Building Building Customer Customer

RelationshipRelationship““Service is so great an opportunity for the Service is so great an opportunity for the

company that our vision for the next century company that our vision for the next century is that GE is a global service company that is that GE is a global service company that

also sells high quality product.”also sells high quality product.”Jack WelchJack Welch

Relationship MarketingRelationship Marketing• Relationship marketing is a philosophy of

doing business, a strategic orientation, that focuses on keeping and improving current customer rather than acquiring new customer.

• There has been a shift from a transaction to a relationship focus in marketing. customers become partners and the firm must make long term commitment to maintaining those relationship with quality, service and innovation.

Goals of relationship Goals of relationship marketingmarketing

• To build and maintain a base of committed customers who are profitable for the organization.

• Customers goals of relationship marketing :getting customer, satisfying customers, and enhancing customers.

• Loyal customers can be even better customers

Benefits for customers and Benefits for customers and firmsfirms

• Confidence benefits• Social benefits- social support benefit

resulting from these relationship are important to consumer quality of life.

• Special Treatment Benefits

Benefits for the Benefits for the OrganizationOrganization

• Increased revenues• Reduced marketing and

administrative cost.• Free advertising through word of

mouth• Employee retention

Factors that influence Factors that influence relationship Valuerelationship Value

• Length of an average life time.• Average revenue generated • Sales of additional products and

services over time• Referral generated by customer over

time.• Cost associated with serving the

customers

Foundations for relationship Foundations for relationship strategiesstrategies

• Quality in the core service• Market Segmentation and targeting.• Continuous monitoring of relationship

Bases for market Bases for market segmentationsegmentation

• Demographic: Age sex family size, income, occupation, or religion.

• Geographic• Psychographic: Bases on social class,

lifestyle, or personality characteristics.• Behavioral segmentation: based on

knowledge, attitude, uses or responses to a service

Requirement for effective Requirement for effective segmentationsegmentation

• Measurability• Accessibility• Substantiality• Action ability

Criteria for evaluating market Criteria for evaluating market segments for market targetingsegments for market targeting

• Segment size and growth-information on current rupees sales, projected growth sales, and expected profit margins.

• Segment structural attractiveness-current and potential competitors, substitute products and services, relative power of buyers and relative power of suppliers.

• Company's objectives and resources: Involves whether the segment fits the company objective.

Steps in market segmentation Steps in market segmentation and targeting for services.and targeting for services.

• Identify bases for segmenting the market

• Develop profiles of resulting segments

• Develop measures of segment attractiveness

• Select the target segments• Ensure that segments are compatible

Monitoring relationshipMonitoring relationship• Basic market research in the form of

annual customer relationship surveys for determining their perception on value received, quality, satisfaction with services and satisfaction with the provider relative to competitors.

The 80/20 Customer The 80/20 Customer pyramidpyramid

• 20% of customer produce 80% of sales or profit.

• 20% of the best customer spends more with company over time, costs less to maintain, and spreads positive words of mouth’.

• 80% of the other customers cost the company in time, efforts, and money and yet does not provide the return the want

The expanded customer The expanded customer pyramidpyramid

• The platinum tier• The Gold Tier• The Iron Tier.• The lead Tier

Levels of relationship Levels of relationship strategystrategy

• Level 1-Financial Bonds-volume and frequency rewards, bundling and cross selling, stable pricing

• Level II- Social Bonds-continuous relationship, personal relationship, social bond among customers.

• Level III- Customization Bond-Anticipation/innovation/mass customization, Customer intimacy

• Structural Bond-Integrated Information Systems, Joint Investments, shared process and equipment

CRMCRM• CRM deals with learning about the

needs and behavior of customer in order to develop stronger relationships with them. It involves the use of technology to enable organizations to continue attracting new and profitable customers while forming tighter bond.

• CRM involves various tools, technologies and business procedure to attract and retain customers, prospects and business partners-

• Contact Management• Sales Force Automation• Opportunity Management• Relationship Management• ERP (enterprise relationship management)

is also a tool of CRM

• CRM software is designed to help companies keep track of their customers and boost revenues.

• CRM is the process that helps bring together various pieces of information about customer, sales, marketing effectiveness and market trends.

• CRM helps company provide• Better customer service• Make call centre more efficient• Cross sell product more effectively• Close deals faster• Simplify marketing and sales process• Find new customers and increase

customer revenue

CRM software collect following CRM software collect following informationinformation

• Responses to campaign• Shipping and fulfillment dates• Sales and purchase data• Demographic data• Shipping and fulfillment dates• Account information• Service and support records• Web sales data

CRM helps companies toCRM helps companies to• Gain better understanding of customer

needs and build individual customer solutions.

• Establish a dialog with customers using internet.

• Improve marketing efforts by using readily accessible customer information

• link departments, giving them access to the same information updated in real time.