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LikeCustomers Treating Students How can schools develop the best relationships with their students? Think of them as customers to be managed—for a very long time. by David Bejou illustration by Hadley Hooper It's widely believed that it's more cost-efficient for a merchant to keep a current customer than to attract a new one. This theory holds true for educational institutions, as well. It's more effective for schools to keep current students enrolled in programs and retain them as alumni than to recruit new students and new supporters for the school. While some administrators find it difficult to accept the idea of students as consumers, in reality, that's what they are. In today's competitive marketplace, schools are sellers offer- ing courses, a degree, and a rich alumni life. Students are buy- ers who register for courses, apply for graduation, and make donations as alumni. The longer these ongoing transactions are satisfactory to both parties, the longer the relationship will endure, to the benefit of everyone. How can schools prolong these relationships indefinitely? One extremely useful technique schools can use is one many corporations already have adopted: customer relationship management (CRM). Managing Through Relationships CRM is a relatively new field that follows the relationship- selling trajectory between customers and merchants. In this model, both buyers and sellers exhibit specific behavior pat- terns as they establish,maintain, and enhance amutually prof- itable, long-term relationship. The CRM model is drawn from research in interpersonal relationships, family and mar- riage relationships, marketing, sales and sales management, and services marketing. According to the model, all of these relationships, both personal and professional, go through four stages: exploration, expansion, commitment, and dissolution. Stage 1: Exploration. At the beginning, a successful encounter 44 BizEd MARCH/APRIL 2005 between buyer and seller results in a mutual perception of potential benefits. First, the buyer and seller exchange infor- mation. Attraction is encouraged, promises are made, and rewards are offered. The seller raises expectations as it pro- motes the quality of the product or service. If both perceive that a relationship could be equitable and neither perceives the other as opportunistic, a "sale" takes place. The relationship is forged; from this point, it can either continue or dissolve. Stage 2: Expansion. As the relationship is established, confi- dence is raised and an ethical orientation is established. Buyer and seller overcome obstacles and build trust. If the seller's actions improve the quality of the relationship, the relation- ship can expand—that is, it can produce additional sales or referrals to new customers. Stage 3: Commitment. This stage is marked by a cycle of increasing satisfaction and building loyalty. The seller encour- ages positive word-of-mouth so that the buyer promotes the seller to others. Meanwhile, both sides perceive new benefits and rewards, which are much higher than the perceived rewards of switching to a new relationship. Stage 4: Continuation or Dissolution. At the end of Stage 3, the buyer can choose whether to continue the relationship or end it. The buyer compares original expectations to the current reality and considers past experience with this seller. If the buyer chooses to continue, the pattern of expansion and com- mitment is repeated.However, if the seller has failed tomain- tain satisfaction, the buyer's loyalty may have been so eroded that the perceived benefits of continuing the relationship appear lower than the perceived benefits of investigating a