Relationship Marketing of Services-- Growing Interest, Emerging Perspectives Leonard L. Berry Texas A &M University Relationship marketing is an old idea but a new focus now at the forefront of services marketing practice and aca- demic research. The impetus for its development has come from the maturing of services marketing with the emphasis on quality, increased recognition of potential benefits for the firm and the customer, and technological advances. Accelerating interest and active research are extending the concept to incorporate newer, more sophisticated view- points. Emerging perspectives explored here include tar- geting profitable customers, using the strongest possible strategies for customer bonding, marketing to employees and other stakeholders, and building trust as a marketing tool Although relationship marketing is developing, more research is needed before it reaches maturity. A baker's dozen of researchable questions suggests some future di- rections. Relationship marketing is a new-old concept. The idea of a business earning the customers' favor and loyalty by satisfying their wants and needs was not unknown to the earliest merchants. Grrnroos (1994, p. 18) cites this Mid- dle Eastern proverb from ancient trade: "As a merchant, you'd better have a friend in every town." Yet the blossoming of relationship marketing, the crea- tion of a conceptual framework for understanding its prop- erties and studying its possibilities, was slow to develop. Until recently, marketing's focus was acquiring custom- ers. Formally marketing to existing customers to secure their loyalty was not a top priority of most businesses nor a research interest of marketing academics. As Schneider wrote in 1980: Journal of the Academy of Marketing Science. Volume 23, No. 4, pages 236-245. Copyright 9 1995by Academy of Marketing Science. What is surprising is that (1) researchers and busi- nessmen have concentrated far more on how to attract consumers to products and services than on how to retain those customers, (2) there is almost no published research on the retention of service con- sumers, and (3) consumer evaluation of products or services has rarely been used as a criterion or index of organizational achievements. (p. 54) The phrase "relationship marketing" appeared in the services marketing literature for the first time in a 1983 paper by Berry (Barnes 1994; Grrnroos 1994). Berry defined relationship marketing as "attracting, maintaining and--in multi-service organizations--enhancing cus- tomer relationships" (p. 25). He stressed that the attraction of new customers should be viewed only as an intermedi- ate step in the marketing process. Solidifying the relation- ship, transforming indifferent customers into loyal ones, and serving customers as clients also should be considered as marketing. Berry outlined five strategy elements for practicing relationship marketing: developing a core ser- vice around which to build a customer relationship, cus- tomizing the relationship to the individual customer, augmenting the core service with extra benefits, pricing services to encourage customer loyalty, and marketing to employees so that they, in turn, will perform well for customers (Berry 1983). Although relationship marketing terminology in the services literature can be traced back to 1983, recognition of the need to formally market to existing customers ap- peared earlier. Ryans and Wittink suggested that many service firms pay inadequate attention to encouraging cus- tomer loyalty in a 1977 paper. Levitt emphasized the need for firms marketing intangible products to engage in con- stant reselling efforts in 1981. George (1977), Grrnroos (1981), and Berry (1980, 1981) each wrote about improv- ing the performance of service personnel as a key to retaining customers.