Uppsala universitet

3.3.1 Customer-Supplier Relationships
Marketing costs decrease with the need to recruit new customers, and as both suppliers and
customers become better partners, coproducers, and codevelopers, this has a positive impact
on quality. This also provides the opportunity to get to know the customers better and hence
to become more sensitive to their needs. This, in turn, increases the ability to target the
offerings more effectively, all with favourable effects on outcome and revenue. Additionally,
customers become better part-time marketers, spreading the word about their satisfaction with
the supplier, without burdening marketing and sales budgets. Loyal customers also become less
price sensitive, within certain limits, as a well-functioning relationship makes them value
relationship dimensions such as trust, commitment, and convenience more highly than a lower
price elsewhere.
3.3.2 Competitor Relationships

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A company’s competitors experience more difficulty when retention and loyalty increase in its
business relationships, and the rate of defection decreases. They are no longer fed with
defectors, at least not from the focal company. Collaboration with competitors, something
almost unthinkable only a few decades ago, may be most cost-effective if managed in the right
way; by collaborating in an industry, competitors can help each other to improve conditions for
the industry as a whole.
However, Gummesson offers words of caution for the loyalty marketing relationship
manager. He reminds us that satisfied not is the same as loyal (efforts have to be made to
make satisfied customers improve the retention rate) and neither is loyal the same as
profitable, since a company always has to actively recruit the right customers (Gummesson,
1997).