session 2 relation

8/3/2019 Session 2 Relation

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Relationship Marketing

Session 2


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Relationship Marketing

Relationship Marketing isA philosophy of doing business, a strategic

orientation that focuses on keeping and

improving current customers, rather than onacquiring new customers.

The development and maintenance of long-

term, cost-effective relationships withindividual customers, suppliers, employees,

and other partners, perhaps even with

competitors, for mutual benefit.


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Why to study Relationship Marketing? C

ompanies changed their focus fromTRANSACTION

toRELATIONSHIP for longer term customer retention.

In addition, they are concerned about OTHERMARKETS that includes Suppliers

Potential employees

Opinion leaders & influencers

Referrals

Internal people

Integration of Marketing activities,

CustomerService and

Quality Standards

helps achieving stable Relationship Marketing orientation.


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Goals of Relationship Marketing

To build & maintain a

base of committed

customers who are

profitable for the

Organization

Attract them first through Market Segmentation, the loyalcustomers then will attract newer ones by their word-of-mouth,

Retain them by responding their changing needs, and constantly

improving & evolving the product mix,

Enhance relationship by selling more products to them.

Getting

Satisfying

Retaining

Enhancing


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Benefits for Customers

Confidence Benefits: Feelings of trustin provider, reduced anxiety, great

comfort in knowing what to expect.

Social Benefits: A sense of familiarity,

social relationship with providers.

Special Treatment Benefits: Gettingbenefit of the doubt, a special deal or

price, preferential treatment.


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Increasing Sells Free Advertising

through word-of-mouth

Benefits for the Organization

Customer Satisfaction

Quality Services

Employee Loyalty

Customer Retention

And Increased Profits

Customer Satisfaction

Quality Services

Employee Loyalty

Customer Retention

And Increased Profits

LowerCostsEmployee

Retention


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Transaction & Relationship Marketing

Transaction-based marketinginvolves limited communicationsbetween buyer & seller and little orno ongoing relationship between the

parties.


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BondingBonding:: two parties must bond to onetwo parties must bond to one

another in order to develop a longanother in order to develop a long--termterm

relationship.relationship.

In other words, mutual interests orIn other words, mutual interests or

dependenciesdependencies between the parties mustbetween the parties mustbe strong enough to tie them together.be strong enough to tie them together.

EmpathyEmpathy:: the ability to see situationsthe ability to see situations

from the perspective of the other partyfrom the perspective of the other party..

Empathy is another key emotional linkEmpathy is another key emotional link

in the development of relationships.in the development of relationships.

Four Dimensions Marketing Relationships


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ReciprocityReciprocity: every long: every long--term relationshipterm relationshipincludes someincludes some givegive--andand--taketake between thebetween the

parties.parties.

This process, termed reciprocity, becomesThis process, termed reciprocity, becomes

a web of commitments among the partiesa web of commitments among the parties

in the relationshipin the relationship binding them everbinding them evercloser togethercloser together

TrustTrust:: reflects the extent of one partysreflects the extent of one partys

confidenceconfidence in another partys integrity.in another partys integrity.

When parties followWhen parties follow--through onthrough on

commitments, they enhance trust andcommitments, they enhance trust and

strengthen relationships.strengthen relationships.

When parties do not followWhen parties do not follow--through onthrough oncommitments, the opposite is true.commitments, the opposite is true.

Four Dimensions Marketing Relationships


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Lifetime Value of a Customer

Life-time Revenue and thus the Profitabilityof the Customer to the Organization.

Length of average lifetime

Average revenues generated per

relevant time period over the lifetime

Sales of additional products over time

Referrals generated by the customer

over time


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Lifetime Value of a CustomerIf 10-persons organization had Tk. 1000 per month

business for the organization, assuming 10 yearlifetime for a customer, the value of the customer to

the organization will become:

Tk. 1000/month X 12/year X 10 years = Tk. 120,000

If the happy customer creates at least one new

customer via word-of-mouth,

Tk. 120,000 X 2 new customers = Tk. 240,000

If an average sales person serves 50 customers each day,

Tk. 240,000 X 50 Companies = Tk. 12,000,000

Thus an average employee of the organization is

managing a Tk. 12,000,000 portfolio of lifetime

business for the or anization.


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Markets to Concentrate

Customer Markets (Satisfaction vs. DELIGHT)

Referral Markets (insurance, real estate, lawfirms, both customers)

Supplier Markets (vendorship partnership, co-makership, reverse marketing)

Recruitment Markets

Influence Markets

Internal Markets


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Customer Relationship

Management (CRM) Establishing & Maintaining a Customer

Information File

Blue-printing or Planning CustomerContactPoints

Analyzing Informal Customer Feedback

Conducting CustomerSatisfaction Surveys

Managing Communication Programs

Hosting Special Events Programs forCustomers

Auditing and Reclaiming Lost Customers


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Customer Information FilesThe file will include information on:

Current Customers

Prospective Customers

Lost Customers

(Conversion or Loss ratios

can help setting targets)

Benefits:

Helps determining Lifetime Value of a Customer

Helps identifying costs of acquiring & maintaining a customerHelps customer scoring or ranking

More Effective & Efficient marketing effort

Better use of IT to manage the vast information

A dialogue to track & forecast their changing needs

Results in new product development

Objective:

Customers are known,

thus addressable

Customers are acknowledged &

appreciated to build loyaltyCustomers are satisfied to become

loyal & less price sensitive


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Blue-printing or Planning

Customer Contact Points Core Product/services

Expected Product/services

Augmented Product/services, with Confidence

Creativity

Caring

Consideration


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Analyzing Informal CustomerFeedbackEncouraging Informal Dialogue may:

Tell the marketer if something is wrong in theinteraction process and how to resolve

Give marketer opportunity to produce new

product ideas, and ways to present existingproducts in a novel way

Make the prospective customers moreinterested & less cautious

Make the customer feel more loyal, &committed to doing business with the marketer

Help advertising

Add value


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Conducting Customer

Satisfaction Surveys

A deeper understanding of the buyer-

seller relationship

Focus on delivering high standard

customer satisfaction (Delight!)

Front-line-employee judgment


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Customer Communication ProgramsS

et of PriorityC

ommunication goals of an organization: To position the Organization in a distinctive manner

To keep customers informed on what is new

To educate customers about the product/services &usage conditions

To communicate the privilege factors, a sense ofindividuality and importance

To reaffirm the purchasing decision, & lower postpurchase dissonance

To stimulate cross-sellingMostly BY

Individualized letters on new product/serviceintroductions

Special offers for affinity products


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Special Events for Customers

Newsletters

Corporate Videos

Special Interest Magazine

Invitation to Cultural & Other Events

Affinity Product/Services Introduction


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Lost Customer Programs

Know who the lost customers are

Find out why they left

Establish if the problem can be fixed

Apologize if its our own fault

If the problem can be fixed, fix it

If can not, monitor the situation to see if: Our own abilities change

Customers preferences or personnel change


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Retention Strategies

Foundation to Retain:

Quality Offered in the Core Service

Careful Market Segmentation & Targeting

Continuous Monitoring of Relationships


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I. Financial

Bonds

IV. Structural

Bonds

III. Customization

Bonds

II. Social

Bonds

Volume &

Frequency

RewardsBundling &

Cross-selling

Stable

Pricing

Customer

Intimacy

Shared

Process &

Equipment

Joint

Investment

Integrated

Information

System

Retention Strategies


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Customer is NOT Always Right

All customer relationship may not be beneficial,and that every customer is not right all the time:

Customer from the Wrong Segment

If the customer is NOT Profitable in long-run

If the customer is difficult to work with,

placing stress on organization and itsemployees by:

Refusing to follow policies of organization

Verbal/physical abuse of employees

session 2 relation

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