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

    4

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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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