term goals like customer acquisition and individual sales. The goal of relationship marketing (or customer relationship marketing) is to create strong, even emotional, customer connections to a brand that can lead to ongoing business, free word-of-mouth promotion and information from customers that can generate leads.

It has been suggested that firms frequently focus on attracting customers but then pay little attention to what they should do to keep them. Ideas expressed in an interview by James L Schorr, then executive vice president of marketing at Holiday Inns, he was referring to the leaky bucket theory

The leaky bucket theory is the model that seeks to describe the process of customer gain and loss. In this we consider marketing to be a huge bucket and people come in via methods such a directs sales, indirect sales,promotion etc. As long and the programs are effective the buckets stay full,however there is an issue there is a small hole in the bucket and customers are leaving. Customer retention is one of the key concepts in relationship marketing. Most companies concentrate on recruiting new customers to replace customers who move on, rather than seeking to retain customers.

2. Evolution of Customer Relationships


Firms relationship with their customers, like other social relationship tend to evolve over time. It has been said that the relationship between provider and customers often have the potential to evolve from strangers to acquaintances to friends to partners.

  • Customers as Strangers: Strangers are those customers who have not yet had any transactions with a firm and may not even be aware of the firm.At the industry level,strangers may be conceptualized as customers who have not yet entered the market,at the firm level,they may include customers of competitors.clearly the firm has no relationship with the customer at this point.Consequently,the firm’s primary goal with these potential customers is to initiate communication with them in order to attract them and acquire their business.

3. Benefits for customers and firms


Both parties in the customer-firm relationship can benefit from customer retention. That is, it is not only in the best interest of the organization to build and maintain a loyal customer base, but customers themselves benefit from long-term association.

3.1 Benefits to customer

  • Confidence Benefit: It comprise of feelings of trust or confidence in the provider along with a sense of reduced anxiety and comfort in knowing what to expect.

3.2 Benefits to firm

As alluring as customer acquisition may seem, the truth is that it is important to invest time, effort and resources in maintaining a relationship once the customers are on board. Customer loyalty and brand loyalty initiatives facilitate companies to retain customers, beginning from the first contact one has with the company and endures throughout the period of the relationship.

  • Economical Benefit: Increasing customer retention helps boost profits simply because loyal customers already have trust in your brand and therefore are likely to spend more. According to the research referenced above, increasing retention by just 5% through customer loyalty programs can boost revenue up to 90%.

4. Relationship development strategies

In order to succeed in the market, there should be a good product, good relationship marketing strategies and setting up of distribution channels. For some companies sales process is completed with the sale and guarantee terms.

  • Core service provision: Retention strategies will have little long-term success unless the firm has a solid base of service quality and customer satisfaction on which to build.

5. Relationship challenges

  • Wrong Segmentation: A company cannot target its service to all customers, some segments are more appropriate than others

6. Summary

In this chapter we focused on the rational for, benefits of, and strategies for developing long-term relationship with customers. The segment of your customer base who regularly buys from you could be the biggest asset your company has. By adjusting your marketing spend so that you target not only new customers but also nurture your existing audience, you could enjoy far greater profitability.


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