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Customer relationship marketing



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Customer relationship marketing

  1. 1. Submitted To – Submitted By - Dr. Smriti Sood Ravneet Kaur Swati Sharma Vikas Dhiman Vishal Vivek
  2. 2. Agenda  What is CRM?  Evolution  Transaction Marketing Vs. Relationship Marketing  The “Bucket Theory Of Marketing”  Basis of CRM  Goals Of Relationship Marketing  The Customer Pyramid  Segmenting Customers  Different Levels of Relationship Marketing  Relationship Marketing and the 4Ps  Framework For Customer Relationship Marketing  Relationship Marketing Strategies and Programs  Case Study  Benefits and Disadvantages of Relationship Marketing  Conclusion  Precautions  References
  4. 4. What is CRM?
  5. 5. Customer Relationship Marketing Customer Relationship Marketing (CRM) is a business process in which client relationships, customer loyalty and brand value are built through marketing strategies and activities. CRM allows businesses to develop long-term relationships with established and new customers while helping streamline corporate performance. It is the process of carefully managing detailed information about individual customers and all customer “touch points” to maximise loyalty.
  6. 6. What are these touch points? Any occasion on which the customer encounters the brand or the product • Actual experience to personal • Mass communication to casual observation EXAMPLE: Guess the touchpoints in a hotel?
  7. 7. Evolution of Customers Relationship Marketing Period Focus area 1950’s Customer Good Marketing 1960’s Industrial Goods Marketing 1970’s Marketing of Non-Profit Organization or Societal Marketing 1980’s Services Marketing 1990’s Customers Relations Marketing
  8. 8. HOW TO GO ABOUT CUSTOMER RELATIONSHIP MANAGEMENT PERSONALIZING MARKETING An increasingly important ingredient here is of using the right technology. Companies are using the following to foster continuous contact between company and the customers: • E-mails • Websites • Call centres • Databases • Social media is a powerful tool in CRM
  9. 9. WHAT IS A MARKETER TRYING TO ACHIEVE THROUGH PERSONLISED MARKETING He is making sure that the brand and its marketing are as relevant as possible to as many customers as possible Excellent example of personlised marketing and pure CRM: RURAL MARKETS Companies that have learned and adapted from rural markets:
  10. 10. Transaction Marketing Vs. Relationship Marketing  In 1990’s the concept of Relationship Marketing emerged strongly but the focus now has been changed from Transaction Marketing to Relationship Marketing as shown below: Transaction marketing Relationship marketing Focus on Single sale Focus on customers retention Orientation on product features Orientation on product benefits Little emphasis on Customers Service High emphasis on customer service emphasis Limited customer commitment High customer commitment
  11. 11. The “Bucket Theory Of Marketing”  Define and measure retention rate  Distinguish the causes of customer attrition and identify those that can be managed better.  Compare the lost customers’ lifetime value to the costs of reducing defection rate.
  12. 12. Relationship Management  Move from a ‘transactional’ model of marketing to a ‘relationship’ model Advocate Supporter Client Customer Prospect Emphasis On developing and Enhancing relationships (customer keeping) Emphasis on new Customers (customer catching) Advocate Supporter Client Customer Prospect Advocate Supporter Client Customer Prospect Emphasis on developing and enhancing relationships (customer keeping) Emphasis on new customers (customer catching) Source: Christopher et al (1991)
  13. 13. Basis of CRM  It requires building and maintaining long term relationship between buyers and sellers.  It is based on trust and commitment between the two parties.  Emphasis is on retaining the customers over making sales.  CRM ranks customer service as a high priority.  It encourages frequent customer contact.  Fosters customer commitment with the firm.  Bases customer interaction on cooperation and trust.
  14. 14.  Building loyalty:- 1. Interacting with customers 2. Developing loyalty programs:  Frequency programs  Club membership programs 3. Creating institutional ties
  15. 15. Goals Of Relationship Marketing The goal of customer relationship marketing are: 1) Customer Acquisition 2) Customer Satisfaction 3) Retention of the customers 4) Enhancing the customer base
  16. 16. Since it costs five times as much to attract a new customer as it does to keep a current one satisfied, the main focus is on customer satisfaction so as to achieve customer loyalty. This is important as highly satisfied customers are: 1) Less price sensitive 2) More likely to talk favourably about product 3) More likely to refer product to others 4) Remain loyal for long
  17. 17. The Customer Pyramid
  18. 18. Platinum Tier - Company’s most profitable customers, typically heavy users of the product, not overly price sensitive, willing to invest in and try new offerings, and committed customers of the firm. Gold Tier - Profitability levels are not as high, perhaps because customers want price discounts that limit margins or are simply not as loyal. May be heavy users who minimize risk by working with multiple vendors.
