8/3/2019 Chapter 07_Building Customer Relationship
1/26
Wednesday, May 02, 2012 S.M. Monirul Islam, DBA, NUB 1
Chapter: 07
8/3/2019 Chapter 07_Building Customer Relationship
2/26
Wednesday, May 02, 2012 S.M. Monirul Islam, DBA, NUB 2
Relationship Marketing, its goals, andbenefits of long term relationship for firmand customers.
1
Customer profitability segments as the strategyfor relationship marketing.2
Relationship development strategies: Coreservice, switching barriers, and relationship
bonds.
3
Challenges in relationship development, ascustomers are not always right.
4
8/3/2019 Chapter 07_Building Customer Relationship
3/26
Wednesday, May 02, 2012 S.M. Monirul Islam, DBA, NUB 3
It represents a paradigm shift within
marketing away from an acquisitions
focus toward a retention/relationshipfocus.
It focuses on keeping and improving
relationship with current customersrather than an acquiring new customers
8/3/2019 Chapter 07_Building Customer Relationship
4/26
Wednesday, May 02, 2012 S.M. Monirul Islam, DBA, NUB 4
Evolution of Customer Relationship
Firms relationship with their
customers like other social
relationships tend to evolve overtime. The relationship between
service customer and provider have
the potential to evolve fromstrangers to acquaintances to fiends
to partners
8/3/2019 Chapter 07_Building Customer Relationship
5/26
Wednesday, May 02, 2012 S.M. Monirul Islam, DBA, NUB 5
Customers as Strangers
ProductOffering
Attractive relative to competitive offering or alternativepurchase
Source ofCompetitive
Advantages
Attractiveness
BuyingActivity
Interest, exploration and trial
Focus of
sellingActivities
Awareness of firm offering
RelationshipTime Horizon
Buyer may have had no previous interactions with orknowledge of the firm
8/3/2019 Chapter 07_Building Customer Relationship
6/26
Wednesday, May 02, 2012 S.M. Monirul Islam, DBA, NUB 6
Customers as Acquaintance
ProductOffering
Parity product as a form of industry standard
Source ofCompetitive
Advantages
Satisfaction
BuyingActivity
Satisfaction facilitates and reinforces buying activityand reduces need to search for market
Focus of
sellingActivities
Familiarity and general knowledge of customers
RelationshipTime Horizon
Generally short because the buyer can often switchfirms without much effort of cists
8/3/2019 Chapter 07_Building Customer Relationship
7/26Wednesday, May 02, 2012 S.M. Monirul Islam, DBA, NUB 7
Customers as Friends
ProductOffering
Differentiated product adapted to specific marketsegments
Source ofCompetitive
Advantages
Satisfaction+trust
BuyingActivity
Trust inn firm is needed to continue the buying activitywithout perfect information
Focus of
sellingActivities
Specific knowledge of customers connection to
segment need abd situation facilities selling
RelationshipTime Horizon
Generally longer than acquaintance relationships
8/3/2019 Chapter 07_Building Customer Relationship
8/26Wednesday, May 02, 2012 S.M. Monirul Islam, DBA, NUB 8
Customers as Partners
ProductOffering
Customized product and dedicated resources adaptedto an individual customers or organizations
Source ofCompetitive
Advantages
Satisfaction+ trust+ commitment
BuyingActivity
Commitment in the form of information sharing andidiosyncratic investments is needed to achievecustomized product
Focus of
sellingActivities
Specific knowledge of customers need and situation
and idiosyncratic facilitates selling.
RelationshipTime Horizon
Generally long because it takes time to build andreplace interconnected activities and to develop adetail knowledge.
8/3/2019 Chapter 07_Building Customer Relationship
9/26Wednesday, May 02, 2012 S.M. Monirul Islam, DBA, NUB 9
Goal of RelationshipMarketing
1. Acquiring Customer
2. Satisfying Customer
3. Retaining Customer
4. Enhancing Customer
8/3/2019 Chapter 07_Building Customer Relationship
10/26Wednesday, May 02, 2012 S.M. Monirul Islam, DBA, NUB 10
Benefit For Customers
Confidence Benefit(Feeling of trust/confidence, reduced anxiety)
Social Benefit
(Customers develop a sense of familiarity and even asocial relationship with their service providers)
Special Treatment Benefit
(Getting the benefit of the doubt, being given aspecial deal or price/getting preferential treatment
as exemplified by the following quotes from the
research)
8/3/2019 Chapter 07_Building Customer Relationship
11/26Wednesday, May 02, 2012 S.M. Monirul Islam, DBA, NUB 11
Benefits For firms
Economic Benefit
Customer Behavior Benefit
Human Resource Management Benefit
8/3/2019 Chapter 07_Building Customer Relationship
12/26Wednesday, May 02, 2012 S.M. Monirul Islam, DBA, NUB 12
Customer ProfitabilitySegments
All firms are aware at some level that theircustomers differ in profitability, in particular,that a minority of their customers accounts
for the highest proportion of sales or profit.This finding has often been calledthe80/20 rule-20 percent of customersproduce 80 percent of sales or profit.
