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What Is Business Relationship Management?

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  • Written By: Jan Fletcher
  • Edited By: S. Pike
  • Last Modified Date: 30 October 2016
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Business relationship management is a scientific approach to managing customer relationships. The interactions between a business and a customer are viewed from a quality-control perspective, with a goal of continuous improvement in the relationship. Customers are seen not as a casual, happenstance response to marketing efforts, but as a vital supply-chain that is the lifeblood of the business. In business relationship management, the goal is the establishment of a trusting relationship through which many transactions will occur over time. These relationship transactions occur both through repeat business and through referrals from existing satisfied customers.

Extensive, ongoing training is typical in this business practice, and it is done to prepare staff to create and maintain trusting relationships with clients. Over time, according to this theory, satisfied customers create goodwill capital sharing their favorable experiences with others. This is called word-of-mouth advertising, and it is considered to be more potent than an advertising campaign in terms of the return on investment. According to the theory, people will tend to listen to a friend's recommendation over an advertiser's appeal. This entices new customers into an ongoing relationship with the company.

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Evert Gummesson, an emeritus professor of Marketing and Management at the Stockholm University School of Business, in Sweden, popularized the concept of business relationship management through his numerous books on the topic. His theory of managing customer relationships has garnered a favorable reception in the U.S., being widely adopted in practice by major corporations. This theory, in practice, operates on the premise that word-of-mouth recommendations play a large role in the expansion of the customer supply-chain that feeds the business over time through these transactions. In this way, existing customers' positive experiences feed the supply chain, bringing new customers into the persuasive orbit of the business.

Business relationship management may be compared to the Japanese concept of Total Quality Control. In the latter, manufacturing procedures are managed through a systematic process that ensures high-quality production with low tolerance for error. Intensive, ongoing, systematic training of staff to comply with a set of prescribed steps in the manufacturing process is done to create a culture of consistent superior quality.

In business relationship management strategy, the same concept is applied to relationships with customers. Personnel throughout the company are systematically trained to deliver consistent, responsive, stellar customer service. This service extends from the initial customer inquiry to assisting the customer in choosing the product or service best suited to both his or her needs and desires. Product and service support are continually delivered in business relationship management, as the need arises. With an eye toward future sales, representatives offer existing customers information on the latest options and innovations in products and services.

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