Implementing Relationship Marketing: the Role of Internal and External Customer Orientation

Developing an inhering and remote client druthers altogetherow facilitate the carrying out of race selling principles by fe bes. Relationship market highlights the emergency for an screennational client taste, which in turn raises the read for guest-oriented employees. Employees exit only be guest-oriented if an interior guest druthers is evident in the line of descent. Four constructs pertaining to the midland client druthers of small- to medium- surfaced framework retailers in the northwestern Province were identified.After checking for intrinsic harmony, prep ar sizings were determined for these constructs analysing the functional significance of employees as opposed to focuss mentation on the underlying constructs. Similarly, tetrad constructs referring to the foreign client predilection of the homogeneous feares were identified. The tetrad identified constructs underpinning an impertinent node penchant were also checked for internal consistency and the practical significance of customers as opposed to attentions whimsy on the underlying constructs was determined finished assemble sizes.It was found that the identified creasees deprivation both an internal and immaterial customer orientation course. Recommendations are make to repair internal customer orientation for the sake of an improve outside(a) customer orientation. An improved external customer orientation go forth facilitate implementation of kind merchandising principles in these businesses. INTRODUCTION fit in to Saren and Tzokas (1998187) researchers in race merchandise go by dint of come to realise that there is a need for detailed experimental evidence on how this begin could be utilize in order to promote a beneficial customer-business kin.Morris, Brunegee and Page (1998360) and Fornier (1998343) betoken that a wish of knowledge and consensus about kinship marketing and the activities knobbed in the implementation thereo f has led to difficulties in operationalising the construct. This nurture addresses this reach by arguing that a relationship marketing orientation is facilitated by centering being sufficiently orientated to the needs and expectations of employees (internal customer orientation) as well as to those of customers (external customer orientation).The internal and external customer orientations of small- to medium-sized stuff retailers in the northwesterly Province were investigated by stiffs of consummation size analyses. The coating and objectives of the study are subsequently explained, followed by a conjectural exposition on the interface amongst relationship marketing as well as internal and external customer orientation. A translation of the research methodology is followed by the empirical results on internal and external customer orientation of the businesses that participated in the study.Conclusions are drawn from these empirical findings. Finally, managerial impl ications are discussed base on the conclusions. GOAL AND OBJECTIVES OF THE STUDY The goal of this study is to explore internal and external customer orientation as elements facilitating relationship marketing implementation by small- to medium-sized material retailers in the North-West Province. This goal ordain be achieved with the following objectives to explore the interface mingled with relationship marketing, and internal and external customer orientation to report on empirical findings related to internal and external customer orientation of small- to medium-sized textile retailers in the North-West Province and to consider the managerial implications of the to a higher place empirical findings for managing these retailers. FOSTERING dissembleNAL AND EXTERNAL customer taste TO FACILITATE THE writ of execution OF RELATIONSHIP MARKETINGSheth and Parvatiyar (1995261) define relationship marketing as an orientation that seeks to condition close interaction with sele cted customers, suppliers and foes for rank creation finished co-operative and collaborative efforts. This rendering suggests that businesses should pursue profitable business relationships. Morgan and Hunt (199422) define relationship marketing as all marketing activities directed towards establishing, developing and maintaining successful comparative exchanges. This definition sets out the crowning(prenominal) goals of relationship marketing, but does non register what relationship marketing entails.Attempts have been made to address this limitation by emphasising the dimensions and activities of relationship marketing. These dimensions and activities include (Too, Souchon and Thirkell, 2001290) customer retention product benefits quality good customer service customer loyalty by the business and frequent contact with the customer. The first quartette issues refer to the business customer orientation while the last dickens relate to customer relationship counsel practices.Kotler and Armstrong (20019, 667-681) indicate that relationship marketing is the process of creating, maintaining and enhancing strong value-laden relationships with customers and other stakeholders. According to this definition, relationship marketing does non end with customers, but includes all stakeholders (i. e. employees, business members, stockholders and others). Relationship marketing advocates the establishment of long-term and profitable relationships between (both internal and external) partners or stakeholders (Zikmund and dAmico, 20018).These relationships are non naturally sustained and should wherefore not be taken for granted (Day, 200025). Long-term and profitable relationships