Building Customer Relationships CHAPTER 7 Why are customer

Building Customer Relationships CHAPTER 7

Why are customer relationships Important to services marketing?

What is Relationship Marketing (RM)? Principles and standards that: �Create stable links between exchange partners �Create effective, cost-efficient measures to engage long-term customer commitment. �Create stronger relations between a customer and the salesperson/organization.

Relationship Marketing Defined �There are numerous suitable definitions for RM. For our purposes, we will define RM as: �Creating, developing and sustaining exchanges of value between parties whereby exchange relationships evolve to provide continuous stable links.

Relationship Marketing, …. . From 4 Ps to 4 Cs �Price �Place �Product �Promotion Cost to Customer Convenience Customers needs and wants Communication

What’s Happening? � http: //www. mybanktracker. com/bank-news/2010/07/07/chase- iphone-app-incorporates-mobile-check-deposits-3 pm-wednesday/

Discussion Question # 3, page 182

Simple return on Relationship Model Customer Satisfaction Customer Retention Service organization’s success

Two Viewpoints on Relationships �Customer/buyer viewpoint �Service provider/sellers viewpoint

Customer/buyer’s Viewpoint �Benefits for engaging in relationships include: Reduces choice and search alternatives Initiates and builds trust Social bonds through communication

Service provider/ sellers Viewpoint �Benefits include: “locking” up the customer/buyer (retention) Positive word of mouth Customer commitment Increase in purchase rates (may include secondary products)

Strategies for Building Relationships �Core Service Provision: service foundations built upon delivery of excellent service: � satisfaction, perceived service quality, perceived value �Switching Barriers: customer inertia switching costs: � set up costs, search costs, learning costs, contractual costs �Relationship Bonds: financial bonds social bonds customization bonds structural bonds

Levels of Relationship Strategies Stable pricing Volume and frequency rewards 1. Financial bonds Integrated information systems 4. Joint Structural investments bonds Shared processes and equipment Bundling and cross selling Excellent service and value 3. Customization Bonds Anticipation / innovation Mass customization Continuous relationships 2. Social bonds Personal relationships Social bonds among customers Customer intimacy

Discussion Question # 6, page 183