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Relationship marketing1


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Relationship marketing1

  1. 1. Customer Relationship Marketing <ul><li>Most important concept in modern marketing </li></ul><ul><li>While marketing has been about getting customers and keeping them, more attention is now towards creating superior value and satisfaction </li></ul><ul><li>Marketing has to also develop processes that will enhance long-term customer loyalty </li></ul><ul><li>Relationship marketing was born and is based on the belief that the fundamental purpose of marketing is the creation and development of long-term profitable relationships with customers. (augments marketing and not replace) </li></ul>
  2. 2. The shift to Customer Relationship Marketing Transactional Focus Relationship Focus Orientation to single sales Orientation to customer retention Discontinuous customer contact Continuous customer contact Focus on product features Focus on customer value Short time scale Long time scale Little emphasis on customer service High customer service emphasis Little commitment to meeting customer High commitments to meeting Expectations customer expectations Quality is the concern of production staff Quality is the concern of all staff
  3. 3. CRM Defined <ul><li>‘ A customer born with generic needs is a fading scenario. Customers want a total customer value package that extends beyond the basic product into bundles of experience and outcomes. Some futurists believe that tomorrow’s business environment will find firms selling relationships rather than products’ (Tersine) </li></ul><ul><li>Marketing is more concerned with development and maintenance of mutually satisfying long-term relationships with customers (Francis Buttle) </li></ul><ul><li>Marketing is to establish, maintain and enhance relationships with customers and other partners at a profit so that objectives of the parties involved are met. This is achieved by a mutual exchange and fulfilment of promises (Gronross) </li></ul>
  4. 4. CRM Defined <ul><li>CRM is currently seeking its identity. Gradually a more general approach to marketing management based on relationships is gaining ground (Gummesson) </li></ul><ul><li>NB Enduring relationships with customers cannot be duplicated by competitors and therefore provide for a unique and sustained competitive advantage </li></ul><ul><li>Principle behind CRM is that the organisation should consciously strive to develop marketing strategies to maintain and strengthen customer loyalty through delivering value and satisfaction </li></ul><ul><li>Long term relationships can be developed through training programmes, client seminars, frequent customer communication </li></ul>
  5. 5. Characteristics of CRM <ul><li>1. Concern – welfare of customers, intimately understand customer expectations </li></ul><ul><li>2. Trust and Commitment – confidence that one partner has in the other’s reliability and integrity, an enduring desire to maintain a relationship </li></ul><ul><li>3. Service – organisation to be committed to provide high-quality service which is reliable, and responsive, leads to customer satisfaction, relationship strength and longevity and then profitability. </li></ul>
  6. 6. Requirements for a successful CRM <ul><li>Internal </li></ul><ul><li>1. Supportive culture – from within the organisation where salespersons are replaced by customer relationship managers </li></ul><ul><li>2. Internal marketing – goal being to convert employees to the new vision of relationship marketing concept </li></ul><ul><li>3. Customer knowledge – clear understanding of customer expectations through adequate MIS can bring competitive positioning for the firm </li></ul><ul><li>4. Appropriate databases – sophisticated customer database which provides information in actionable format for the development and monitoring of RM strategies and tactics </li></ul>
  7. 7. Requirements for successful CRM <ul><li>5. Appropriate structures – new organisational structures and reward schemes to be put in place to motivate staff and help facilitate the philosophy </li></ul><ul><li>EXTERNAL </li></ul><ul><li>1. Creating a relationship dialogue – suppliers and service providers and their customers to share info. And keep each other informed about their requirements and intents. </li></ul><ul><li>This creates value for the customer on top of the value of products and services that are exchanged </li></ul>
  8. 8. Requirements for CRM <ul><li>2. Learning relationships – successful relationships develop when the two parties learn from each other e.g. Supplier or service provider to constantly improve understanding of customer needs, values and consumption or usage habits </li></ul><ul><li>Customer also needs accurate information. Personal attention, well functioning products and services </li></ul><ul><li>3. A concept of commitment – developing and maintaining overall quality of product, service and relationships with customers </li></ul>
  9. 9. CRM <ul><li>NB The ultimate outcome of CRM is the building of a unique company asset called a marketing network i.e. Consists of the company and its supporting stakeholders e.g. Customers, employees, suppliers, retailers etc. With whom it has built mutually profitable business relationships hence competition is not between companies but between marketing networks. </li></ul>
  10. 10. How organisations lose customers <ul><li>Customers die (1%) </li></ul><ul><li>Customers move away (3%) </li></ul><ul><li>Customers naturally float (4%) </li></ul><ul><li>Customers change on recommendations (5%) </li></ul><ul><li>Customers go because they can buy more cheaply somewhere else (9%) </li></ul><ul><li>Customers are chronic complainers (19%) </li></ul><ul><li>Customers go elsewhere because the people they deal with are indifferent to their needs (68%) </li></ul><ul><li>NB It takes 5 times much effort, time and money to attract a new customer than it does to keep an existing one. </li></ul>
  11. 11. Importance of long-term relationships with customers <ul><li>Long term relationships are also more profitable for 6 reasons </li></ul><ul><li>1. the cost of acquiring new customers can be substantial. A higher retention rate implies that fewer customers need to be acquired and these can be acquired more cheaply </li></ul><ul><li>2. Established customers tend to buy more </li></ul><ul><li>3. regular customers place frequent, consistent orders and therefore usually cost less to serve </li></ul><ul><li>4. satisfied customers often refer new customers to the supplier at virtually no cost </li></ul><ul><li>5. satisfied customers are often willing to pay premium prices for a supplier they know and trust </li></ul><ul><li>6. retaining customers makes market entry or share gain difficult for competitors </li></ul>