  19. 19. Iron Tier - Essential customers that provide the volume needed to utilize the firm'’ capacity but their spending levels, loyalty, and profitability are not substantial enough for special treatment. Lead Tier - Customers who are costing the firm money. They demand more attention than they are due given their spending and profitability and are sometimes problem customers—complaining about the firm to others and tying up firm resources.
  20. 20. Segmenting Customers Based on Commitment And Profitability
  21. 21. Different Levels of Relationship Marketing  Basic Marketing – The salesperson sells to the final customers. This is also known as direct sales.  Reactive Marketing – The sales person sells the product and encourages the customer to call for any comments or enquiries.  Accountable Marketing – The sales person calls the customers to ensure whether the product is working as per satisfaction and if there is any problem in the product. Furthermore he also asks the customer for any suggestions / feedback to improve the service / product. Thus he is taking responsibility for the sale.
  22. 22.  Proactive marketing – The company works continuously with its large customers to help improve performance. This is especially seen in financial companies wherein the movement in the financial market induces the company to make changes regularly. However at the same time, these financial companies have to take care of their customers as well. Thus they take regular feedback from their large customers thereby developing their products accordingly.  Partnership Marketing – The company works continuously with its large customers to improve its performance.
  23. 23. Relationship Marketing and the 4Ps • Product -  More products are customized to the customers’ preferences.  New products are developed and designed cooperatively with suppliers and distributors. • Price –  The company will set a price based on the relationship with the customer and the bundle of features and services ordered by the customer.  In business-to-business marketing, there is more negotiation because products are often designed for each customer.
  24. 24.  Place (Distribution) –  RM favours more direct marketing to the customer, thus reducing the role of middlemen.  RM favours offering alternatives to customers to choose the way they want to order, pay for, receive, install, and even repair the product.  Promotion (Communication) –  RM favours more individual communication and dialogue with customers.  RM favours more integrated marketing communications to deliver the same promise and image to the customer.  RM sets up extranets with large customers to facilitate information exchange, joint planning, ordering, and payments.
  25. 25. Framework For Customer Relationship Marketing Create a Databas e • A necessary first step to a complete CRM solution is the construction of a customer database or information file. Analysis • Each row/customer of the database should be analyzed in terms of current and future profitability to the firm. When a profit figure can be assigned to each customer the marketing manager can then decide which customers to target. Customer Selection • Segmentation type analyses are performed on purchasing or related behaviour the customers in the most desired segments (e.g. highest purchasing rates greatest brand loyalty) would normally be selected first for retention programs. Customer Targeting • A portfolio of direct marketing methods such as telemarketing, direct mail, and, when the nature of the product is suitable direct sales is used to target customers Relations hip Marketing • Managers must constantly measure satisfaction levels and develop programs that help to deliver performance beyond targeted customers expectations.
  26. 26. Six Types Of Markets 1. Internal Markets 2. Supplier Markets 3. Recruitment Markets 4. Referral Markets 5. Influence Markets 6. Customer Markets
  27. 27. Relationship Marketing Strategies 1. Core Service :- A key strategy in relationship marketing is the design and marketing of a `core service’ around which a customer relationship can be established. The ideal core service is one that attracts new customers through its need – meeting character, cements the business through its quality, multiple parts, and long term nature, and provides a base for the selling of additional services over time.
  28. 28. 2. Customizing the Relationship :- By learning about the specific characteristics and requirements and individual customers, and then capturing these data for use as needed, service firms can more precisely tailor service to the situation at hand. This results in the customization of relationships. 3. Service Augmentation :- Service augmentation involves building ‘extras’ into the service to differentiate it from competitive offerings. For meaningful service differentiation to occur, the extras must be genuine extras- that is, not readily available from competitor – that are valued by customers. When this is the case, customer loyalty is encouraged.
  29. 29. 4. Relationship Pricing:- Relationship pricing mean pricing services to encourage relationships. An old marketing idea – a better price for better customer – forms the basis of relationship pricing, another strategy option available to service companies pursuing customer loyalty. 5. Internal Marketing :- In an internal marketing strategy, employees are treated as “internal customers” who must be convinced of a company's vision and worth just as aggressively as “external customers. Internal marketing is based on the idea that customers’ attitudes toward a company are based on their entire experience with that company, and not just their experience with the company’s products. Any time a customer interacts with an employee, it affects their overall satisfaction. Therefore, customer satisfaction is deeply dependent on the performance of a company's staff.
