relationship marketing
DESCRIPTION
TRANSCRIPT
Traditional vs.Traditional vs. Marketing Marketing
With the cost of customer attraction escalating, With the cost of customer attraction escalating, companies are paying more attention to holding on to companies are paying more attention to holding on to their existing customers their existing customers
Long-standing customers are less expensive to reach Long-standing customers are less expensive to reach and less expensive to serve and less expensive to serve
Customer relationships are assets that should be Customer relationships are assets that should be evaluated and managed as rigorously as any financial evaluated and managed as rigorously as any financial or physical assetsor physical assets
Relationship marketing not only focuses on customer Relationship marketing not only focuses on customer retention, but also takes a long-term perspectiveretention, but also takes a long-term perspective
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)
What is Relationship Marketing?What is Relationship Marketing?
The cornerstone of marketing is getting The cornerstone of marketing is getting close to close to customerscustomers in order to better identify and satisfy their in order to better identify and satisfy their needs needs
Realize that marketing is responsible for Realize that marketing is responsible for more than more than “just the sale” “just the sale”
The focus is shifting from the transaction to the The focus is shifting from the transaction to the
relationshiprelationship
It is difficult to separate service operations and delivery It is difficult to separate service operations and delivery from relationship buildingfrom relationship building
Managing customer relationships continues to be Managing customer relationships continues to be paramount, so is the growing importance of managing paramount, so is the growing importance of managing relationships with suppliers and resellersrelationships with suppliers and resellers
Relationship Marketing - Relationship Marketing -
Goals and OutcomesGoals and Outcomes
Whereas the goal of traditional marketing is customer Whereas the goal of traditional marketing is customer acquisition, under relationship marketing the acquisition, under relationship marketing the focus shifts focus shifts to creating value to creating value
The objective is to create more value through The objective is to create more value through interdependent, collaborative relationships with interdependent, collaborative relationships with customers, customers, the outcome is customer retention the outcome is customer retention
Relationship marketing is ongoing, constantly looking for Relationship marketing is ongoing, constantly looking for opportunities to generate opportunities to generate new valuenew value
Retaining customers requires marketers to exhibit care Retaining customers requires marketers to exhibit care and concern and concern afterafter they have made a purchase they have made a purchase
The sale often represents only the beginning of the The sale often represents only the beginning of the relationship between the buyer and sellerrelationship between the buyer and seller
Building Lasting Building Lasting Customer RelationshipsCustomer Relationships
Sellers can resist the natural tendency toward decline and Sellers can resist the natural tendency toward decline and complacency by developing what we refer to as “relationship complacency by developing what we refer to as “relationship enablers”enablers”
It is the seller’s responsibility to nurture the relationship It is the seller’s responsibility to nurture the relationship beyond its simple dollar valuebeyond its simple dollar value
Using the relationship enablers sellers can minimize Using the relationship enablers sellers can minimize relationship decay and strengthen the bonds that lead to relationship decay and strengthen the bonds that lead to long-term, perhaps even lifetime associationslong-term, perhaps even lifetime associations
Supplier Rankings of Relationship Supplier Rankings of Relationship Enablers *Enablers *
TRUSTTRUST
COMMITMENTCOMMITMENT
DEPENDENCDEPENDENCEE
INFORMATION INFORMATION EXCHANGEEXCHANGE
COOPERATIONCOOPERATION
Transaction-Based
Relationship
Partnership Relationship
Transaction Selling
Relationship Selling
Low Account Penetration
High Account
Penetration
Services that the seller is willing to provide the relationship
Info
rmat
ion
, Tim
e, o
r T
rust
Lev
el
that
the
Buy
er is
wil
ling
to in
vest
in t
he r
elat
ion
ship
Figure 11.3 - Information Sustains a Relationship
Customer Relationship ManagementCustomer Relationship Management ( (CRMCRM))
Definition of CRMDefinition of CRM CRM is a business strategy that involves CRM is a business strategy that involves
selecting and managing customer relationships selecting and managing customer relationships to optimize the long-term value of a companyto optimize the long-term value of a company
Goal of CRMGoal of CRM The goal of CRM is to acquire, grow, and retain The goal of CRM is to acquire, grow, and retain
