bgs customer relationship management chapter 3 relationship marketing and customer relationship...
TRANSCRIPT
BGSCustomer Relationship
Management
BGSCustomer Relationship
ManagementChapter 3
Relationship Marketing and Customer Relationship
Management
Chapter 3Relationship Marketing and
Customer Relationship Management
Thomson Publishing 2007 All Rights Reserved
Transaction vs. Relationship Marketing
• Short term focus• Marketing mix• Price sensitive
customers• Product quality
dominates• Market share• Ad hoc satisfaction
studies• Little
interdepartmental interface
• Little internal marketing
• Long-term focus• Interactive marketing• Less price sensitive
customers• Interaction quality
dominates• Share of wallet focus• Measurement of
commitment• Interdepartmental focus
• Extensive internal marketing
There is a Paradigm Shift in Marketing
• The 4-P paradigm involves marketing to anonymous masses of customers
• The relationship marketing paradigm in:– industrial marketing– services marketing– managing channel– strategic alliances– consumer packaged
goods marketing deals with
now deals with identifiable customers.
Six Key Aspects of a Successful
Relationship Marketing Strategy
STRATEGIC ISSUES• Service business orientation• Process management
perspective• Partnership/network
formation
TACTICAL ISSUES• Direct customer contacts• Customer databases• Customer-oriented service
system
Today the Concept of Product Must Be Expanded to the Extended Product Model
• Today’s companies must enhance value around their core product. This includes service and commitment components.
The Meaning of Relationship Marketing
Relationship marketing means identifying, establishing, maintaining, and enhancing relationships with customers and other stakeholders at a profit, so that the objectives of all parties involved are met; this is done by a mutual exchange and fulfillment of promises.
Key Aspects of Relationship Marketing
1. Getting customers and creating transactions
2. Maintaining and enhancing ongoing relationships with customers, distributors, suppliers, networks of cooperating partners, etc.
3. Replacing products with personnel, technology, knowledge, and time
Existing Typology of Marketing
Strategies and Tactics
Existing Markets• Existing products
-Market penetration• Modified products
-Reformulation• New products• Product-line
extension• Horizontal
diversification
New Markets• Existing products
– Market development
• Modified products– Market extension
• New products-Mkt segment/prod
differentiation
• Concentric diversification
• Conglomerate diversification
Roots of Relationship Marketing
• Technological advances in IT• Continued growth of direct marketing• Using B2B relationship building models in
a B2C environment• Published findings of consultants
What is Relationship Marketing All About?
• RM consists of initiating, enhancing, and maintaining relationships with one’s “customers” and dissolving them when appropriate.
• RM has three basic features:– Relational databases– Integrated marketing communications– Capabilities for dialogue
Relationship Marketing is Applicable on at Least Ten
Different Levels1. Goods suppliers2. Service providers3. Competitors as in strategic alliances4. Nonprofit organizations5. Government entities as in joint R&D6. Ultimate customers7. Intermediate customers:
• franchisees• channel members
8. Functional departments9. Employees10.Other company business units
Will Relationship Marketing Benefit Every Company?
Meat Sauce
Shoelaces
Office Supplies
Meat Sauce
Shoelaces
Office Supplies
Hotels
Airlines
Autos
Hotels
Airlines
Autos
Professional Services
Sports Teams
Luxury Items
Professional Services
Sports Teams
Luxury Items
Discrete
Functional
Unemotional
Discrete
Functional
Unemotional
Continuous
Relational
Emotional
Continuous
Relational
Emotional
Exchange ContinuumExchange Continuum
There Are Three Levels of Relationship Marketing
Level 1: relies primarily on pricing incentives. Aim at customers at far left.
Level 2: relies primarily on social bonds involving customization and personalization.
