Relationship Hierarchy

 Transactional
 Satisfactionbased
 Emotional Connect Relationship
 Shared Value Relationship

Value Exchange = Basic Minimum to Premium

Loyalty Pyramid
 Switchers – No feeling of loyality
 Satisfied Buyer : No reason to break off
relations but will switch on inducements
 Likes the brand : Considers it a friend
 Committed Buyer : Champion and
Spokesperson for brand
 There are no walls. We are all
interconnected….
 Marketing world continues to change
 No canned program will work in all situations
Nine Truths of Relationship
Marketing
1. Customers are no longer loyal
2. Customers do not really want a relationship
but companies do
3. Customers want information
4. Customers not only want to be thanked for
their patronage they expect it
5. Customers control the selling process
Nine Truths……
6. Lifetime value of company to customer
7. Do not overcomplicate the program
8. Keep reporting simple and focused on the
customer
9. What If ? Ask it often. Experiment
i
 What is the difference between transaction
marketing and relationship marketing ???
 What is the difference between marketing and
CRM ?
Case- Philips
Dutch consumer electronics company
Uses a program called touchpoint tool a
six point plan
Identifies the company’s interactions(
touch points) with customers and
improves them
Every touchpoint influences the opinion
of customer
This has to be aligned to the brand
positioning
 Withthe help of ‘touch point wheel’ all touch
points are plotted sequentially along a
customer’s passage from pre to post purchase

 For
eg : Touchpoints : a chat with a Philips
manager, a TV commercial, hit on Phillips
website…..

Any place where the customer ‘touches’ Philips

 Touch points are analysed and those with
greatest impact selected
 These are tested on ( unearthed after
research)
3. Designed around you
4. Easy to experience
5. Advanced
 Touch points are improved to increase impact
 Semiconductor division conducts product
seminars for customers ( a touchpoint)
 Touchpoint tool helped in making these
seminars more interactive
 Customers wanted end-to-end demos and
more close product connect
 Senseo a new type of electric kettle was often
given as a gift
 Word of mouth was a vital touchpoint
 A new marketing strategy was developed
which was very effective
 Saved on expensive advertising campaign
 Steps in the CRM tool:
1. Identify touchpoints( point of purchase to
end application)
2. Prioritise touch points
3. Assess touch points
4. Define TP improvements
5. Define business impact and resources
6. Develop key actions steps
 AllPhilips marketing managers are trained on
the tool . The encounters are improved….
increase in sales and meaningful bonding with
the customer
Indian banks
 Sheila has a SB account
 She has taken a car loan
 She has a credit card
 She also invests in MFs
 Her parents are long term customers
 Her NRI brother also has an account

 Earlierbanks had discrete systems for

different functions….
 New technology ‘single view’ and singe ID
across all transactions
 Having different databases for the same
customer does not make sense
 Bank also needs to keep the entire family and
overall credit worthiness of the client

A customer defaults on payment , harshly

viewed by bank…. Son-in-law , a big
industrialist closed all his accounts with same
bank
 HSBC, citibank, ICICI, gives single statement
for all the products ( credit card, accounts,
loan, etc)
 This has benefits for the bank too…
 Tracking of transactions…account to FD…
 Profiling of customers
 Business potential
 Cross selling-
 Servicing - ATM/phone banking/net banking
 ‘ONE FACE OF THE CUSTOMER’= Integrated
CRM

