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Relationship Marketing and Customer Relationship Marketing

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					Relationship Marketing and
Customer Relationship Marketing


Prof. Rushen Chahal




                                  1
Learning objectives
 Understand the relationship and
  differences between relationship
  marketing (RM) and customer
  relationship marketing (CRM)
 Know the overlaps and differences
  between these and direct marketing
 Be aware of the practical problems in
  implementing such a system


                                          2
Relationship Marketing
 A marketing approach considering what
  your customers need at their stage of the
  customer life cycle and maintaining
  contact with them to provide it
 This is not making “friends” of your
  customers. Most probably do not want
  that.



                                              3
Continued…
 But it is not transaction marketing either
 Companies can no longer count on
  customers being ignorant and accepting
  what companies make. We expect more
  now.
 Companies must find ways to customize
  and provide what customers want or
  loose them


                                               4
Key elements of RM
 Page 208
 From transactions to relationships
 Maximizing LTV of best customers
 Customer service as everyone’s job
 Quality is what customer says it is
  (customization)
 Relationships with many groups including
  distributors, suppliers, others…

                                             5
RM case study: Starbucks
 Howard Schultz, founder and chairman,
  claims Starbucks sells 19,000 possible
  varieties of coffee because customers can
  build their own drinks
 Baristas informed management that
  customers were asking for soy milk and
  the company started selling it
 Sounds simple but many companies don’t
  do this (like sandwich shop)
                                              6
Regarding collaboration
 This is where much profit potential
  comes from!
 If one company creates a new
  pharmaceutical drug and another an
  efficient distribution system, both can
  benefit more from collaboration than
  working separately, even if it means
  sharing some information


                                            7
RM case study: Rolls Royce
 RR stopped making cars in 1972!
 RR has partners in 50 countries doing
  manufacturing, research, and service.
 The company still owns the key
  technologies but harnesses brain power
  from around the world
 This B2B aspect of RM is new in the West
  (but common here)

                                             8
RM and DDM
 Both focus primarily on existing
  customers-selling to them
 DDM does more to attract new
  customers while RM retains previous
 But RM is more focused on creating the
  relationship rather than just the sale
 Page 213 RM and transaction marketing
  strategies contrasted, and role of DDM
  and RM in different sectors
                                           9
CRM
 Strange concept:You can’t really manage
  customers, they actually manage you!
 Companies only manage the record of
  their transactions and communications,
  using this record to grow with their
  customers and develop trust.




                                            10
CRM definition(s)
   “CRM is an enterprise-wide commitment
    to identify your named individual
    customers and create a relationship
    between your company and these
    customers so long as this relationship is
    mutually beneficial.”




                                                11
Continued…
 Enterprise-wide: the whole company is
  part of making the relationship
 Identify named customers: trying to know
  customers personally
 Mutually beneficial: not just buying the
  customer

   Do you ever feel like you have a
    relationship with a company?
                                             12
3 perspectives on CRM
 IT perspective
 Customer life cycle perspective
 Business strategy perspective




                                    13
14
15
16
A real CRM company has:
 Page 216
 Good service personnel
 Cross-departmental service processes
 Customers identified by value to company
 Database independent of individual
  channels and at the center of DDM
  programs for outbound contact


                                         17
CRM compared to DDM:
 Associated with large companies with
  many channels
 Centered around data-driven service
 Focuses on inbound customer contact at
  least as much as outbound




                                           18
Works best in sectors with:
  Frequent customer interactions
 High level of expertise needed to guide
  purchases
 Multiple products/services are purchased
  by the customer

   Page 217


                                             19
CRM
     People-centered rather than system-
      centered (human decision needed)
      ◦ Ever see people walk through one of two
        doors and others waiting to get through? One
        smart person opens the other door!
      ◦ It might be necessary to refer a customer to
        another place than to sell an inferior product.
      ◦ GNC coupon example



                                                      20
CRM must be useable
   Don’t leave it all to the technologists
    ◦ The spell-check on MS Word is system-
      centered
    ◦ Forgetting password and cannot log in or
      make new account
    ◦ Marketers must assert control to ensure
      customer interface is useable (ex. customers
      can request this be changed)



                                                     21
CRM need not be high tech
 If a customer buys fruit and milk at one
  store because the prices are the best,
  how does the store know that is why? If
  the location is right? Or another reason?
 Even with a “Club Card” the company
  may not know why customers do as they
  do. The competitors do not know why I
  don’t buy fruit and milk there, even if I
  have a club card with them too.

                                              22
Continued…
 Direct contract and a system to record
  customer transactions and reactions is
  vital.
 Ask for customer thoughts and opinions
 Information volunteered by customers
  should be given to management
  systematically
 No one tells the company why they leave.
  They just leave.
                                         23
CRM low-tech suggestions
 Hire “people” people who are good
  listeners, creative, and love their
  jobs…AND pay them what they are
  worth
 Train customer service persons to act on
  information immediately and pass it on to
  management
 Good quality personnel, paid well, are less
  expensive than CRM software
                                            24
Continued…
   Encourage cross-department
    collaboration (“Not my job” has no place
    in business today! If employees argue
    about who has to help the customer, the
    customer will go where they will be happy
    to help.)
    ◦ There are high and low tech approaches to
      this like company collaborative software and
      database accessibility, and company culture

                                                     25
     CRM interface suggestions
 Be sure site content is complete and easy to
  read.
 Make certain navigation totally simple.
 Keep order forms as simple as possible.
 Throughout your site, encourage feedback in
  every possible way.
 Respond quickly to email. Answer the
  question completely. Anticipate and respond
  to other possible concerns as related to the
  question.

                                                 26
Continued…
 Complete contact info at the bottom of
  every page on your site, including street
  address, phone number (preferably toll
  free) that is answered 24/7 by someone
  who knows what they are about.
 Provide a fax number as well; some
  people love paper
 Follow up on all queries and sales. Make
  certain a high level of satisfaction has
  been generated.
                                              27
Continued…
 Be sure your product or service delivers
  more than expected.
 Offer an unbeatable guarantee. 12 months
  has merit in that customers will not feel
  hurried into making a decision. And later
  they may not feel comfortable making a
  request.



                                          28
CRM, RM, and DDM contrast
 RM: business-wide strategy/marketing
  philosophy
 DDM: system that allows us to implement
  marketing plans based on customer
  data/prediction tool
 CRM: system and process-driven attempt
  to improve contact between large firms
  and the customer
 Page 218

                                        29
Putting CRM into action
   Channels should be consolidated into one
    customer file
    ◦ Security is important but too much guarding
      by managers is not helpful to customers or to
      company that wants to learn and grow
    ◦ Anyone in the company should be able to
      help the customer or get him connected to
      someone who can



                                                  30
Continued…
   CRM systems require access to accounts
    data to give marketers the opportunity to
    share decision making on high-value
    customer account inquiries
    ◦ Management should be able to see everything
      customer said and did instead of requiring
      employees to try to brief them




                                                    31
Continued…
   Channels should be connected so that
    cross-sell opportunities can be identified
    ◦ If sales can see what a customer did before
      through another channel, it gives ideas as to
      how to sell products that go along with the
      others
    ◦ Before each channel had its own manager
      who competed with other channels. They
      should be working together
    ◦ Page 222 evolution of CRM in companies
                                                      32

				
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posted:2/15/2012
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Description: Prof. Rushen notes for MBA and BBA students