The premature death of relationship marketing

Tags: relationship, relationship marketing, consumers, consumer, companies, connections, customer satisfaction, Change Management, meaningful connections, DAVID GLEN MICK, SUSAN FOURNIER, HARVARD BUSINESS REVIEW, marketing, target, Dublin City University, customer relationships, personal lives, the University of Wisconsin, research methods, Understanding the consumer, product policies
Content: To save relationship marketing, managers will need to separate rhetoric from reality PREVENTING THE premature death OF RELATIONSHIP MARKETING BY SUSAN FOURNIER, SUSAN DOBSCHA, AND David GLEN MICK
. ". :-. `. 42
ARTWORK BY GORDON STUDER
RE L A T I O N S H I P M A R K E T I N G isinvogue.Managers talk it up. Companies profess to do it in new and better ways every day. Academics extol its merits. And why not? The new, increasingly efficient ways that companies have of understanding and responding to customers'needs and preferences seemingly allow them to build more meaningful connections with consumers than ever before. These connections promise to benefit the bottom line by reducing costs and increasing revenues. Unfortunately, a close look suggests that relationships between companies and consumers are troubled at best. When we talk to people about their lives as consumers, we do not hear praise for their so-called corporate partners. Instead, we hear about the confusing, stressful, insensitive, and manipulative marketplace in which they feel trapped and victimized. Companies may delight in learning more about their customers than ever before and in providing features and services to please every possible palate. But customers delight in neither. Customers cope. They tolerate sales clerks who hound them with questions every time they buy a battery. They muddle `through the plethora of products that line grocery store shelves. They deal with the glut of new features in their computers and cameras. They juggle the flood of invitations to participate in frequentbuyer rewards programs. customer satisfaction rates in the United States are at an all-time low, while complaints, boycotts, and other expressions of consumer discontent rise. This mounting wave of unhappiness has yet to reach the bottom line. Sooner or later, however, corporate performance will H ARVARD BUSINESS REVIEW January-February 1998
suffer unless relationship marketing panies wanting to initiate or im- And for that matter, suppose I wasi
becomes what it is supposed to be: prove their relationship with her. If a company did `remember'whal
the epitome of customer orientation. "One is more meaningleSs than the drink I ordered from room service
Ironically, the very things that next. I must get ten [email protected] every the last time I stayed in the hotel,
marketers are doing to build rela- day. When I go away for vacation, who's to say that I'd want it again? 1
tionships with customers are often the accumulation is remarkable. I don`t always order a diet soft drink."
the things that are destroying those never look inside the mail&s any-
The disconnect between the
relationships. Why? Perhaps we are more. I just throw them all away."
"give" and the "get" was particular-
skimming over the fundamentals of
"The flood of advances from com- ly revealing in one consumer's story
relationship building in our rush to panies undermines
cash in on the potential rewards of any one overture so creatimz close connections with our that it doesn't matter Do marketers understand h(
customers. Perhaps we do not understand what creating a relationship
which company you end up Doing Business
customers' trust and intima$
really means; that is, how cus- I tomers'trust and intimacy factor
with," said another disillusioned cus-
factor into the connections
I into the connections we are trying to forge. Relationship marketing is
tomer. "I started with phone company A,
they are trying to forge?
powerful in theory but troubled in then switched td
practice. To prevent its premature company B. I got some reward from of his interactions with a catalog
death, we need to take the time to the second company for switching- company. "The company has what
figure out how and why we are I don't remember what. Then com- seems to be a good idea," he recount-
undermining our own best efforts, as pany A paid me to come back. It was ed. "Each year around the holidays,
well as how we can get things back like I was hunted prey-$50 here, it sends out a reminder to its cus-
on track.
