AMERICAN LANGUAGE HUB_Level2_Student'sBook_Answerkey.pdf
Relationship Marketing
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. 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 Emphasized
Short-term Focus Long-term Focus
Adapted from Jag Sheth, AMA Faculty Consortium/Evolution of Global Marketing and the Relationship Imperative, 1996
3. Relationship Marketing Defined
“To establish, maintain, and enhance (usually
but not necessarily long-term) relationships
with customers and other partners, at a profit,
so that the objectives of the parties involved
are met. This is achieved by a mutual exchange
and fulfillment of promises.”
___Grönroos (Service Management and Marketing, 1990)
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. 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. Building Lasting
Customer 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
7. Supplier Rankings of Relationship Enablers *
TRUST
COMMITMENT
COOPERATION
INFORMATION
EXCHANGE DEPENDENCE
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. 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 CRMGuru.com)
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. 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. 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. 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. Marketing Knowledge & CRM
Marketing 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. 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. 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
Editor's Notes
Research with Lucent Technologies and Motorola purchasing folks