Relationship Marketing

1. CHAPTER 5
MANAGING CUSTOMER RELATIONSHIPS

2. CHAPTER OUTLINES
 CUSTOMER SERVICE : DEFINITION AND ROLE IN RELATIONSHIP MARKETING
 COMPONENTS OF CUSTOMER SERVICE : PRE-TRANSACTION, TRANSACTION AND POST
TRANSACTION
MANAGING CUSTOMER RELATIONSHIP AT PRE-TRANSACTION, TRANSACTION AND POST-
TRANSACTION STAGE
 CUSTOMER DEFECTION AND RETENTION STRATEGIES

3. CUSTOMER SERVICE
The ongoing process of managing the buyer/seller interface to
ensure continued customer satisfaction
A process which provide time and place utilities for the customer
and which involves pre-transaction, transaction and post
transaction considerations relating to the exchange process with
the customer.

4. CONTINUE
La Londe and Zinszer (1976) found a range of views existed as to the definition of
customer service which included:

All the activities required to accept, process, deliver amd build customer
orders and follow up on any activity that erred.

Timeliness and reliability of getting materials to customers in acordance with
a customer's expectation.

A complex of activities involving all areas of business whch combine to deliver
and invoice the company's products in a fashion that is perceived as
satisfactory by the customer and which advances our company's objectives.

Timely and accurate delivery of products ordered by customers with accurate
follow up and enquiry response including timely delivery of invoice.

5. THREE COMPONENTS OF CUSTOMER
SERVICE

Pre-transaction are service provided to the customer before entering the
store. E.g.: information aids such as what kind of product promte today in
the board or convenient hours.

Transaction are services provided to customers when they are in the store
shopping and transacting business. E.g.: use credit card to shopping, gift
wrapping and packaging, have god card member no need to go the shop just
telephone and made some order and delivery.

Post transaction are services provided to customers after they have
purchased the merchandise/service. E.g.: complaint handling, merchandise
return, merchandise repair, servicing, delivery, post-sale such as follow up.

6. THREE COMPONENTS OF CUSTOMER SERVICE

7. Customer Retention
 Customer retention is the process by which an
organization identifies and maintains a
relationship with prime customer groups.
 Such relationships should add value to both
producer and consumer, the decision to serve
being based on a forecast of the economic
lifetime value of the consumer to the
organization.

8. IMPROVING CUSTOMER RETENTION
 STEP 1 : MEASURING CUSTOMER RETENTION
 STEP 2 : IDENTIFYING CAUSES OF DEFECTION AND KEY SERVICE ISSUES
 STEP 3 : CORRECTIVE ACTION TO IMPROVE RETENTION

9. CONTINUE
Step 1: Measuring customer retention:

To improve customer loyalty and profitability.

Involves 2 tasks which are measuring customer retention rates and analysing
profitablity by segment.

Organisations need to anaylse a number of dimensions in detail which include
measuring customer retention rates over time, by market segment and in
terms of the product or service offered.

10. CONTINUE
Step 2: Identifying causes of defection and key service issues

Identifying the reasons why consumers leave the company.

Companies need to identify celarly and understand the root causes of
customer defection before they begin to implement a successful customer
retention programme.

Highly experienced market researchers are often required to undertake this
task.

11. CONTINUE
Step 3: Corrective action to improve retention

Plans to improve retention become highly specific to the organisation
concerned and any action taken will be particular to the given context.

Some key elements include: marshalling top management commitment;
ensuring employees are satisfied and dedicated to building long term
customer relationships; utilising best practice techniques to improve
performance; and developing a plan to implement a customer retention
strategy.

Many organisationa are reviewing their customer service strategies to find
ways to boost retention rates as means of improving their business
performance.