$50 there, $roo to leave company A tomers, telling them what they or-
Seeing Through the Eyes of the Consumer
a second time. I was a college student at the time, and the money was great. But it was crazy. The salespeo-
dered the year before and for whom. The problem is, several years ago I ordered presents for the physicians
Caught up in our enthusiasm for our ple on both sides kept telling me who took care of my mother when
information-gathering capabilities how important a customer I was to she was hospitalized for an emer-
and for the potential opportunities them, but who pays you to be their &ncy medical condition. And each
that long-term engagements with customer? I wasn't developing a rela- year now, the company reminds me
customers hold, is it possible that tionship with either company. I was of that awful time. I even &lled the
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we have forgotten that relationships take two? Is it possible that we haven't looked close enough to see
just taking the money." There's a balance between giving and getting in a good relationship.
company and explained that I don't generally buy presents for the people on that list. I told them why, and I
I i
that the consumer is not necessarily a willing participant in our relationship mission? Consider relationship
But when companies ask their customers for friendship, loyalty, and respect, too often they don't give
asked for those names to be deleted. Susan Foumkr is an assistant pro-
1;
marketing from the consumer's those customers friendship, loyalty, fessor at the Harvard Business
point of view.
and respect in return. How do we fol- School in Boston, MAssachusetts.
ii
The number of one-on-one rela- low through on the assertion that we Her Research Focuses on the rela tion-
;. I;
tionships that companies ask con- value one-on-one relationships with ships that consumers form with sumers to maintain is untenable. As our customers? One woman told us products and brands. Susan Dob-
a result, many marketing initiatives of her frustration at being asked to scha is an Assistant Professor of
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seem trivial and useless instead of disclose personal information each marketing at Bentley College in unique and valuable. Every com- time she patroniz& a certain hotel Waltham, Massachusetts. Her re-
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pany wants the rewards of long- chain. "I volunteer Vital Statistics search focuses on consumers' criti-
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term, committed partnerships. But every time," she explained. "Name, cal responses to marketing strategy
people maintain literally hundreds address, method of payment, travel and tactics. David Glen Mick is the
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of one-on-one relationships in their for business or pleasure, number of endowed chair of marketing at
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personal lives -with spouses, co- hotel visits per year. The use to Dublin City University iu Ireland.
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workers, casual acquaintances. And which this information is put re- He returns next academic year to clearly, only a handful of them are of mains a mystery to me. Do the the University of Wisconsin in
a close and committed nature. How clerks know who uses the informa- Madison, where he is an associate
i
can we expect people to do anymore tion and how! No. Are product offer- professor of marketing. Mick's re-
in their lives as consumers?
ings improved? Not to my knowl- search focuses on communication
"It's overkill," said one woman we edge. Do I get a special discount? and meaning, particularly in the
oinfteardvvieawnecde,sresfheerrfini,egldtos
the number from com-
Certainly not. Am I greeted in some special way each time I return? No.
areas of advertising, gift giving, and technological products.
44
Harvard Business Review January-February 1998
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RELATIONSHIP MARKETING
The operator wasnice enough on the phone and said that the names would be taken off my list. But this fall, there they were again." The net effect, according to another consumer we talked to, is relationship marketing that is all "one way": "Sure, they can call me at dinner, but I can't reach them on the phone. They can send me zoo pieces of mail per year, but I can't register one meani&ul response with them. You really want to be my friend? Sure you do. Well, then, what are you going to do for me? Or more to the point, how much is it going to cost me? Companies claim that they're interested in the customer. But the focus is not on the customer-it's on the company." Companies' claims that customer relationships are valued don't hold water. Sometimes people feel put at a disadvantage by their loyalty. And sometimes a company's preoccupation with its so-called best customers leaves other revenue-geneIatilIg enstomers feeling left out and underappreciated.Newcustomersatc.ertain credit-card companies get special introductory interest rates while fees for long-standing customers skyrocket. Loyal customers are immdatcd with inappropriate or seemingly insignificant corporate mailings mailings that sometimes treat them as brand-new marketing targets, ignoring their long-standing tenure. One savvy consumer summed up the phenomenon: "Are these the rewards or the punishments of relationship marketing? M And what of those loyal customers who don't happen to spend enough money to get into a company's inner circle? "I rent cars from one particular company," said one man. "You could call me a loyal customer. I never rent from any other company. But as I learned on my last trip, I am apparently not one of the company's valued customers. We were taking the van from the airport to the rental lot, and the driver asks, `Who here is a club member!'Three people raise their hands and, one by one, get dropped off at their cars. They get all this special treatment, and the rest of us are just sitting there looking around at one another,
feeling uncomfortable. Finally, one sion, sinus, or recurring headache?