are only established when trust, commitment and service are inculcated in relationship partners (Buttle, 19968-9). Stakeholder relationships also have to transcend functional boundaries (Beth, Burt, Copacino, Gopal, Lee, Lynch and Morris, 200367-68). Relationship marketing ad vocates that an engineer should, for example, take time to see how he could best invention the product to satisfy the customers needs.The same applies to the accounting subdivision it should develop credit and payment terms that entrust best turn the customer while it needs also realising a profit for the business (Ostroff and Smith, 199222-23). In this respect Day (200024-30) argues that the ability to create and maintain relationships depends, inter alia, on the integration of key internal processes in the business. The implementation of relationship marketing therefore depends on a well- developed internal (employee) and external customer orientation.Taher, Leigh and French (1996218) argue that in order to be customer-oriented, marketers should provide majestic writ of execution in quality, economy and cost competitiveness (i. e. customer orientation). The business should also understand how customers measure value and how these value expectations can be met. To win order s, a business should exhibit an external customer orientation that manifests the relative strength of the business in relation to its competitors (Koufteros, Vonderembse and Doll, 2000526).To attain changeless customer orientation careful attention should be given to detail, confluence promises and swift response to the requirements of customers i. e. competitive capabilities. The same authors define competitive capabilities encourage as a business ability to meet customer expectations compared to its competitors ability to do the same. Day (200028) argues that a customer orientation should be immediately evident in the mindset of those who deal forthwith with the customer. Kennedy, Goolsby and Arnould (200377-79) found that the development of an external customer orientation will be facilitated by leadership. Staff members must experience an unbroken circuit of passionate, sincere, merge and pull leadership from nip levels to local managers centrality of customer requireme nts and performance feedback. This will also assist in achieving the compulsory inter-functional co-ordination and alignment and collection and distribution of external customer data. This data, however, only becomes conducive for customer orientation development when it is widely circulated in the business to become a shared organisation-wide programme from which decisions are made.Patterson and Smith (2001438) also support this notion. It is stressed that customer orientation should be explicit, otherwise the business risks over-serving unprofitable accounts and wasting resources that might be allocated to profitable customer groups. In this respect Reinartz and Kumar (2002) distinguished between customer groups and suggested ways of managing each group for increased profitability. Relationship marketing raises the need for customer orientation, which in turn raises the need for customer-oriented employees.Bendapudi and Leone (200283) indicate that customers form relationships with employees who assist them, and that these relationships may be stronger than the customers relationship with the business delineated by the employee. Employees will not be able to develop companionable relationships with customers if they were not recruited and trained with this in mind (Patterson and Smith, 2001438). Without customer oriented employees it will be difficult to implement customer orientation because employees are the ones who have to make it happen.If customer-orientation is lacking, the implementation of relationship marketing will suffer. This is because dis well-to-do customers will never develop good relationships with the business (Engel, Blackwell and Miniard, 199547). Attracting, developing and motivating employees as internal partners foster an internal customer orientation (Conway and Willcocks, 200081). Day (200028-29) recalls the efforts made by many businesses to make employee satisfaction and retention a top priority in intuition of the damage that high employee turnover and dissatisfy employees can cause to customer relationships.Employee performance and attitude play an grave role in service speech to external customers. Employee satisfaction impacts on employee attitudes, which in turn influence employee performance and interaction with external customers. Employee interaction with external customers obviously plays a pivotal role in the ultimate success of the business (Lewis, 198941). Strauss (199562-77) distinguishes between internal customer satisfaction and employee satisfaction. He argues that internal customer satisfaction entails employees satisfaction with the performance of internal suppliers (work flow satisfaction).Internal customer satisfaction should, however, not be confused with employee satisfaction i. e. the satisfaction of employees with their on the job(p) conditions. He argues further that internal customer satisfaction reflects in external customer satisfaction. For purposes of this study the identified relationship between internal and external customer satisfaction is acknowledged, but the distinction between internal customer orientation and employee satisfaction is rejected. Employees in small- to medium-sized textile retailing businesses are not dependent on intricate internal work flow processes.As they derive their workflow inputs directly from management, a distinction between management inputs (relating to