Paper info

Customer sharing: a new driver of strategic networks in the contemporary retail industry

Mika Raulas, Mika Westerlund and Seppo Leminen

The paper was published at the 24th IMP-conference in Uppsala, Sweden in 2008.

Companies form networks in search of various benefits. An emerging form of strategic networking is the customer relationship network consisting of actors that share their customer databases in order to benefit of the shared customer base. The aim of our paper is to explore how a joint marketing network based on shared customers works and develops. The empirical foundation of this paper is based on a qualitative empirical study, which consists of exploring a strategic network that comprises seven independent companies in the Finnish retail industry. The study is carried out from the perspectives of the key node and the partners in the network.  Our study contributes to the business networks literature by identifying six levels of customer sharing in the strategic network: the match of organizational values, customer base matching, extending offerings, cross selling, improved concepts and new business innovation and the development of cooperative relationships in the strategic network. In the beginning, partners seek cost-effective new customer acquisition through sharing their customer bases and access to each others customers. As these wins are gained, closer cooperation and better targeting and cross selling can bring additional benefits. The next challenging step is to learn to arrange the various offerings of the parties into joint concepts, and to develop new offering packages and concepts together with other partners. Only after experience and learning of cooperation through these levels can the network succeed in developing new business innovations. Another contribution is to describe the development of customer relationships networks and motivates and benefits at different levels. An analysis of a prevalent retailer network reveals how the realization of gains for both the entire network and its individual members is determined by the evolution stage and management of the network. Our study suggests that the levels actually depict on both horizontal and vertical growth of business in the strategic network, which may take place simultaneously.