guy looks at me and says, `What Did I want aspirin, ibuprofen, aceta-
makes them so special?'I started to minophen? Store brand or major
explain that those are the company's brand? I don't know all the answers,
big-ticket customers, that they but I do know that my headache got
spend a lot of money with the com- worse thinking about them. I just
pany. But as I was talking, I was stood there looking at the shelf. I
[email protected], Hell, I spend a lot of mon- was paralyzed."
ey here, too. I should be a valued cus-
"I tried to do something about the
tomer. But instead, the company is chaos," another disgruntled cus-
making me feel like chopped liver. It tomer recounted. "I was being del-
made me really mad."
uged by catalogs-three, four, five a
In their role as relationship part- day. I was saturated with options. I
ners, companies need people to had to put a stop to it. So I called one
think of them as allies and friends; company that I actually like. I asked
but more often than not, they come where the company had gotten my
across as enemies. Companies claim name. After a few calls, I finally got
to offer solutions to consumers' someone who could tell me. It was
problems; but in fact, they are creat- another company. So I called that
ing more problems than they solve. company. And so on, and so on. With
Supermarket SKUs have risen to every call, I registered my deep dis- .
32,ooo, with more than 2,500 new appointment that the company
products on the shelf vying for atten- would sell my name and my pur-
tion. Coke is available in more than chase preferences without my per-
50 product and packaging variations, mission. No one seemed to care. The
Crest in 5 5. Snapple at one time best any of them could do was to
logged more than 70 flavor varieties agree to take my name off their list -
on grocers'shelves-despite the fact a change that most said wouldn't
that 6 flavors IXmmanded the ma- take effect for about six months.
jority of the company's sales. Some Finally, I gave up. New catalogs kept
cable television systems on the mar- coming in. I was defeated."
ket today offer more than 700 differ-
Loss of control, vulnerability,
ent channels, though research has stress, victimization: these are the
shown that the average user is happy themes that emerge when we listen
to handle 10.
to people talk about the products
Companies are trying to satisfy- they use, the companies that supply
and log a sale on-customers'every them, and the marketplace as a
desire or fleeting whim. But cus- whole. In fact, we are more likely to
tomers view the scene differently. hear consumers vent their frustra-
They see a bewildering array of tions about newly acquired products
seemingly undifferentiated product than we are to hear them extol their
offerings. Companies
tend to center their efforts on the poten-
Loss of control, vulnerability,
tial advantages of being first to market
stress: these themes emerge
with new, technologitally superior prod-
when consumers talk about
ucts. They view nega- products, companies, even th(
tive feedback from consumers as merely
marketplace as a whole.
temporary resistance
to change. An alternative explana- virtues. Control is experienced
tion begs notice, however: optimal simultaneously as loss of control.
levels of choice exist, and current Gains in efficiency are offset by
product policies consistently exceed the creation of more work. Freedom
those marks.
of choice is interpreted as a bind of
"I nearly cried the last time I went commitments. These frustrations
to buy something for my headache," run deep, threatening the very qual-
one woman said. "Did I have a ten- ity of consumers'lives.
46
HARVARD BUSINESS REVIEW January-February 1998
RELATIONSHIP MARKETING
As one consumer said, "The an- ucts have on their lives, say, by leav- frustrate or overwhelm consumer
swering machine is great. I catch all ing their portable phones behind Sony wuldy engages cultural a~
these calls that I would have missed when they work in the garden. They thr0p010gist~ for this task, where
otherwise. I don't have to be home to may even hire a professional orga- Sharp prefers sociologists. ~0th pram
receive calls. But at the same time, I nizer to help them sift through the tices make salient the "human" sid
become a slave to that technology. chaos and downsize their choices to of design-where concerns abou
The machine makes me come home manageable levels. Consumers don't product performance are augmente
and check it every day. The first welcome our advances. They arm by aesthetics and a genuine effort t
things I do when I get home: check themselves to fizht back.
improve the quality of people's dail
the mailbox, check the answering machine. And then you are rcsponsi-
Regaining Trust
lives. Similarly, we could try harde to ensure that our existing produc
ble for returning all those calls. If In 1985, psychologists Michael lines adhere to a quality-of-life
you had no machine, who would be Argyle and Monica Henderson, pro- based mission. Some companie
the wiser? It's like a plant. You have fessors at Oxford University, de&red seem to be addressing that issue
to water it to keep it alive."
