Lecture 10 Customer Relationships Customer Relationships Todays Objectives

Lecture 10 Customer Relationships

Customer Relationships — Today’s Objectives l Objectives will be to: l Develop a clear definition of relationship l Explore why firms want relationships with their customers l Discuss the relationship stages and interaction intensity l Examine the effects of the Internet and 2 Is on customer relationships l Discuss some final points about customer relationships and the Web

Customer Relationships l Defining Relationship l Why Firms Want Relationships With Their Customers l The Relationship Stages and Interaction Intensity l The Effects of the Internet and the 2 Is on Customer Relationships l Some Final Points About Customer Relationships and the Web l EBay Case Study l Conclusion

Customer Relationships l Defining Relationship l Why Firms Want Relationships With Their Customers l The Relationship Stages and Interaction Intensity l The Effects of the Internet and the 2 Is on Customer Relationships l Some Final Points About Customer Relationships and the Web l EBay Case Study l Conclusion

Relationship Type & Involvement Continuums Enduring Involvement Exchange Relationships Communal Relationships Situational Involvement

A Continuum of Relationship Involvement High Product type (cost, level of symbolism, risk) Purchase situation (visibility, social acceptability) Relationship Involvement Consumer type (interests, values, attitudes) Low Automobile 35 -mm Camera Expensive Watch Stereo Component Eyeglasses Scotch Whiskey Hair Coloring Wine for Dinner Party Washer/Dryer Face Soap Credit Card Salad Oil Deodorant Soap Insecticide Headache Remedy Liquid Bleach Insect Repellent Disposable Razor Potato Chips Soft Drink Paper Towels Toilet Tissue

Customer Relationships l Defining Relationship l Why Firms Want Relationships With Their Customers l The Relationship Stages and Interaction Intensity l The Effects of the Internet and the 2 Is on Customer Relationships l Some Final Points About Customer Relationships and the Web l EBay Case Study l Conclusion

High Low Profitability Length of Customer Tenure and Profitability Relationship Short Long Customer Lifetime

Customer Relationships l Defining Relationship l Why Firms Want Relationships With Their Customers l The Relationship Stages and Interaction Intensity l The Effects of the Internet and the 2 Is on Customer Relationships l Some Final Points About Customer Relationships and the Web l EBay Case Study l Conclusion

Moving Through the Relationship Stages Awareness Exploration/ Expansion Commitment Dissolution Customers can advance through the stages in several different ways

Two Alternatives for Customers at the Commitment Stage Satisfied, profitable customers Stay Committed Unsatisfied or unprofitable customers Dissolution Commitment Customers can either stay committed or move to dissolution

Level of Interaction by Stage of Customer Relationships Four Key Stages of Customer Relationships Awareness Exploration / Expansion Commitment Level of Intensity Stages of Customer Relationships Dissolution

Customer Relationships l Defining Relationship l Why Firms Want Relationships With Their Customers l The Relationship Stages and Interaction Intensity l The Effects of the Internet and the 2 Is on Customer Relationships l Some Final Points About Customer Relationships and the Web l EBay Case Study l Conclusion

Are Interactivity and Individualization Always Necessary? Low Individualization, Low Interactivity Example: news service Low Individualization, High Interactivity Example: library High Individualization, Low Interactivity Example: bank statement High Individualization, High Interactivity

Online Privacy Attitudes

Customer Relationships l Defining Relationship l Why Firms Want Relationships With Their Customers l The Relationship Stages and Interaction Intensity l The Effects of the Internet and the 2 Is on Customer Relationships l Some Final Points About Customer Relationships and the Web l EBay Case Study l Conclusion

Integrative Framework: Building Relationships on the Web Four Key Stages of Customer Relationships Awareness Exploration/ Expansion Price Marketing Levers Product Promotion Distribution Brand Commitment Dissolution

Customer Relationships l Defining Relationship l Why Firms Want Relationships With Their Customers l The Relationship Stages and Interaction Intensity l The Effects of the Internet and the 2 Is on Customer Relationships l Some Final Points About Customer Relationships and the Web l EBay Case Study l Conclusion

Building Relationships at EBay Four Key Stages of Customer Relationships Awareness No. 1 general auction service on the Internet Exploration/ Expansion EBay encourages browsing before registration for the purpose of exploration Commitment EBay offers (1) community, (2) individualization, and (3) interaction Dissolution Users can stop buying or selling at any time

Customer Relationships l Defining Relationship l Why Firms Want Relationships With Their Customers l The Relationship Stages and Interaction Intensity l The Effects of the Internet and the 2 Is on Customer Relationships l Some Final Points About Customer Relationships and the Web l e. Bay Case Study l Conclusion

Customer Relationships — Conclusion l The customer relationship stages are: 1. Awareness — The customer recognizes that the firm is a possible exchange partner, but has not initiated any communication with the firm or purchased its products 2. Exploration — The customer considers the possibility of exchange, gathers information and perhaps initiates trial purchases 3. Commitment — The parties in a relationship feel a sense of obligation or responsibility toward each other 4. Dissolution — This stage signals the separation of buyer and seller — the loss of connection l The Internet allows firms to interact and to individualize in powerful ways. As a result, firm-customer relationships can be formed and can progress very quickly l Firms don’t always want a relationship with all customers. . . and vice versa