  30. 30. Relationship Marketing Programs By observations of the corporate practices ,there are three types of relationship marketing programs • Continuity marketing • One- to – One marketing • Partnering programs They take different forms depending upon whether they are meant for end-customer, distributor customers ,or business –to-business customers. Marketers use a combination of one or more types of theses to build closer and mutually beneficial relationships with their customers.
  31. 31. Case Study of Volkswagen India
  32. 32. Background  Volkswagen (VW) is one of the world’s leading automobile manufacturers and the largest carmaker in Europe. As Volkswagen pursues its goal of becoming the number one automaker in the world by 2018, India has become a key component of its strategy. India is currently the world’s second fastest growing car market, with shipments expected to more than double by 2018.
  33. 33. CRM Practice -1 “Attracting Working Professionals”  Challenge • Create brand awareness among working professionals • Build loyalty and aspiration • Influence decision-making  Solution • Establish VW-branded Company Page on LinkedIn • Enable LinkedIn members to recommend their favorite VW models • Use LinkedIn Recommendation Ads to extend reach
  34. 34. CRM Practice -1 “Attracting Working Professionals”  Why LinkedIn? • #1 Resource for career-minded professionals • Precise targeting by seniority and geography ensures match with affordability criteria, dealership locations  Results • 2,700 product recommendations in 30 days • 2,300 new followers on VW India Company Page • 960,000 viral updates about VW car models
  35. 35. CRM Practice -2 “Made In India”  Challenge: To foray into the small car segment  Solution: The campaign created by DDB Mudra and executed by MediaCom, clearly displayed the made in India factor in the Polo which is rolling out of the Chakan plant in Pune.
  36. 36. CRM Practice -3 “India Assistance Program” The services that this program will offer to their passengers will be:  Travel and accommodation of the passengers in the incidence of immobilization or theft of the vehicle.  Transport to destination or habitual residence with luggage and personal belongings.  Towing of the vehicle to VW nearest dealer.  On site repair, if possible.  Dispatch of fuel; Wheel replacement.  Transportation, storage and safekeeping of the vehicle.
  37. 37. CRM Practice -4 “Planet Volkswagen”  A new digital campaign, like most of its other initiatives, it is rich in creativity and ideas. It features a rotating globe with different land masses for each of Volkswagen India’s departments.  Since the brand is not very old but has caught on quickly with Indian people, many want to learn the heritage, technology and German company’s background.  There’s a Junior section targeted at kids who Volkswagen see as future customers.
  38. 38. Case Study of Sheraton Suites What people really remember is the guest experience
  39. 39. Service Excellence o Service interaction key to customer loyalty • Carefully selected and trained staff • Brand-specific programs ⁻ ‘Building World Class Brands’ • Staff empowerment • Strong service culture • Awards for service
  40. 40. o Relationship marketing • Tailored to each guest • Personable, non-intrusive attention • ‘It’s Our Pleasure’ program • Starwood Preferred Guest program • Loyalty reward point system • Social media monitoring
  41. 41. Process Followed • Chart the service delivery system. • Identify critical service issues. • Set service standards for all aspects of service delivery. • Develop customer communication systems. • Train employees on building and maintaining a good relationship with clients. • Monitor service standards, reward staff for exceeding service levels. • Each employee fully understands the importance of quality and relationships in the marketing philosophy.