several basic universal rules of Procter h Gamble has standardizes
"We got a weed eater, and what I friendship. Among them: provide its products'formulas and packager
have found in having that thing is emotional support, respect privacy reduced its deluge of promotions an<
that you tend not to be quite as con- and preserve confidences, and be tol- coupons, pruned marginal brand
scious about what you are going to erant of other friendships. We've vio- from its lines, and cut back on it
trim," said another consumer. "My lated each of these rules. In so doing dizzying array of new-produc
wife planted little flower beds here we've forfeited our customers'trust launches. Computer manufacturer:
and there, `and around trees, and it and, with it, the chance to build the are offering more user-friendly fea
was like, `No, problem. We have the intimacy that results in truly re- tures and enhanced service support
weed eater!'The problem here isn't warding partnerships. How can we Auto manufacturers have trimmec
that you bought a product and it regain that trust? We must start to product lines on many models am
didn't do its job. The problem is that behave in ways that will show con- brands by offering platform-base<
because the product made some- sumers that companies can be valued value packages. Some thoughtfu
thing easier, you ended up working partners. We have to prove through initiatives offer customers tangible
more than you would have before. our actions that marketing rclation- tools to control the frustrations thai
The weed cater led to more weeding! ships need not be empty, meaning- overwhelm them. America Onlim
Most technological products do less, or stressful at best.
.has designed software enhance.
iI
their jobs, and do them well, but
Judging from consumers' tales, the merits that allow customers to block
they end up generating more work. II best place to start is with our new- unsolicited E-mail messages; man)
The net effect is a consumer who product-development policies and major department stores now offer
is more likely to view companies as projects. Time-to-market .impera- "purchase pals" to help customers
enemies, not allies. Our research tives, for instance, should be recon- sort through the dizzying array of
suggests that consumers develop sidered from the consumer's point products; and a Microsoft-led initia-
coping strategies designed to elimi- of view. According to marketing tive, called the Simply Interactive
nate, minimize, or otherwise con- researcher Jonlee Andrews, the PC, promises to make it easier for
Consumers view companies as
perceive as key reason companies lcauusntocmh eerxstensions that
users to upgrade their machines, quelling the fears of premature obsolescence that plague leading-edge
enemies, not allies.They don't
meaningless is that, from inside a rigid brand-
buyers. But we must ask ourselves, Are
welcome our advances.They
management organizational structure, man-
these initiatives, and others like them, undertaken with a genuine
arm themselves to fight back.
agers simply can't tell concern for consumers'emotional what will resonate with well-being? In positioning for sim-
consumers and what plicity, are we solving the problem
trol the deleterious effects the mar- won't. We need to break out of that or taking advantage of it? When con-
ketplace has on the quality of their mold, recognize that endless intro- sumers have to pay a fee for tele-
lives. Consumers develop "purchase ductions create noise not need, and phone-software-support service
and consumption rules" to get them be more rigorous about evaluating after only go days of owning their
through the day. They may refuse to consumers'likely reactions to our computers, has the fundamental
set the clock on their VCRs, for ex- new products and extensions.
problem been solved? When con-
ample, or they may put off purchas-
For example, in the area of product sumers pay extra each month for the
ing an item to avoid the challenges design, we might do well to engage privilege of overriding their caller-
of owning it. They also may con- Social Scientists. Their expertise identification feature, have we ad-
strain the use of certain products to would help engineers eliminate the dressed the basic issue? Are SKUs
limit the negative effects those prod- kinds of features and functions that being cut for the consumer's sake, or
48
HARVARD BUSINESS REVIEW January-February 1998
__-_ ~~--~----.~-
--
--___--
-~
R E L A T I O N S H I P MARKETING
is an empathetic stance just a good devoted relationships with every i a tough hurdle. True customer inti- j
way to spin cost cutting?
