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The word, relationship, is thrown out in broad sweeping motions all around the business community: relationship marketing, business-to-business relationships, customer relationship management, brand relationship. What is this relationship thing so many people are attempting to capitalize on in our lives?

Relationships are what make us human! We need them to survive. Without them, an infant will wither and die. We are born into a set of relationships, and we often die surrounded by those relationships. We experience relationships in our various life scenarios—family, work, business, sports, church, hobbies, politics, etc. By definition, each relationship is unique.

MLM is touted as being a relationship marketing business. So, what exactly does that mean?

Relationship businesses are personal and steady:

·The Provider and Customer get to know each other through repeated interaction; this enhances personalizing the service.

· The Provider is directly dependent on customers for income.

· The Provider may become friends with the Customer. A sense of personal duty as well as satisfaction from contributing to the quality of someone else’s life leads that individual to do his/her best for the Customer.

· The Provider, working in partnership or sole proprietorship, has legal obligation to deliver the service he/she offered.

· The Customer is attracted to the quality of the services.

In regard to relationship marketing, MLM parallels traditional, professional services, which specialize in individualized service—personal services as well as services involving special skills, tools, or equipment. Examples include doctors, dentists, and hair stylists. These professionals have specialized knowledge, which is the reason why customers develop a relationship with them. You see them on every visit and they adapt to you and your relationship with them.

Gutek and Welsh (2000) conducted a study on business relationships, which cites four types of business connections people experience:

• Encounter
• Enhanced Encounter
• Pseudo-relationship
• Relationship

• Customer deals with the organization.
• Business is divided into detached tasks.
• Offers little self improvement.
• Decreases in efficiency over time.
• Service fits a standard as opposed to the individual.
• Involves higher emotional labor.

Enhanced Encounter. In an enhanced encounter, the company knows me well enough to make adaptations for me. The Provider with whom I interact has the information and power to help me with my specific concern. I do not expect to get to know an individual Provider in a personal relationship manner.

In an MLM scenario, the company tracks my sales and knows that I like specific products. I expect corporate to know my personal history with the company and to help me navigate the rules and processes.

Pseudo-Relationship. A pseudo-relationship is a pretend relationship, when in fact we just met at the front door over a cleaning product. Few of us are pleased to be treated as if we have a relationship with a particular airline, credit card company or network marketer, when we clearly are not being treated uniquely. This type of superficial relationship develops when we replace real passion with smile training as we stereotype customers.

In MLM, this means the business relationship is disconnected from the MLM organization’s intent.

Ironically, the very things that marketers are doing to build

relationships with customers are often the things that are

destroying those relationships. Why? Perhaps we are skimming

over the fundamentals of relationship building in our rush to

cash in on the potential rewards of creating close connections

with our customers. Perhaps we do not understand what creating

a relationship really means; that is, how customers’ trust and

intimacy factor into connections we are trying to forge. Relationship

marketing is powerful in theory but troubled in practice.

Harvard Business Review

Relationship. A true relationship involves adaptation, trust by both parties, mutual knowledge, and an expectation that we will interact in the future.

In general, a relationship takes more time than an encounter. If I always buy my laundry soap from the same MLM distributor, then she soon learns where I live and how much soap I buy, and most likely, why I buy this product plus what other products I might be interested in.

The study found that people prefer business relationships. (The explosive success of MLM proves this to be true!) However, we also like the availability and efficiency of encounters. In general, a relationship takes more time than an encounter. However, relationships typically get more efficient over time. No business includes just all relationship or all encounter contacts, but instead, a combination of the two. Whereas, relationship get more efficient over time, encounters get less efficient.

Generally, an MLM relationship can be defined as an association that develops when individuals see the same company representative each time they do business, and both parties expect to continue doing business together. MLM companies typically function within the framework of a Tight-Tight-Loose relationship illustrated in the Types of Relationship Model in Figure 1 from the study. The Organization is the network marketing company, the Provider includes distributors of that company, and the Customer refers to individuals who buy a product or service. In this model, the strong bond is between: 1) the Organization and the Provider, and 2) the Provider and the Customer.

Figure 1.

MLM companies work hard to create a strong link between the company and its distributors, especially top distributors. It relies on top distributors to create and maintain relationships further away in the downlines. Uplines work at developing their connections with their downlines. The uplines often recruit family and friends, so tight relationships exist prior to company affiliation. Distributors work hard to connect with customers and new distributors they recruit. They labor to diminish ambiguity, which occurs when these individuals are new, trying new products, changing levels, etc.

Some companies want to move faster and faster, but still maintain a relationship. When you treat customers as encounters, it may cause friction. Essentially, effective follow up is a key to every relationship (business or social). This is the time when, in a personal relationship, you send flowers “just because.” Or, in a family or friend relationship, you call a bit after a crisis is over. Rather than breathe a sigh of relief after a sale or gaining a new recruit, you should send a coupon for the next sale or call to see how the product is working. Simply saying, “We have a great customer relationship program!” is not enough.

Conclusion

One of the crucial keys to success in the MLM industry is effective relationship marketing—the balancing act involving relationships between MLM companies, their distributors, and customers. This business is challenging because relationships are hard work and require money, but they can be extremely rewarding as has been proven by the spectacular, record-breaking success of a number of well known MLM companies. The successful relationship marketer will remember that relationships are complex and require time and effort. They will remember that keeping in contact and offering support through all MLM phases--especially uncertain ones--is crucial for success. The core principle of relationship marketing is not to ever forget to put the relationship before the marketing.

References:

Gutek, B. A., & Welsh, T. (2001) The brave new service strategy: Aligning customer relationships, market strategies, and business structures. San Francisco: American Management Association.