Return on relationships: conceptual foundation and measurement of mutual value gains from relational business engagements

Christian Grönroos, Pekka Helle

Research output: Contribution to journalArticleScientificpeer-review

38 Citations (Scopus)

Abstract

Purpose – Relationship is based on the idea of creating a win-win situation for parties involved in a business engagement. The purpose of the article is to develop a model of mutual value creation and reciprocal return on relationships (RORR) assessment which enables calculation of joint and separate gains from a relational business engagement.
Design/methodology/approach – Research paper: The approach takes form of a conceptual analysis, which is tested empirically through a real-life case. The empirical part is based on a longitudinal empirical study including several empirical cases.
Findings – Following a practice matching process, resulting in mutual innovation and aligning of their processes, resources and competencies, the parties in a business engagement make investments in the relationship. This enables the creation of joint productivity gains. Valuation of joint productivity gains produces an incremental value, which can be shared between the parties through a price mechanism. Finally, based on this shared value and costs of investments in the relationship by the parties, a reciprocal return on the relationship can be assessed and split between the business parties.
Research limitations/implications – The study addresses dyadic business engagements only. The findings enable calculation of reciprocal return on relationships (RORR) and form a basis of further development of marketing metrics and financial contribution of marketing, and of developing financial measures of intangible assets called for by the finance and investor communities.
Practical implications – Using the conceptual model and corresponding metrics, the financial outcome of the development of customer relationships as well as an assessment of the return on relationships with customers can be established.
Originality – The approach to assess the value of customer relationships as a two-sided endeavor is novel, as well as the joint productivity construct and the value sharing approach, and the way of assessing ROR as a reciprocal measure that can be split between the business parties.
Original languageEnglish
Peer-reviewed scientific journalJournal of Business & Industrial Marketing
Volume27
Issue number5
Pages (from-to)344-359
Number of pages16
ISSN0885-8624
Publication statusPublished - 30.05.2012
MoE publication typeA1 Journal article - refereed

Keywords

  • 512 Business and Management
  • Relationship marketing, service logic, service-dominant logic, return on relationships (ROR), reciprocal return on relationships (RORR), joint productivity, marketing metrics, marketing accountability, value-in-use
  • KOTA2012
  • Customers and Relations
  • Marketing Effectiveness and Profitability

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