consumer of every product or brand : macy- the backbone of a successful, j
Once we have our product policies we offer. Why pretend that we can? I rewarding relationship-requires a I
m line, we must rethink the way we , Let's put our relationship motives deep understanding of the context in :
solicit and handle our customers' / on the table: no fluff, no faked sin- which our products and services are )
personal information. The informa- / cerity, no obtuse language, no prom- used in the course of our customers'
tion that companies need to build ' ises we don't keep- just honesty ; day-to-day lives. Put simply, it re- ;
Lasting long-term relationships is ex- about commercial intent. We want ! quires a comprehensive view of con- i
tremely private and valuable, so we consumers' money-let's tell them sumer behavior. And the founda- j
must treat it with care. We need that, and let's tell them why the tions of our marketing work-our i
to remember a forgotten rule: that deal's a good one. Nielsen Media Re- i Western analytic research methods- /
intimacy and vulnerability are en- search has recently converted its : are simply not capable of providing ;
twined. For example, if a company routinely asks its customers for sen-
panelists into "members" who have ' that view. They have set us up to the "privilege of volunteering to be , fail, time and again.
!
sitive information but doesn't put Nielsen households." Do those fam- : Consider for a moment how we 1
that information to use, it should ilies feel any different now than they j measure the capstone of relationship !
stop asking those questions. We did before? Are the company's pan- ; marketing: customer satisfaction. Is ;
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must force ourselves out of that safe elists allied to the company in a ! it simply a question of expectations j
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place where information may some- more meaningful way than they 1 versus actual performance on a giv-
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day prove useful for an as-yet-to-be- were in the past? Or has the lan- ! en attribute of a product or service? ,
1
articulated question and recognize guage fallen flat because there's ; 1s it a static, context-free rating on a
the cumulative price of eroded con- nothing to support it?
1 five-point scale? The stories of eon- i
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sumer confidence along the way. We pay for those invasions, so let's make
Attaining Intimacy
/ sumers on the edge suggest that they / j aren't simply pleased or displeased
sure the cost is worth it. Finally, we must begin to confront
Even if we approach all of the above directives with the same zeal with
1
with their computers, their answering machines, their trips to the gro-
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our own relationship goals honestly. which we have embraced the call of I cery store. They are satisfied or dis-
!
We can't expect to develop intense, relationship marketing, we still face 1 satisfied with the quality of their ,
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RELATIONSHIP MARKETING
lives in today!s-world. For contem- enough-about the role played by hang out at the local VFW, attend tl-
porary consumers, product satisfac- discussion groups in fueling market- parent-teacher conference on Thur:
tion is linked inextricably with life place crises such as the one the com- day night. One of the authors of th:
satisfaction, and companies must at- pany experienced with the Pentium article did just that when workin
tend to both these dimensions if processor. Soap opera writers regu- for Young and Rubican Advertisin;
they expect to win.
larly monitor viewers' reactions to Ten years later, video reports froi-
Let's face it: problem-focused re- evolving story lines, changing char- that field-based research on th
search studies and runaway num- acters and plots in response to the "new traditional woman" still ir
voiced concerns of view- form creatives'opinions about th
For contemporary consumers,
E:zi ~~~~~&~~~~
real consumers of Jell-0 and othe classic mainstream brands. Perhap
product sati;facti& is linked to
~~~~~~~~~~~~~~~~
it's time we take the philosophy c "customer visits" embraced in bus]
Ufe satisfaction, and companies
~-~~~$h~e~t~~~~;
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ness-to-business marketing into th customer domain.
must attend to both to win.
daily for consumer discourse about comnanies
To be truly effective, howevei these methods require grounding ii
and their brands and a strong disciplinary base of theoq
bers crunching are misleading. They then offers its clients advice on how Simple mastery of methods-ion;
are not designed to reveal the kind of to respond.
the kingpin of power in a data-inten
consumer discontent we're describ-
There also are many readily avail- sive world-will no longer suffice
ing; and in fact, they may get in the - able sources of relevant information Understanding consumers'experi
way of such insights. Isolated ratings outside companies. For example, ence means embracing theories o
of the sugar content in cereal or the more formal use could be made of philosophy, communications, coun
readability of digital displays tell us trend analyses, such as those offered seling, psychology, and religiou:
nothing about despairing consumers by the Yankelovich Monitor, Roper studies. Even such disciplines a:
1 and the role that marketing Policies Reports, and the Public Pulse. These medicine, law, and literature have ;
play in exacerbating their discon- services provide cutting-edge indica- lot to offer. Each can give us a new
tent. To get inside people's heads, tors of shifts in the consumer psy- broad perspective on the emotiona
marketers need to turn to the tools che. Ad agencies also are likely pur- lives of our consumers and help u:
of ethnography and phenomenology: veyors of trend information. And get past the narrow views that train
qualitative social-science methods there's the recently formed Intema- ing has inured us to.