Level 3: bonds are established by structural solutions
Choosing a Loyalty Strategy
Short Term Customers
Long-Term Customers
High Profit Butterflies True FriendsLow Profit Strangers Barnacles
Four Types of Customers
1. Loyalists: the most satisfied become apostles for your company.
2. Mercenaries: only loyal to low prices and are transaction specific with no intentions of ever establishing a relationship.
3. Hostages: “stuck” with you for a variety of reasons. Complainers and prima donnas.
4. Defectors: various types of dissatisfied former customers.
Customers Can Also Be Arrayed Based on
Relationship Strength• Intimate relationships:
doctor and patient• Face-to-face relationships:
customer and retail store
• Distant relationships: interactions over phone or online
• No relationships: manufacturers with final customers who buy through middlemen
“I Can’t Get No Satisfaction”
• Overall or cumulative satisfaction vs. transaction satisfaction
• But satisfaction as a measure does not predict purchase behavior
• The variables trust and commitment are introduced
A Model of a Long-Term Relationship
Long term orientation in a buyer-seller relationship
– F(mutual dependence, trust)– Trust=f(credibility of vendor, benevolence)– Credibility of vendor=f(reputation for
fairness, satisfaction with outcomes)– Reputation for fairness=f(reliable and
consistent behavior over time)– Benevolence=f(caring and making
sacrifices for the channel partner, satisfaction with outcomes)
Relationship Marketing and CRM
CRM is a set of business practices designed to put an enterprise into closer and closer touch with its customers, in order to learn more about each one and to deliver greater and greater value to each one with the overall goal of making each one more valuable to the firm.
Peppers and Rogers
Relationship Marketing Will Make Marketing More
Effective by:• Enabling marketers to learn more about
individual customers and develop customized products and services
• Allowing customers to help design and develop the product/service
• Minimizing negative images of marketing
Relationship Marketing Will Make Marketing More
Efficient by:• Enabling companies to retain customers
and drive profits• Reducing mass marketing wastes• Having customers do much of the
marketers’ work, including order processing, product design, etc.
Are Marketers Losing Ground in Their Ability To Be the Company
Focal Point for Customers?
•Marketing can no longer be confined to a single department.
– Line managers developed their own customer databases.
– They began to work directly with direct marketers to develop programs and testing.
– These efforts led to the CRM systems of today.
Is Marketing Loosing Ground?
• Companies today are being organized across functional lines that decentralizes the marketing function.
• TQC, ERP, in-house venture groups all develop new products and services.
• Product and brand managers focus on “push” marketing, HOEs, POP, and sales promotion to sell.
• These are the complete antithesis of what is needed to build class 1:1 relationships based on dialogues. Enter the customer manager.
• The U.S. recession in the 1990s put a focus on mass media spending.
• IT-supported approaches to direct marketing were less expensive and could reach masses of people individually with measurable results.
• The mass media has fragmented and results are still not measurable.
CRM Systems Can Provide Added Value for Customers
by:• Saving time• Providing convenience• Allowing for
customization• Providing a positive
experience
Have the 4 Ps Outlived Their Usefulness?
Some new suggestions:– 4 P’s: People, preferences, permission,
and precision– 4 C’s: Content, context, collaboration,
and community– 4 C’s: Customer value, lower costs,
better convenience, and better communications
Organizing for Relationship Marketing
• Companies organized around products and markets are not built around one-to-one relationships. No dialogue with the masses.
• Customer service reps, however, do have dialogues.
• Some suggest companies organize around customers in the form of customer portfolios run by segment managers.
• The rise of the CRM department?
One Scenario of the Future Marketing/CRM Interface
• How to connect the customer with the – Product– Service delivery– Financial accountability systems?
• Marketing owns the customer-product connection and is responsible for product strategy, branding strategy, price, and promotion.
One Scenario of the Future Marketing/CRM Interface
• CRM is responsible for the relationship between the customer and– Service delivery function: CRM responsible for
improving satisfaction and loyalty through management of loyalty programs
– Financial accountability system: CRM responsible for managing customer profitability through data mining and determining the profitability of marketing initiatives