 …the Problems???
 High cost Rs 4-5 Crores
 Privacy..among family members- FDs to other
family members
How to manage customer
relationship
1. Manage customer as an asset – value of
the asset should grow through study of
consumer behaviour
2.Rate customers on the basis of their
profit stream – current and future spends –
eg student using banking services
3.Customise rather than broad brush
classification- design, colour, features, time,
mode of service, channel – eg book websites
4.Hear the voice of the customer- deep
understanding of the context in which our
product is used
Making it work
 Understand psyche shifts
 Identify gaps between customer expectation
and mgt perception
 Done through company CRM experts
 Map the customer experience
Techniques in Acquisition stage
 Target advertising – media,message, websites,
blogs
 Avenues to raise questions during acquisition
 Trial pack, test drive, return guarantee, if
customer wants to disconnect…..
Post acquisition – single product
 Educate – to exploit the full value of the
product/service - user manuals, websites,
query desks, contact centers, demos, onsite
support
 Complaint/ query management support quick
connect
 Complaint handling within reasonable time
 Assurance of no repeat failure
Multiple proDuct
 Aiming for total share of wallet
 Done through unique loyalty card no, account
no
 Using IT to throw up data- items ordered,
quantities, destinations..
 1:1 for priority customers with large share of
wallet

Capturing info for CRM
1. Transaction history
2. Socio economic characteristics
3. Behavioural traits
4. Life time potential for additional
products/services
 Thesame telephone company, called me three
times to sell DSL even though I had DSL service
from them; what a waste of my time, their
time and to add to this the frustration.
thrash out a DATA CAPTURE PROCEDURE
document, defining the rules of use. 
 Who has what rights to the system; who can
Create, Insert, Modify or Delete records,
  Decide on a procedure to check for any
duplicates before creating a record.
 Do you allow abbreviations or acronyms? For
example: IBM, or I.B.M, or International
Business Machines Inc. or Incorporated and so
on. A policy on ensuring consistency of input
will help to avoid duplications in future. 
 Are records going to be created in Upper and
Lower case and when are CAPS acceptable? 
 Is the primary address of clients to be created
as a postal or a physical address? 
 Make sure everyone checks spellings if they
are unsure and do not trust spellchecker!
When in doubt, ask the client - they'll respect
that. Is it Clark with an ‘e'; Shawn, Sean or
Shaun? One certain way to get your mail
binned is to spell someone's name incorrectly. 
 Alsoconfirm the kind of corporation e.g. Inc,
Ltd. and so on.

 Make rules for creating new profiles or User

Definable Fields (UDF) (or whatever your
specific CRM software calls them.) Place a lot
of emphasis on this. Every time a new UDF is
needed, it should first be approved. Otherwise
duplicates will permeate your database e.g.
Yellow Pages, YP, yelo pages. 
 Ensurethat email addresses are put in
correctly. Basic but common mistake! 

• Set up procedures, if not supported by your

software, of how to create records from
inbound emails. 
 Who is the responsible person for backing up
your databases/s? Who covers for them when
they are absent or unavailable? 

• How frequently are backups to be done?

Diarise! 

• How are backups done e.g. by the

Grandfather, Father, Son method. 
 Ensurebackups are made on good quality CD's
or whatever format you are using. It's no good
doing a backup, then finding on attempting a
Restore that it doesn't work! It is also a good
idea to copy backups onto more than one data
format. 

• Where are the backups to be stored? 