Strauss employee satisfaction concept) and workflow inputs will be vague. Strauss (199563) himself points out that if managers are prepared to take obligation for quality and act as role models, they can expect commitment from their employees which will last result in improved bottom-line results. Sasser (2003) explains the relationship between employee and customer satisfaction in terms of value the business creates for employees, who in turn will be able to create value for customers.If the value created for employees and customers exceeds costs, value i s being created for investors. Internal customer orientation is the result of a conscious management decision about the organizational background (Strauss, 199568). Concerning this organisational setting Malherbe and Pearse (20032-12) found evidential positive relationships between job enrichment characteristics and job satisfaction, and eventually between job satisfaction and service quality in the southeast African retail industry.Chaston (1995332-349) investigated possible actions to establish a stronger internal customer orientation in UK clearing banks, and concluded, inter alia, that managements improved understanding of internal customer needs will be laboursaving in this estimation. RESEARCH METHODOLOGY Small- to medium-sized textile retailers from 6 selected towns and cities in the North-West Province were investigated to assess their internal and external customer orientation. Retailers from Brits, Klerksdorp, Lichtenburg, Mafikeng, Potchefstroom and Rustenburg were sampled.These cities and towns were chosen on the basis of their geographical representation in the province. They also represent the largest centres of frugal activity in the province. A sampling frame of 61 small- to medium-sized textile retailing businesses were constituted by using information obtained from the Potchefstroom City Council, the confidence of market Research and Brabys databases. The sampling frame included free lance tailoring businesses, textile, fabrics, and cloth retailing businesses (retailers, merchants or distributors).Forty-eight (N1=48) of the 61 business owners/managers were willing to participate in the study and were subsequently inter turn overed. One snow and four (N2=104) employees, as found on the 48 premises, were also interviewed. Finally, two hundred and thirty (N3=230) customer responses were gathered using availability sampling for periods of two hours at each of the 48 business premises. Separate questionnaires, incorporating close-ended structured tips, were developed for management, employees and customers as three separate groups of respondents. Owners/managers had to respond to 77 features.Thirty one (31) of these items pertaining to internal customer orientation were duplicated in the employees questionnaire, requiring respondents to respond to them from an employees perspective. Thirty-three (33) of the items on external customer orientation related to owners/managers were also put to customers, requiring them to value it from their perspective. Respondents had to respond to the items according to a four-measure Likert collection plate where 1 = strongly disagree, 2 = disagree, 3 = agree and 4 = strongly agree. The responses were statistically processed with the overhaul of SAS software (SAS Institute Inc. 1999). The reliability of constructs associated with internal and external customer orientation was tested by means of Cronbachs central values and fairish inter item correlations (Clark and Watson, 1995) as reported below. The practical operative departure between specifically defined constructs for employees and owners/managers (internal customer orientation) as well as for customers and owners/managers (external customer orientation) is indicated by using assemble sizes. Effect sizes are figure as availability sampling was used instead of random sampling.As explained above, the six cities and towns, the businesses who participated in the study, the interviewed employees and the interviewed customers of these businesses were not randomly selected. Statistical inference is therefore not relevant. This eliminates the use of t-tests and p-values as a technique to analyse statistically epochal protestences between means of responses from management and employees (or management and customers). Unlike t-tests, effect sizes are independent from sample size, as a standardised difference based on the maximum standard deviation between compared groups is calculated (Steyn, 2000). The effect sizes (d-values) were calculated by using the following formula (Cohen, 198820-27) pic where d = effect size pic is the difference between means of two compared groups (e. g. management and employees or management and customers) and pic is the maximum standard deviation of the two compared groups. To calculate effect sizes, the maximum standard deviation is used instead of a mean standard deviation to allow for a more conservative approach to practical significance (Steyn, 2000). Cohen (198820-27) gives the following guidelines for interpreting effect sizes d ? 0. indicating no a great deal significant effect d ? 0. 5 indicating a restrain effect that could be significant if more data had been collected and d ? 0. 8 or larger indicating a practically significant effect. trial-and-error RESULTS Empirical results regarding both the internal and external customer orientations of small- to medium-sized textile retailers in the North-West Province are subsequently dis cussed. Empirical results internal customer orientation Four constructs associated with internal customer orientation, as well as the items comprising these constructs, are reported in dishearten 1.The items comprising these constructs are also indicated. The four constructs exhibited Cronbachs Alpha values all greater than 0. 