dedicated to richly describing and tional Society for Quality-of-Life
We can't do all this without re-
interpreting people's lives. Video- Studies, which sponsors annual con- dressing the role of marketing re-
tapes and photography also are good ferences and publications. Sec- search. If researchers were truly the
reporting tools. They can reveal ondary data are another overlooked consumer specialists we intend
what a "day in the life of the cus- source of valuable information them to be, primarily responsible for
tomer" is all about. Finally, long- about consumers. We should be understanding their customer -
term studies work better than ad hoc reading our target groups'maga- mainstream Americans, techno-
surveys in painting an accurate pic- zines, watching their television phobes, or whatever segmentation is
ture of how consumers react to and shows, learning what issues domi- deemed relevant - we would no
use products.
nate their fields of
We alao can tap into underutilized vision, and tracking data scattered within organizations how those concerns Relationship marketing as it
to develop a more complete and intimate picture of consumers. Cus-
evolve and change over time.
currently practiced has not
tomer-service hot lines, for example, are a source of great insight, but few
Understanding the consumer will above
brought us closer to custom(
companies use them for that purpose. Ironically, many have out-
all require us to get out into the field. And
It has sent us farther afield.
sourced their 8oo-number services that doesn't just mean
and customer-response hot lines in the researchers. It means senior longer think of them as tacticians,
the wake of cost cutbacks. Another managers, middle-level managers, reporters, data crunchers, or facilita-
underutilized resource is the World engineers. If the target customer tors of focus groups on a company's
Wide Web. Because marketers do not that a Kraft Foods manager is pursu- latest ad campaigns. Instead, they
directly maintain or intervene in ing is the so-called middle-American would be strategic specialists with a
product discussion groups, the con- mom, that manager should rent a mandate to develop and communi-
versations that develop there are es- van, drive her team to DeSoto, h4is- cate throughout the company an
pecially revealing. Managers at Intel souri, and "live with the natives." empathetic understanding of target
learned quickly-but not quickly She should go to church with them, consumers. The researcher would
50
HARVARD BUSINESS REVIEW January-February 1998
I
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, < 6%.
and yet in recent years, the balance
has become selfishly skewed. Rela-
tionship marketing as it is currently practiced has not brought us closer to our customers. Instead, it has sent , us further afield. Our misguided actions have sparked a consumer backlash that endangers the reputation of relationship marketing, calling into
_ : I.
DESIGNING A
``1,:.;:.i;,.-i.,:- VIRTUAL CORPORATE
question the viability of the entire
marketing discipline going forward. 1 .'
Relationship marketing can work ' if it delivers on the principles on which it was founded. It's startling how wrong we've been about what 1 1 it takes to cultivate intimate rela- / 1
by %;~ Building a Brfdge Between Business and Learning-
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`. .,,_ , ._, -,`:`!": Jeanne&M&i' `- .
`-`. P&dent of Corporate University Xchange. Inc.
'
1 tionships with customers. And it is
alarming how quickly and thoughtlessly relationships can be destroyed through the huddled actions we / often engage in. We've taken advan- 1 i tage of t?he words for long enough. 1 It's time to think about-and act on -
Featuring . DaimlerfSenz (Germanu) l tdetva dllniver dty l Dell Co mp uter t2a p o r etlo n l lWb flSBa nk : ~~~n!d& -U)
/ what being a oartner in a relation- II l Petn5leosde Venezuela
1 ship really&eans.
B/1
l sk a ndii ( Sweden) l The l3cJelllg c o mp a ny
l Xer o x Capofation
Reprint 98106
To order reprints, see the last page of this issue.
March 30 - April I,1998
I-
Royal Sonesta Hotel, Cambridge, MA

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