Equity theory studies the distribution of resources between relational partners. For example, it examines whether what the parties in a relationship get out of a relationship is equal to or greater than what they put into it. According to this theory, relationship equity matters because people seek relationships where there is balance.

In a business context, relationship equity is building a relationship with a prospective client or customer by giving freely, valuable content or products to assist that individual, without remuneration.

The lack of relationship equity can make or break sales process, strategic partnerships, technology implementation projects, diminish employee productivity, lessen patient engagement and impact other important initiatives. Relationship equity isn’t just about making a sale. It applies to every single facet of human interaction. Another option is to invest in communities and relationships that reflect your company’s values and meet community needs.

Relationship equity might simply mean helping people and providing access to individuals and communities by networking on an informal basis. A more formal option might be joining and participating in a local professional association.

The payback from strong, close relationships comes from several sources, principally, but not exclusively:

  • the increased likelihood that the customer will continue to be a customer;
  • the length of time the customer is likely to remain a customer;
  • the greater percentage of his or her business that the customer will give the firm;
  • the greater likelihood that the customer will recommend the company to friends and family members.


The days where you simply advertise your product and someone would see it and purchase are gone. The buying psychology of purchasers has changed. People search their desired products online, then view them in the shops and return online to access the best deal and then purchase.

And in the case of intangible goods such as services they will spend a considerable amount of time online comparing similar services before they make a decision. So you need to build a relationship with your customer.

It will cost you time and money to build the relationship equity, but the value when they become your customer or client will greatly exceed the initial costs. In other words, the stronger the relationship you have built, along with the value you have provided in business, the more “equity” you have developed. This equity translates in the real world into bottom line impacting tangibles such as partnerships, business deals, and referrals.

The term relationship equity is connected with customer retention and therefore is used in marketing in relation to potential customers or leads. As said above, in today’s highly competitive market companies can’t make profit in the long term by simply advertising their products. They need to build balanced relationships with their customers.


Related terms: equity theory, customer retention, customer lifecycle.

Equity theory focuses on determining whether the distribution of resources is fair to both relational partners. Equity is measured by comparing the ratio of contributions (or costs) and benefits (or rewards) for each person.

Customer retention is the process of engaging existing customers to continue buying products or services from your business.

Customer lifecycle is a representation of the stages that customers go through in their relationship with a company, as seen from the company’s perspective.