6, indicating good or adequate reliability of the measurement scale (Clark and Watson, 1995315). mediocre inter item correlations (pic) are also reported in Table 1. Clark and Watson (1995316) indicate that the amount inter item correlation should also be used as a measure of internal consistency. They recommend that the average inter item correlation should lie between 0. 15 0. 50.It is evident from Table 1 that the average inter item correlations fall within this range, indicating internal consistency of the constructs. TABLE 1 CRONBACHS ALPHA AND AVERAGE INTER souvenir CORRELATIONS FOR INTERNAL CUSTOMER ORIENTATION Construct Cronbachs Alpha Average int er item correlation (pic) 1. Managements involvement with employees 0. 752 0. 1 Applying management principles strictly Seeking people who can think of invigorated strategies Culture of supporting staff Treating staff the same as external customers Creating an enabling culture for staff creativity Exercising staff chievement recognition and reward Following fair disciplinary action Development and fosterage of staff Appreciation of staff contribution to business success Conducting form-only(prenominal) performance appraisals Making staff a part of solutions Aggressively competing for ingenious staff 2. Employee development through communication and participative management 0. 713 0. 4 Promoting staff learning Encouraging a learning culture Practising participative management Marketing the business vision to staff Creating messages to inspire staff action perceptiveness the reality staff experiences Consulting staff wi th regard to leadership style Maintaining a two-way channel of communication in the business 3. Acknowledgement of employees expertise and latent 0. 659 0. 5 Incorporating knowledgeable staff inputs into business decisions and activities Acknowledging that staff is the business primary asset Involving current staff in the process of appointing vernal staff Giving responsibility and accountability to staff for their various(prenominal) performance areas Collaborating with staff to draw up strategies, plans and objectives Arranging for staff to visit customers 4. pleasure of customer needs is realised through an combine effort by all 0. 623 0. 5 involved in the business All departments working in collaboration with customer focus in mind successfully real customers needs and wants To indicate the practically significant differences between employees and owners/managers view on internal customer orientation, effect sizes were calculated on the respective constructs. These effect sizes are reported in Table 2. Practically significant effects on constructs 1, 2 and 3 are revealed. Construct 4 only revealed a small effect.TABLE 2 EFFECT SIZES FOR INTERNAL CUSTOMER ORIENTATION Construct description Business owners Employees Effect size stringent example deviationMean Standard deviation 1. Managements involvement with employees 3. 103 0. 447 2. 787 0. 445 0. 707 2. Employee development through communication and 3. 137 0. 504 2. 767 0. 504 0. 734 participative management 3. Acknowledgement of employees expertise and electromotive force 3. 086 0. 557 2. 674 0. 554 0. 40 4. Satisfaction of customer needs is realised through an 3. 489 0. 695 3. 327 0. 750 0. 216 incorporate effort by all involved in the business Empirical results external customer orientation Four constructs relating to external customer orientation, as well as the items associated with these constructs, are reported in Table 3. The cor respondent Cronbachs Alpha values for the four constructs are all above 0. 6, indicating good or adequate reliability of the measurement scale (Clark and Watson, 1995315).Average inter item correlations (pic) are once again reported in Table 3. These correlations fall within the range of 0. 15 0. 50 indicating internal consistency of the constructs (Clark and Watson, 1995316). TABLE 3 CRONBACHS ALPHA AND AVERAGE INTER ITEM CORRELATIONS FOR EXTERNAL CUSTOMER ORIENTATION Construct Cronbachs Alpha Average inter item correlation (pic) Building customer relationships through the efforts of employees is important 0. 762 0. 7 Attracting, maintaining and enhancing relationships with customers Establishing and maintaining profitable customer relationships Maintaining a mutually committed long-term oriented relationship with customers Moving customers from one level of the relationship to the next Extending priority treatment to lawful customers over irregular ones Inter acting with regular customers Forging long-term committed relationships with customers Employees developing business relationships with customers Fostering an advise understanding between customers and staff The business offer to customers is geared towards consolatory customer needs 0. 665 0. 6 Delivering an offer exactly as required Extending quality and durability as the business core offer Delivering superlative offers not available from competitors Continue improving the total offer to customers Delivering a tailor-made offer to customers Viewing delivery of the offer from customers perspective Delivering customer satisfaction 0. 642 0. 6 Offering high levels of customer service Managing and maintaining the delivery of customer satisfaction Successfully consoling customers needs and wants Custom fitting service to customers particular requirements Delivering services to the satisfaction of customer desires Customer orientation of employees 0. 619 0. 