• Are the backups secure? This is important for

both security and practical reasons.
 he most common generational backup scheme
is the three-generation or "grandfather-father-
son" method.
 In its most basic form it involves making a
complete copy of the data to be backed up on
removable media such as tape or CD. This is
the grandfather
.At the next scheduled backup period, say the
next day, another complete copy of the data is
made, which of course includes the changes in
the data during that period. This is the father.
At the next scheduled backup, the third copy,
or son is produced.
 The fourth backup is made by recording over
(or replacing, depending on the media) the
grandfather copy.
 The new copy becomes the son, the previous
son becomes the new father and the father is
promoted to grandfather.
 This continues in rotation so there are always
three backups, each of a different point in
time.
 GF F S S
 - GF F
 User Defined fields – for Name, address, etc
 Best customers outspend others by a ratio of
16 to 1
 Company loses money on some customers
 Focus on profitable customers in the database
Some key relationship metrics
 Repurchase rates
 Loyalty scores
 Switch over from competitors
 Churn- customers leaving
Relationship costs ???
 Recommended approach – 1% to 10% of
potential revenue
Depending on Margins, and total value.
The Cost spread
1. Transaction handling – contact center,
showroom, web support, service
2. Loyalty programs – addressed at mass
markets – loyalty cards, membership-
rewarded for duration of relationship, cross-
sell/up-sell purchases….
3. Partnership programs – Co branding to offer
advanced services to mass markets
4. Personalised -
 A good CRM program can improve customer service by
facilitating communication in several ways :
 * Provide product information, product use information, and
technical assistance on web sites that are accessible 24
hours a day, 7 days a week.
* Identify how each individual customer defines quality, and
then design a service strategy for each customer based on
these individual requirements and expectations.
* Provide a fast mechanism for managing and scheduling
follow-up sales calls to assess post-purchase cognitive
dissonance, repurchase probabilities, repurchase times, and
repurchase frequencies.
* Provide a mechanism to track all points of contact
between a customer and the company, and do it in an
integrated way so that all sources and types of contact are
included, and all users of the system see the same view of
the customer (reduces confusion).
* Help to identify potential problems quickly, before they
occur.
 rovide a user-friendly mechanism for registering customer
complaints (complaints that are not registered with the company
cannot be resolved, and are a major source of customer
dissatisfaction).
* Provide a fast mechanism for handling problems and complaints
(complaints that are resolved quickly can increase customer
satisfaction).
* Provide a fast mechanism for correcting service deficiencies
(correct the problem before other customers experience the same
dissatisfaction).
* Use internet cookies to track customer interests and personalize
product offerings accordingly.
* Use the Internet to engage in collaborative customization or real-
time customization.
* Provide a fast mechanism for managing and scheduling
maintenance, repair, and on-going support (improve efficiency and
effectiveness).
* The CRM program can be integrated into other cross-functional
systems and thereby provide accounting and production
information to customers when they want it.
 Managing Customer Relationships

Qualifying prospects for relationship building

H
igh Use a non Build a strong
customized and lasting
approach relationship

Opportunities
for adding
value
Seek better Focus on
opportunities loyalty-building
elsewhere program

Low
Low Potential profitability of H
customer igh
Summary

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 both

relationship builders and relationship promoters; and

The basic premise of CRM is to offer superior value to

customers in an effort to turn prospects into
customers, customers into loyal customers, and
loyal customers into partners.
Customer Value-Drivers in CRM
 Superior Customer Service (Gruen et al. 2000; Winer 2001)
 Trust (Morgan and Hunt 1994)
 Risk Reduction (Gwinner et al. 1998)
 Anxiety Reduction (Bitner 1995)
 Cognitive Efficiency (Peterson 1995, p. 279)
 Personal Recognition (Bendapudi and Leone 2002)
 Holistic Treatment of Customer (Byrd 2001)
 Fraternization (Price and Arnould 1999)
 Promise Keeping (Bitner 1995)
 Ongoing 2-way communication (Berry 1995)
 Interactive Feedback Systems (Ryals and Payne 2001; Srinivasan et al. 2002)
 Discounts / Special Deals (Peterson 1995)
 Loyalty Rewards (Winer 2001)
 Convenience (Berry et al. 2002; Srinivasan et al. 2002)
 Time Savings (Gwinner et al. 1998)
 Multi-channel Support (Rosenbloom 2004, p. 21)
 Value Co-creation (Sheth et al. 2000)
 Customized Solutions (Srivastava et al. 1999; Wilson 1995; Zeng et al. 2003)
 …………
 Categorizing the above values
 Psychological (Confidence)
• Superior Customer Service
• Trust
• Risk Reduction
• Anxiety Reduction
• Promise Keeping
• Cognitive Efficiency

Social
• Personal Recognition
• Holistic Treatment of Customer Customer Value-
• Fraternization
• Ongoing 2-way communication Drivers in CRM
• Interactive Feedback Systems

Economic (Special Treatment)

• Discounts / Special Deals
• Loyalty Rewards
• Time Savings
• Convenience
• