Ch. 11 RELATIONSHIP MARKETING AND CUSTOMER RELATIONSHIP MANAGEMENT (CRM) (Bus 233)

Transaction-based marketing
• Emphasis on individual sales and transactions
• Limited communication
• No ongoing relationship
• Limited in some markets, such as residential real estate
Relationship Marketing
• Views customers as equal partners in transactions
• Encourages long-term relationships, repeat purchases,
and multiple brand purchases from the firm
• Leads to increased sales and low marketing costs
The Shaping Process (Learning)
▮ Step 1: Offer a free-sample package that
includes a substantial discount for first
purchase
▮ Step 2: Entice the consumer to buy the item
with little financial risk
▮ Step 3: Motivate the person to buy the item
again at a moderate cost
▮ Step 4: Customer decides whether to buy the
item at its true price without the discount
coupon
Segmenting by Age
People within a certain age group have
many buying needs in common.
Customer Relationship Management
▮ Combination of strategies and tools that drive customer
relationship programs
▮ # times CRM mentioned in the media
• Once in 1989, 14,000 in 2000
• About 124,000,000 results – Google, yesterday
▮ Leverages technology to manage customer relationships
▮ Integrates all stakeholders into a company’s product
design and development
Three levels of Relationship Marketing
▮ First Level: Focus on Price
• Most superficial level, least likely to lead to long-term relationships
• Marketers rely on pricing to motivate customers
• Competitors can easily duplicate pricing benefits
▮ Second Level: Social Interactions
• Customer service and communication are key factors
• Example: A wine shop holding a wine-tasting reception
▮ Third Level: Interdependent Partnership
• Relationship transformed into structural changes that ensure partnership
and interdependence between buyer and seller
• Its tech-help agents can now answer customer queries via chat, telephone,
the Web, or social media
As relationships move from lower to higher levels
on a continuum, strength of
commitment and likelihood of continuation also grows
Two ways to keep customers happy
Frequency marketing and Affinity marketing
Affinity marketing
• Solicits responses from individuals who share
common interests and activities
Frequency marketing
-Frequent-buyer or -user marketing programs
that reward customers
-The customers perceive little differentiation between
the product or service and competitor’s.
Firms build long-term relationships in four ways
• Gather information about their customers
• Analyze the data and use it to modify the
marketing mix
• Monitor interactions with customers
• Use customers’ preferences and knowledge
Face to Face Consumer Relationship Management
▮ Staff members often remember the names and
favorite services/products of regular
customers and use this information to create a
personalized service for them.
– could prove less useful when organizations have a large number of customers as it would be more difficult to remember details about each of them.
Consumer Relationship Management Program
▮ Business strategy directed to understand, anticipate
and respond to the needs of an enterprise’s current
and potential customers in order to grow the
relationship value.
▮ Goal
• Find, attract, and win new clients
• Nurture and retain those the company already has
• Increase the customer loyalty
• Attract former clients back
• Reduce the costs of marketing and client service
Database Marketing
▮ Use of software to analyze data about customers
▮ Helps firms to:
• Identify their most profitable customers
• Calculate the lifetime value of each customer’s business
• Build relationships and encourage genuine brand
loyalty
• Improve customer retention and referral rates
• Reduce marketing and promotion costs
• Boost sales volume per customer or targeted customer
group
• Expand loyalty programs
Possible sources of data
• Websites, sign up for discounts
• Credit card applications
• Software registration
• Product warranties
• Point-of-sale register scanners
• Customer opinion surveys
Typical usage of CRM systems
• Customer profiling
• Marketing Campaigns
• Sales
• After sales service
• Advanced Data mining
Data Mining
▮ what the consumer likes
▮ what the consumer needs
▮ which coupons are most likely to make the
consumer happy
Rules for service providers
▮ To anticipate where problems will arise and
figure out how to prevent them
▮ To accept that mistakes will occur in even
the best systems and have a high-quality
recovery effort in place that employees are
empowered to enact