The fundamental principle on which this theory was built is that a firm's satisfactory relationships with its clients augment the clients' loyalties towards the firm. This, in turn, contributes to increased profitability for the firm. Therefore, it can be summed up as "the wealth-creating potential that resides in the firm's relationships with its stakeholders." (Sawney & Zabin, 2002)
How do the relationships develop?
Bonding with clients is a vital step towards developing an infrastructure that supports growth in relationship equity. Relationship equity can be developed primarily through two ways: developing personal bonds and steady development and results. Developing personal bonds requires those involved in the hospitality industry to be loyal to and supportive of one another. Thus, the need to function in an ethical and professional manner is paramount. Doing so will help prevent negative publicity and other damaging effects which might hamper fragile client-industry relations. Professionalism will also prove to be beneficial, in terms of competition, in the future. A few other proven communication skills can also help deepen the bond:
- Attentiveness to client demand
- Strong interpersonal skills
- Knowledge of how to interact with people
- Attention to minute details
- Effective networking
Relationship Equity is never a firefighting strategy. It has to be built, nurtured, and zealously sustained by industry professionals at all levels. Most hospitality industry professionals often wonder how this can be accomplished. In the hospitality industry, which is customer-centric, the client is the platform upon which everything is built. The hospitality industry functions by three vital "equity" factors: value, brand, and relationship equity. When clients objectively perceive and quantitatively evaluate a company's products and offerings in terms of quality, price, and availability, it is called value equity. When the client's emotional concept of the brand rises above the value equity of the products or services, it becomes brand equity. And finally, when the client chooses a brand or service provider based not only on its brand or value equity, it is a client relationship in which the customer is satisfied, which prompts him or her to sustain the bond with the company—and this is relationship equity.
Adding something new each time
The key to success in the hospitality industry is a good understanding of the customer and his or her peculiar needs. Each time a need is met with professionalism and expediency, another milestone is met and the bond strengthens. Innovativeness—in products, services, prices, and people—never fails to pay in the hospitality industry. The focus is on the customer, and if the customer is happy, the hospitality industry's strategies have been successful.