  42. 42. Benefits of Relationship Marketing • Benefits for Customers: • Receipt of greater value • Confidence benefits: • trust • confidence in provider • reduced anxiety
  43. 43. • Social benefits: • familiarity • social support • personal relationships • Special treatment benefits: • special deals • price breaks
  44. 44. Benefits of Relationship Marketing Contd. • Benefits for Firms: • Economic benefits: • increased revenues • reduced marketing and administrative costs • regular revenue stream
  45. 45. • Customer behavior benefits: • strong word-of-mouth endorsements • customer voluntary performance • social benefits to other customers • mentors to other customers • Human resource management benefits: • easier jobs for employees • social benefits for employees • employee retention
  46. 46. Disadvantages of Relationship Marketing : • Organizational wise change of priority to customers. • Significant investment of time and money • Threatens management’s control/power struggle • Heightens people’s resistance to change • Inappropriate integration leads to disaster
  47. 47. Conclusions  There is potential for CRM to help firms to sustain in market as it is becoming much more competitive.  Successful implementation would mean many changes to attitudes and structures.  The process would almost certainly be painful.  It would probably be particularly difficult to develop and install customer centric strategies  If CRM is used must be with the backing of those at the highest level and it must be planned carefully  A process must be gone through which would take note of CRM theory and use the experiences of others to maximize the chances of success
  48. 48. Precautions  Don’t attempt to implement CRM without adopting customer-centric strategies  Don’t justify CRM implementation on the hope of achieving operational efficiencies  Don’t take shortcuts that bypass key implementation steps (such as customer satisfaction research)  Don’t try to avoid organisational change  Don’t allow changes in workflow and process without involving those affected  Don’t let consultants or software vendors limit the scope of your implementation to their capabilities
  49. 49. References  Lo, S. C. (2012). A Study of Relationship Marketing on Customer Satisfaction . Journal of Social Sciences , 8 (1 ), 91–94. Retrieved from T8MwELagEwviTXlIHkEoVRI7qY3EUCoQC1PLHDl- UKQ2QVEz8O85x04btfQPsDqJYt3n3H127r5DiMSDMNjwCdTEIXxIScKUjZkhk xAqhgKioxA6bMrYOqXEq4ak67H_APyoyQ38cSojPtPNZmS9t_XN9v_AuAbSt 9DVw6RT3bCDqPoKXu8FVhx8  ANASTASSOVA, L. (2013). RELATIONSHIP MARKETING IN SERVICES : Customer LTV and Retention Strategies. Center for Business Studies BURGAS FREE UNIVERSITY, 01(01), 1–68.  Jalili, P. (2008). The Impact of Customer Relationship Marketing on Market Performance. Technology, 110.  Huang, M. H. (2015). The influence of relationship marketing investments on customer gratitude in retailing. Journal of Business Research, 68(6), 1318–1323.  Lowder, J. (1999). Relationship Marketing Report, III(Viii). Retrieved from  Cabré, C. (2005). KEYS TO EFFECTIVE RELATIONSHIP MARKETING Lluís G . Renart, 3(05).
  50. 50.  Pallister, J. (2002). Customer Relationship Marketing. Journal of Database Marketing, 9(2), 194–194.  Christopher, M., Payne, A., & Ballantyne, D. (1991). Relationship Marketing.  Hollensen, S., & Opresnik, M. O. (2010). Marketing: A Relationship Perspective. Verlag Franz Vahlen GmbH, 01(01), 1–50.  Al-Hersh, A., & Saaty, A. (2014). The Impact of Customer Relationship Marketing on Customer Satisfaction of the Arab Bank Services. International Journal of Academic Research in Business and Social Sciences - HRMars, 4(5), 67–101.  Velnampy, T., & Sivesan, S. (2012). Impact of Customer Relationship Marketing on Customer Value Creation in Mobile Service Providers – A Sri Lankan Experience. Journal of Marketing and Business Management, 1(1), 16–21.  Nwakanma, H., Jackson, A. S., & Burkhalter, J. N. (2007). Relationship Marketing : An Important Tool, 5(2), 55–64.  Marta, M. M., Pilar, P. M., Marzo-navarro, M., & Pedraja-iglesias, M. (2006). The benefits of relationship marketing for the consumer and for the fashion retailers.  Magasi, C. (2015). Customer Relationship Marketing and its Influence on Customer Retention : A Case of Commercial Banking Industry in Tanzania, 1–

Editor's Notes

  • The VW Info Service will be a part of the VW India Assistance Program which will take care of all needs and necessities for Volkswagen customers in India, covering service appointments, commercial information, complaints management and concierge services. The VW Customer Club is expected to hit off by the second phase of the project.
    This new program from Volkwagen will cater a unique Customer Relationship Management service, which aims at offering a one-stop solution to the customers.
  • The pre-existing website is basically a simple corporate website focused on advertising & a way to locate a dealer for a test drive. But with this new portal, VW aims to take Customer Relationship Management (CRM) to new heights in the auto-industry where, till date, it was limited to after-sales service.
    Apart from basics like product & brand promotion, the new web-portal will have games, a separate section for kids (after all they do influence a buying decision!), feature drive destinations, integrate with Social networking sites like: Facebook, Twitter, YouTube. A virtual tour of the VW factory is also on the cards.
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