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A set of interactions over time is what builds the customer relationship and what executes strategy. Knowing what interactions gets to the reason things happen as they do—the “cause.” What interactions, in what order, how many, when, at what cost? Considering just the interactions or the number of them doesn’t lead to clarity—there are myriad interactions and myriad combinations. The interactions indicate what happened, but not what good the interaction did in developing the relationship. So, of even more significance is capturing automatically the relative Relationship Value created or destroyed with each interaction. Relationship Value is the building block that measures how the relationship is improved, or not improved, as it is moved forward or backward by the interaction. With Relationship Value, the effect of one interaction to another can be compared very easily and in real time. Placing a value on each interaction for its effect translates squishy, soft interactions to hard numbers and provides critical context. The value is based on the interaction’s relative impact and relationship enhancement capabilities. Relationship Value is the common denominator that puts the interactions into context so that the relative value in the development of the relationship can be seen—no matter what interactions have occurred, or how many. Relationship Value measures interaction effectiveness—what good the interaction did. While the interactions themselves measure the “cause,” Relationship Value measures the “effect” in relationship cause-and-effect. Since Relationship Value summarizes interaction effectiveness, it can be used to allay confidentiality concerns in working with distributors, agents, or other sales organizations. The depth of the relationships being built can be shared, without sharing the contact information or the details of the interactions at the individual relationship level. The interactions, interaction costs, and Relationship Value are the unifying customer relationship metrics key to measuring value creation and strategy execution. The cause-and-effect relationship between the interactions and the new customer relationship metrics can be tracked in real time. With these customer relationship metrics embedded in an operational CRI tracking system, the customer relationship process links the customer relationship to profit, and through profit, back to strategy. Cause-and-effect in customer relationships is different in every company, and even within different parts of the same company. Because this is so, measuring Relationship Value can lead to sustainable competitive advantage when harnessed. Relationship
Value Drives Profit and Customer Satisfaction
For
more about Relationship Value, please see What is the context for
customer relationship metrics? or How can Relationship Value be
used? or our next-generation papers on value creation and strategy execution. Or take a look at Chapter Four in our CEO's new book Customer
Relationship Intelligence: A Breakthrough Way to Measure and Manage
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