Customer Relationship Management Strategies Chapter 4 Customer Relationship

Customer Relationship Management Strategies Chapter 4

Customer Relationship Marketing n n Why do some companies succeed? Collaborative advantage • “

Relationship Marketing n n “All activities directed toward establishing, developing, and maintaining successful changes with customers and other constituents. ” Why?

Relationship Marketing

Relationship Marketing n Transactional exchange • Definition • Distant exchanges • One of many suppliers • Few operational linkages n What’s an operational linkage?

Relationship Marketing n Collaborative exchange • Definition • Work closely together n Value-adding exchanges • Attracting customers Maintaining customers

Relationship Marketing n Nature of relationships • Transactional Standardized n Competitive bidding n • Collaborative exchange Customized product n Work together through linkages n Relationship commitment n Trust n • Reliability and integrity

Relationship Marketing Transactional Collaborative Availability of Alternatives Supply Chain Dynamism Importance of Purchase Complexity of Purchase Information Exchange Operational Linkages

Relationship Marketing n Strategy Guidelines • Match purchasing situations and supply chain conditions for each customer! • Collaborative n How to handle? • Transactional n How to handle?

Measuring Customer Profitability n Common mistake • Two factors must be present for differentiation to work n Activity Based Costing • Aggregate v. Individual firms n Unlocking Customer Profitability • • • 20/80 rule Corollary Big companies are usually most profitable or least profitable

Measuring Customer Profitability n Managing High- and Low-Cost-to. Serve Customers • What makes some customers expensive? • Look inside first • Sharper profit lens n See next slide

Measuring Customer Profitability

Measuring Customer Profitability n Identifying Profitable Customers • Location on chart • How to maintain? n Identifying Unprofitable Customers • Location on chart • How to improve the situation? • Fire customers? ! Why? n How? n

Customer Relationship Management n “Cross-functional process for achieving • continuing dialogue with customers • across all their contact and access points, with • personalized treatment of the most valuable customers • to ensure customer retention and the effectiveness of marketing initiatives”

Customer Relationship Management n n Develop Customer Strategy, THEN choose software Five Steps for Customer Strategy • Acquiring the right customers • Crafting the right value proposition • Instituting best processes • Motivating employees • Learning to retain customers

Customer Relationship Management n Acquiring the Right Customers • Look at current and potential customers • Balance desired level of relationship with profitability of doing so • Choosing accounts Three factors n How do they define value? n Look at profit potential n

Customer Relationship Management n Crafting the Right Value Proposition • Value proposition- “the products, services, ideas, and solutions that a business marketer offers to advance the performance goals of the customer organization. ” • Look at industry- what are others doing?

Customer Relationship Management

Customer Relationship Management • Industry bandwidth n The strategies competing firms in an industry pursue • Flaring out by unbundling • Flaring out with augmentation • Create Flexible Service Offering

Customer Relationship Management n Instituting the Best Practices • Salespeople • Others n Motivating Employees • • n Why? How? Retaining Customers • • • Why? Growth from existing customers Evaluate relationships

Gaining an Advantage at CRM n Customer-Relating Capability • Orientation toward relationships n n Customer retention is a shard goal Organizational members act quickly on info received from customers All employees understand appreciate the lifetime value of a customer Employees have considerable latitude when taking actions • Information about relationships • Configuration n Org. structure and performance measures

Gaining a Position of Advantage n What works best?