Different systems and levels can be helpful.One useful 4 tier system includes thefollowing
8/3/2019 Chapter 07_Building Customer Relationship
13/26Wednesday, May 02, 2012 S.M. Monirul Islam, DBA, NUB 13
Customer ProfitabilitySegments..
Platinum Tier
Gold Tier
Iron Tier
Lead Tier
8/3/2019 Chapter 07_Building Customer Relationship
14/26Wednesday, May 02, 2012 S.M. Monirul Islam, DBA, NUB 14
Platinum Tier
It describes the companys most
profitable customers, typically those
who are heavy users of the products arenot overly price sensitive are willing to
invest in and try new offering and the
committed customers of the firm
8/3/2019 Chapter 07_Building Customer Relationship
15/26Wednesday, May 02, 2012 S.M. Monirul Islam, DBA, NUB 15
Gold Tier
Where profitability levels are not as high,
perhaps because the customers want price
discounts that limit margins or are not asloyal. That may be heavy users who
minimizes risks by working with multiple
vendors rather than just local company
8/3/2019 Chapter 07_Building Customer Relationship
16/26Wednesday, May 02, 2012 S.M. Monirul Islam, DBA, NUB 16
Iron Tier
The iron tier contains essential
customers who provide the volume
needed to utilize the firms capacity,but their spending levels, loyalty &
profitability are not substantial
enough for special
8/3/2019 Chapter 07_Building Customer Relationship
17/26Wednesday, May 02, 2012 S.M. Monirul Islam, DBA, NUB 17
Lead Tier
It consists of Customers who are costing
the company money. They demand more
attention than they are due given theirspending & profitability & are sometimes
problem customers-complaining about the
firm to others & tying up the firmsresources.
8/3/2019 Chapter 07_Building Customer Relationship
18/26Wednesday, May 02, 2012 S.M. Monirul Islam, DBA, NUB 18
Most profitable customers
Least Profitable Customers
What segment spendsmore with us over time,
costs less to maintain &spreads positive word ofmouth
What segments costs us intime effort & money yet doesnot provide the return wewant? What segment isdifficult to do business with?
Customer Tier Pyramid
8/3/2019 Chapter 07_Building Customer Relationship
19/26Wednesday, May 02, 2012 S.M. Monirul Islam, DBA, NUB 19
StrongCustomer
Relationship
RelationshipBonds
Firm
BenefitsSwitchingBarriers
CustomerBenefits
CoreService
Provisions
RelationshipDrivers
OutcomesRelationship DevelopmentModel
8/3/2019 Chapter 07_Building Customer Relationship
20/26
Wednesday, May 02, 2012 S.M. Monirul Islam, DBA, NUB 20
Relationship DevelopmentStrategies
1. Core service Provision
A firm need begin to relationshipdevelopment process by providing a
good core service delivery meets
minimum expectation
8/3/2019 Chapter 07_Building Customer Relationship
21/26
Wednesday, May 02, 2012 S.M. Monirul Islam, DBA, NUB 21
2. Switching Barriers
Customer Inertia
Here discussed why dissatisfied customers staywith provider. Because.. People dont like to
change their habit. To retain customer firmconsider increasing the perceived effort is neededto change companies.
Customer cost
Cost involve in changing to and purchasing from adifferent firm. It may be real/perceive, monetary
/non-monetary.
8/3/2019 Chapter 07_Building Customer Relationship
22/26
Wednesday, May 02, 2012 S.M. Monirul Islam, DBA, NUB 22
3.Relationship Bond
Level 1 Financial Bonds
Level 2 Social Bonds
Level 3 Customization Bonds
Level 4 Structural Bonds
8/3/2019 Chapter 07_Building Customer Relationship
23/26
Wednesday, May 02, 2012 S.M. Monirul Islam, DBA, NUB 23
3.Relationship Bond..
Financial Bond
Volume & frequency Rewards
Stable PricingBuilding & Cross Selling
8/3/2019 Chapter 07_Building Customer Relationship
24/26
Wednesday, May 02, 2012 S.M. Monirul Islam, DBA, NUB 24
3.Relationship Bond
Social Bond
Continuous Relationship
Personal RelationshipSocial bonds among Customers
8/3/2019 Chapter 07_Building Customer Relationship
25/26
Wednesday, May 02, 2012 S.M. Monirul Islam, DBA, NUB 25
3.Relationship Bond..
Customization Bond
Customer intimacy
Mass CustomizationAnticipation/Innovation
8/3/2019 Chapter 07_Building Customer Relationship
26/26
3.Relationship Bond..
Structural Bond
Integrated information system
Joint InvestmentShared Process and Equipment
Top Related