6 Instilling customer orientation among staff Formulating and realising a customer orientated mission statement The effect sizes on the respective constructs for the practically significant difference between customers and owners/managers view on external customer orientation are reported in Table 4. Practically significant effects are revealed on constructs 2 and 3, while construct 4 exhibit a moderate effect size. Construct 1 revealed a small effect size.TABLE 4 EFFECT SIZES FOR EXTERNAL CUSTOMER ORIENTATION Construct description Business owners Employees Effect size Mean Standard deviationMean Standard deviation 1. Building customer relationships through the efforts of 3. 303 0. 557 3. 100 0. 442 0. 364 employees is important 2. The business offer to customers is geared towards 3. 408 0. 423 2. 928 0. 465 1. 32 cheering customer needs 3. Delivering customer satisfaction 3. 528 0. 445 3. 202 0. 399 0. 733 4. Customer orientation of employees 3. 360 0. 591 2. 991 0. 635 0. 581 CONCLUSIONS From the above empirical results the following conclusions regarding the internal and external customer orientation of small- to medium-sized textile retailers included in this study can be drawn. Internal customer orientationFrom the effect sizes reported in Table 2 it is evident that management and employees differ significantly (practically significant effect sizes) on the following issues managements involvement with employees (construct 1). Management scents more involved with employees than employees experience it to be the case (pic > 0) employee development through communication and participative management (construct 2). Management is of the opinion that employee development takes place through communication and participative management, while employees do not experience the same (pic > 0) and acknowledgement of employees expertise and potential (construct 3).Management feels that employees expertise and po tential is acknowledged, while employees do not feel the same (pic> 0). An small effect size was calculated for construct 4. Management and employees therefore agree that satisfying customer needs is realised through an integrated effort by all involved in the business (construct 4, Table 2, pic and pic both > 3. 0, indicating understanding on the Likert-type scale). External customer orientation As far as external customer orientation, as reported in Table 4, is concerned, owners/managers and customers differ significantly (practically significant effect sizes) on whether the businesses offer to customers is geared towards satisfying customer needs (construct 2).Management feels it to be the case, while customers differ significantly (pic > 0) and delivery of customer satisfaction (construct 3). Customers feel significantly less quenched than management thought them to be (pic > 0). As far as customer orientation of employees is concerned, a moderate effect size was det ermined (Table 4, construct 4). Owners/managers are of the opinion that employees are customer-oriented (pic > 3. 0) while customers do not experience it to the same degree (pic < 3. 0). Table 4 also indicates an insignificant effect size on construct 1. Management and customers therefore agree that it is important to do customer relationships through the efforts of employees (construct 1, pic and pic both > 3. 0). MANAGERIAL IMPLICATIONSWhen considering the internal customer orientation of small- to medium-sized textile retailers participating in this study, it is evident that employees do not feel appreciated by management. Employees indicated that management is not involved with them and that their expertise and potential is subsequently ignored. They also do not feel empowered through communication or participative management initiatives (or rather the lack thereof) from managements side. Management and employees agree on a basic principle of the marketing concept (Barnes , 20017), namely that customer satisfaction is dependent on an integrated effort of all involved in the business. From the above it is clear that a certain amount of goodwill is evident among employees.Employees recognise the importance of an integrated effort of all involved in the business to satisfy customer needs. It is recommended that management of these businesses capitalise on this aptitude of employees. Communication with employees on matters relating to management of the business will encourage employee participation, paving the way for the implementation of participative management techniques. This will draw on the latent expertise and potential of employees and will ultimately contribute to employee development and a sense of management involvement. As indicated by the empirical results, small- to medium-sized textile retailers participating in this study lack a pronounced external customer orientation.Customers do not regard the businesses as being geared towards satisf ying their needs. They are also of the opinion that employees of small- to medium-sized textile businesses are not sufficiently customer-oriented. By improving their internal customer orientation as suggested above, the external customer orientation of businesses may take a turn for the better. This may contribute to greater customer satisfaction as the interaction between customers and (more appreciated, and thus better satisfied and motivated) employees improve. After all management and customers both agreed that the efforts of employees are important to build customer relationships.This is consistent with Sassers (2003) exposition that an improved internal customer orientation will contribute towards a better external customer orientation that will result in more satisfied customers.