Managing Relationships With Your Customers ( Business)
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Transcript of Managing Relationships With Your Customers ( Business)
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Customer Relationship Management (CRM)
Managing Relationships with your Custmers
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W hat is Customer Relationship Management (CRM)?
CRM is ³the development and maintenance of mutually beneficiallong-term relationships with strategically significant customers ´
(Buttle, 2000)
CRM is ³an IT enhanced value process , which identifies , develops ,integrates and focuses the various competencies of the firm to theµvoice¶ of the customer in order to deliver long-term superiorcustomer value , at a profit to well identified existing and potentialcustomers ´.
(Plakoyiannaki and Tzokas, 2001)
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U nderstanding Customer Relationship Management (CRM)?
CRM is a business philosophy based on upon individual customersand customised products and services supported by open linesof communication and feedback from the participating firms thatmutually benefit both buying and selling organisations .
The buying and selling firms enter into a ³learning relationship ´ , with the customer being willing to collaborate with the seller andgrow as a loyal customer . In return ,, the seller works to maximizethe value of the relationship for the customer¶s benefit .
In short , CRM provides selling organisations with the platformto obtain a competitive advantage by embracing customer needsand building value-driven long-term relationships .
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S tages in the development of a Customer Relationship
T he Pre-relationship S tageThe event that triggers a buyer to seek a new business partner.
T he Early S tageExperience is accumulated between the buyer and seller although a great
degree of uncertainty and distance exists.
T he Development S tageIncreased levels of transactions lead to a higher degree of commitment andthe distance is reduced to a social exchange.
T he Long-term S tageCharacterised by the companies¶ mutual importance to each other.
T he Final S tageThe interaction between the companies becomes institutionalized.
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S tages in the Development of a Key-Account Relationship
Degree of involvement
High
Low
Nature of customer relationship
Transactional Collaborative
Pre-KAM
Early-KAM
Mid-KAM
Partnership
Synergistic KAM
(Millman and Wilson, 1995)
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Functions of Customer Relationship Management
Direct functions (are the basic requirements of a company that arenecessary to survive in the competitive marketplace)
Profit;
Volume; andSafeguard
I ndirect functions (are the actions necessary to convince thecustomer to participate in various marketing activities).
Innovation:Market Access.
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Functions of Customer Relationship Management
Management
DecisionProcess
Customer sensitivity
Diversity
InformationDifferentiatedoffering
Value Creation ProcessT echnology delivery processR& DTechnology integrationEfficiency , effectiveness
learning
Product delivery processConcept to launchManufacturing process
Customer delivery processSupply chainDistributionInfomediation (distributionof information)
Value-basedS trategiesPricingCommunication
(Sharma et. al., 2001)
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Models of Customer Relationship Management
T he Evans and Luskin (1994) model for effectiveRelationship Marketing
Relationship marketing inputsUnderstanding customer expectations
Building service partnershipsEmpowering employeesTotal quality management
Relationship marketing outcomesCustomer SatisfactionCustomer loyalty
Quality productsIncreased profitability
Assessment stateCustomer feedback Integration
(Evans and Luskin, 1994)
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Models of Customer Relationship Management
T he Brock and Barcklay (1999) model of sellingpartner relationship effectiveness
Inter dependence
Relative influence
Mutual trust
Cooperation
Selling partner relationshipeffectiveness
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Managing Customer Relationships
The global companies must be involved in the following activities in order to initiate , develop and enhance the process that is aimed at building trust and commitment with thecustomer.
I nitiating the relationship
Engage in strategic prospecting and qualifying;Gather and study pre-call information;
Identify buying influences;
Plan the initial sales call;
Demonstrate an understanding of the customer¶s needs;
Identify opportunities to build a relationship; and
Illustrate the value of a relationship with the customer
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Managing Customer Relationships
The global companies must be involved in the following activities in order to initiate , develop and enhance the process that is aimed at building trust and commitment with thecustomer.
Developing the relationship
Select an appropriate offering;Customise the relationship;
Link the solutions with the customer¶s needs;
D iscuss customer concerns;
Summarize the solution to confirm benefits; and
Secure commitment.
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Managing Customer Relationships
The global companies must be involved in the following activities in order to initiate , develop and enhance the process that is aimed at building trust and commitment with thecustomer.
Enhancing the relationship
Assess customer satisfaction;
Take action to ensure satisfaction;
Maintain open , two-way communication; andWork to add value and enhance mutual opportunities.
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Managing Customer Relationships
Qualifying prospects for relationship building
Opportunitiesfor adding value
Potential profitability of customer
High
Low
Low High
U se a noncustomized
approach
S eek better
opportunitieselsewhere
Build a strongand lasting
relationship
Focus on
loyalty-buildingprogram
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Relationship networks
The ultimate outcome of a successful CRM strategy is the creationof a unique company asset known as a relationship network.
A relationship network consists of the company and its major
customers with whom the company has established long andenduring business relationships.
The additional aspects of a global salesperson¶s job are to:
Manage customer value;Act as customer advocate; andEnhance customer loyalty and build a ³health´ and
profitable network of relationships.
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S ummary
CRM is a new business philosophy based on trust and value;
The core function of CRM is the value creation process;
Customer relationships develop over time;
The role of global salespeople in the process is that of bothrelationship builders and relationship promoters; and
The basic premise of CRM is to offer superior value tocustomers in an effort to turn prospects intocustomers , customers into loyal customers , andloyal customers into partners.