relationship marketing and customer relationship marketing
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Prof. Rushen ChahalProf. Rushen Chahal
Relationship Marketing and
Customer Relationship Marketing
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Learning objectivesLearning objectives
y Understand the relationship and
differences between relationship
marketing (RM) and customer
relationship marketing (CRM)
y Know the overlaps and differences
between these and direct marketing
y Be aware of the practical problems inimplementing such a system
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Relationship MarketingRelationship Marketing
y A marketing approach considering what
your customers need at their stage of the
customer life cycle and maintaining
contact with them to provide it
y This is not making friends of your
customers. Most probably do not want
that.
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ContinuedContinued
y But it is not transaction marketing either
y Companies can no longer count on
customers being ignorant and accepting
what companies make. We expect more
now.
y Companies must find ways to customize
and provide what customers want orloose them
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Key elements of RMKey elements of RM
y Page 208
y From transactions to relationships
y
MaximizingL
TV of best customersy Customer service as everyones job
y Quality is what customer says it is
(customization)
y Relationships with many groups including
distributors, suppliers, others
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RM case study: StarbucksRM case study: Starbucks
y Howard Schultz, founder and chairman,
claims Starbucks sells 19,000 possible
varieties of coffee because customers can
build their own drinks
y Baristas informed management that
customers were asking for soy milk and
the company started selling ity Sounds simple but many companies dont
do this (like sandwich shop)
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Regarding collaborationRegarding collaboration
y This is where much profit potential
comes from!
y If one company creates a new
pharmaceutical drug and another an
efficient distribution system, both can
benefit more from collaboration than
working separately, even if it meanssharing some information
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RM case study: Rolls RoyceRM case study: Rolls Royce
y RR stopped making cars in 1972!
y RR has partners in 50 countries doing
manufacturing, research, and service.
y The company still owns the key
technologies but harnesses brain power
from around the world
y This B2B aspect of RM is new in the West(but common here)
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RM and DDMRM and DDM
y Both focus primarily on existing
customers-selling to them
y DDM does more to attract new
customers while RM retains previous
y But RM is more focused on creating the
relationship rather than just the sale
y Page 213 RM and transaction marketingstrategies contrasted, and role of DDM
and RM in different sectors
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CRMCRM
y Strange concept: You cant really manage
customers, they actually manage you!
y Companies only manage the record of
their transactions and communications,
using this record to grow with their
customers and develop trust.
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CRM definition(s)CRM definition(s)
y CRM is an enterprise-wide commitment
to identify your named individual
customers and create a relationship
between your company and thesecustomers so long as this relationship is
mutually beneficial.
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ContinuedContinued
y Enterprise-wide: the whole company is
part of making the relationship
y Identify named customers: trying to know
customers personally
y Mutually beneficial: not just buying the
customer
y Do you ever feel like you have a
relationship with a company?
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3 perspectives on CRM3 perspectives on CRM
y IT perspective
y Customer life cycle perspective
y Business strategy perspective
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A real CRM company has:A real CRM company has:
y Page 216
y Good service personnel
y Cross-departmental service processes
y Customers identified by value to company
y Database independent of individual
channels and at the center of DDM
programs for outbound contact
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CRM compared to DDM:CRM compared to DDM:
y Associated with large companies with
many channels
y Centered around data-driven service
y Focuses on inbound customer contact at
least as much as outbound
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Works best in sectors with:Works best in sectors with:
y Frequent customer interactions
y High level of expertise needed to guide
purchases
y Multiple products/services are purchased
by the customer
y Page 217
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CRMCRM
y People-centered rather than system-
centered (human decision needed)
Ever see people walk through one of two
doors and others waiting to get through? Onesmart person opens the other door!
It might be necessary to refer a customer to
another place than to sell an inferior product.
GNC coupon example
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CRM must be useableCRM must be useable
y Dont leave it all to the technologists
The spell-check on MS Word is system-
centered
Forgetting password and cannot log in ormake new account
Marketers must assert control to ensure
customer interface is useable (ex. customers
can request this be changed)
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CRM need not be high techCRM need not be high tech
y If a customer buys fruit and milk at one
store because the prices are the best,
how does the store know that is why? If
the location is right? Or another reason?
y Even with a Club Card the company
may not know why customers do as they
do. The competitors do not know why Idont buy fruit and milk there, even if I
have a club card with them too.
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ContinuedContinued
y Direct contract and a system to record
customer transactions and reactions is
vital.
y Ask for customer thoughts and opinions
y Information volunteered by customers
should be given to management
systematicallyy No one tells the company why they leave.
They just leave.
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CRM lowCRM low--tech suggestionstech suggestions
y Hire people people who are good
listeners, creative, and love their
jobsAND pay them what they are
worth
y Train customer service persons to act on
information immediately and pass it on to
managementy Good quality personnel, paid well, are less
expensive than CRM software
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ContinuedContinued
y Encourage cross-department
collaboration (Not my job has no place
in business today! If employees argue
about who has to help the customer, thecustomer will go where they will be happy
to help.)
There are high and low tech approaches tothis like company collaborative software and
database accessibility, and company culture
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CRM interface suggestionsCRM interface suggestionsy Be sure site content is complete and easy to
read.
y Make certain navigation totally simple.
y Keep order forms as simple as possible.
y Throughout your site, encourage feedback inevery possible way.
y Respond quickly to email. Answer the
question completely. Anticipate and respondto other possible concerns as related to thequestion.
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ContinuedContinued
y Complete contact info at the bottom ofevery page on your site, including streetaddress, phone number (preferably toll
free) that is answered 24/7 by someonewho knows what they are about.
y Provide a fax number as well; somepeople love paper
y Follow up on all queries and sales. Makecertain a high level of satisfaction hasbeen generated.
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ContinuedContinued
y Be sure your product or service delivers
more than expected.
y Offer an unbeatable guarantee. 12 months
has merit in that customers will not feel
hurried into making a decision. And later
they may not feel comfortable making a
request.
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CRM, RM, and DDM contrastCRM, RM, and DDM contrast
y RM: business-wide strategy/marketing
philosophy
y DDM: system that allows us to implement
marketing plans based on customer
data/prediction tool
y CRM: system and process-driven attempt
to improve contact between large firmsand the customer
y Page 218
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Putting CRM into actionPutting CRM into action
y Channels should be consolidated into one
customer file
Security is important but too much guarding
by managers is not helpful to customers or tocompany that wants to learn and grow
Anyone in the company should be able to
help the customer or get him connected to
someone who can
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ContinuedContinued
y CRM systems require access to accounts
data to give marketers the opportunity to
share decision making on high-value
customer account inquiries Management should be able to see everything
customer said and did instead of requiring
employees to try to brief them
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ContinuedContinued
y Channels should be connected so that
cross-sell opportunities can be identified
If sales can see what a customer did before
through another channel, it gives ideas as tohow to sell products that go along with the
others
Before each channel had its own manager
who competed with other channels. They
should be working together
Page 222 evolution of CRM in companies
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