the right customer relationships -- those with the the right customer relationships -- those with the best long-term profit potential best long-term profit potential
(Bob Thompson, founder of CRMGuru.com)(Bob Thompson, founder of CRMGuru.com)
Customer Relationship Management (CRM) Customer Relationship Management (CRM)
as Collaborationas Collaboration
CRM CRM is about collaborating with customers and is about collaborating with customers and partners so they receive superior partners so they receive superior valuevalue
Interactions with customersInteractions with customers regardless of the regardless of the sales channel should be constantly managed to sales channel should be constantly managed to optimize the value of those relationshipsoptimize the value of those relationships
Effective CRM systemsEffective CRM systems provide a “360 degree” provide a “360 degree”
view of the customer, including the frequency, view of the customer, including the frequency, response, and quality of customer interactions response, and quality of customer interactions
Characteristics of aCharacteristics of a Good CRM System Good CRM System
● ● A good CRM systemA good CRM system is capable of describing customer is capable of describing customer relationships in sufficient detail so that management, relationships in sufficient detail so that management, salespeople, customer service and even suppliers have salespeople, customer service and even suppliers have direct and real-time access to customer informationdirect and real-time access to customer information
● ● The information gathered should help match customer The information gathered should help match customer needs with product/service offerings, remind customers of needs with product/service offerings, remind customers of service requirements, predict future purchases, and alert service requirements, predict future purchases, and alert the company when a customer’s purchase behavior has the company when a customer’s purchase behavior has changedchanged
● ● A A key feature of CRMkey feature of CRM is sharing the customer experience is sharing the customer experience
across the organization and supply chainacross the organization and supply chain
CRM BUSINESS DRIVERSCRM BUSINESS DRIVERS
Automation/Productivity/EfficiencyAutomation/Productivity/Efficiency
Competitive AdvantageCompetitive Advantage
Customer Demands and RequirementsCustomer Demands and Requirements
Increased RevenueIncreased Revenue
Cost or Price ReductionCost or Price Reduction
Speed/Saving TimeSpeed/Saving Time
Keeping Track of All Aspects of BusinessKeeping Track of All Aspects of Business
Customer SupportCustomer Support
Inventory Control/Resource ManagementInventory Control/Resource Management
Better/Expanded CommunicationBetter/Expanded Communication
IntegrationIntegration
Customer SatisfactionCustomer Satisfaction
AccessibilityAccessibility
ConformityStandardizationConformityStandardization
33%
22%15%
14%10%
9%
7%
7%
6%6%
6%
6%
4%
4%
0% 5% 10% 15% 20% 25% 30% 35%
Source: AMR Research, 2002
CRMCRM & Critical Customer Data& Critical Customer Data
Companies should continuously gather critical Companies should continuously gather critical customer data known as customer data known as BADIBADI
☛☛BehaviorsBehaviors (how often and where customers visit) (how often and where customers visit) ☛☛AttitudesAttitudes (customers satisfaction, service (customers satisfaction, service quality assessments)quality assessments) ☛☛ DemographicsDemographics
☛☛InsightsInsights (share of market, (share of market, share of wallet)share of wallet)
Marketing Knowledge & CRMMarketing Knowledge & CRM
Marketing knowledge forms the basis of a customer strategy Marketing knowledge forms the basis of a customer strategy by analyzing, planning, implementing, and control – re:by analyzing, planning, implementing, and control – re:
a customer-centric orientation a customer-centric orientation a clearly defined value propositiona clearly defined value proposition alignment with key channel partnersalignment with key channel partners dominating the segment (focused on a particular market dominating the segment (focused on a particular market
segment) or cycle (dominate the evolving value segment) or cycle (dominate the evolving value proposition aimed a group of customers) proposition aimed a group of customers)
internal and supply chain process integration. internal and supply chain process integration. the coordination and practice of relationship marketing the coordination and practice of relationship marketing
activities activities
WWhy hy CRMCRM Efforts Fail Efforts Fail
Lack of focusLack of focus No change management policiesNo change management policies
No buy-inNo buy-in Complicated proceduresComplicated procedures
Poor trainingPoor training
Avoiding Avoiding CRMCRM Failure Failure
Careful planningCareful planning Appropriate use of people in the Appropriate use of people in the
organization organization Get supply chain members involvedGet supply chain members involved Using customer-driven processesUsing customer-driven processes Have a sound platform for introducing Have a sound platform for introducing
CRM systems and activitiesCRM systems and activities