Relationship Marketing

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 TraditionalVersus 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 “Toestablish, 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 RelationshipMarketing?  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 ofRelationship 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 aGood 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 & CriticalCustomer 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 yC 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