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Relationship Marketing


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Relationship Marketing

  1. 1. Traditional vs. Marketing With the cost of customer attraction escalating, companies are paying more attention to holding on to their existing customers Long-standing customers are less expensive to reach and less expensive to serve Customer relationships are assets that should be evaluated and managed as rigorously as any financial or physical assets Relationship marketing not only focuses on customer retention, but also takes a long-term perspective
  2. 2. Fig. 11.1 Traditional Versus Relationship Marketing Interactive Marketing - Value-added Product/ Service Emphasized Relationship Marketing Customer Value Created/ Acquisition/ Customer Retention Satisfaction Traditional Marketing Marketing Mix - Core Product EmphasizedShort-term Focus Long-term FocusAdapted from Jag Sheth, AMA Faculty Consortium/Evolution of Global Marketing and the Relationship Imperative, 1996
  3. 3. Relationship Marketing Defined“To establish, maintain, and enhance (usuallybut not necessarily long-term) relationshipswith customers and other partners, at a profit,so that the objectives of the parties involvedare met. This is achieved by a mutual exchangeand fulfillment of promises.”___Grönroos (Service Management and Marketing, 1990)
  4. 4. What is Relationship Marketing? The cornerstone of marketing is getting close to customers in order to better identify and satisfy their needs Realize that marketing is responsible for more than “just the sale” The focus is shifting from the transaction to the relationship It is difficult to separate service operations and delivery from relationship building Managing customer relationships continues to be paramount, so is the growing importance of managing relationships with suppliers and resellers
  5. 5. Relationship Marketing - Goals and Outcomes Whereas the goal of traditional marketing is customer acquisition, under relationship marketing the focus shifts to creating value The objective is to create more value through interdependent, collaborative relationships with customers, the outcome is customer retention Relationship marketing is ongoing, constantly looking for opportunities to generate new value Retaining customers requires marketers to exhibit care and concern after they have made a purchase The sale often represents only the beginning of the relationship between the buyer and seller
  6. 6. Building LastingCustomer Relationships Sellers can resist the natural tendency toward decline and complacency by developing what we refer to as “relationship enablers” It is the seller’s responsibility to nurture the relationship beyond its simple dollar value Using the relationship enablers sellers can minimize relationship decay and strengthen the bonds that lead to long-term, perhaps even lifetime associations
  8. 8. Figure 11.3 - Information Sustains a Relationship Relationship Selling Partnership Relationship that the Buyer is willing to invest in the relationship Information, Time, or Trust Level High Transaction Account Selling Penetration Transaction- Based Low Account Relationship Penetration Services that the seller is willing to provide the relationship
  9. 9. Customer Relationship Management (CRM) Definition of CRM  CRM is a business strategy that involves selecting and managing customer relationships to optimize the long-term value of a company Goal of CRM  The goal of CRM is to acquire, grow, and retain the right customer relationships -- those with the best long-term profit potential (Bob Thompson, founder of
  10. 10. Customer Relationship Management (CRM) as Collaboration CRM is about collaborating with customers and partners so they receive superior value Interactions with customers regardless of the sales channel should be constantly managed to optimize the value of those relationships Effective CRM systems provide a “360 degree” view of the customer, including the frequency, response, and quality of customer interactions
  11. 11. Characteristics of a Good CRM System● A good CRM system is capable of describing customer relationships in sufficient detail so that management, salespeople, customer service and even suppliers have direct and real-time access to customer information● The information gathered should help match customer needs with product/service offerings, remind customers of service requirements, predict future purchases, and alert the company when a customer’s purchase behavior has changed● A key feature of CRM is sharing the customer experience across the organization and supply chain
  12. 12. CRM BUSINESS DRIVERS Automation/Productivity/Efficiency 33% Competitive Advantage 22% Customer Demands and Requirements 15% Increased Revenue 14% Cost or Price Reduction 10% Speed/Saving Time 9%Keeping Track of All Aspects of Business 7% Customer Support 7%Inventory Control/Resource Management 6% Better/Expanded Communication 6% Integration 6% Customer Satisfaction 6% Accessibility 4% ConformityStandardization 4% 0% 5% 10% 15% 20% 25% 30% 35% Source: AMR Research, 2002
  13. 13. CRM & Critical Customer Data Companies should continuously gather critical customer data known as BADI☛Behaviors (how often and where customers visit) ☛Attitudes (customers satisfaction, service quality assessments) ☛ Demographics ☛Insights (share of market, share of wallet)
  14. 14. Marketing Knowledge & CRMMarketing knowledge forms the basis of a customer strategy by analyzing, planning, implementing, and control – re: a customer-centric orientation a clearly defined value proposition alignment with key channel partners dominating the segment (focused on a particular market segment) or cycle (dominate the evolving value proposition aimed a group of customers) internal and supply chain process integration. the coordination and practice of relationship marketing activities
  15. 15. W h y C R M E f f o r t s F a il  Lack of focus  No change management policies  No buy-in  Complicated procedures  Poor training
  16. 16. Avoiding CRM Failure Careful planning Appropriate use of people in the organization Get supply chain members involved Using customer-driven processes Have a sound platform for introducing CRM systems and activities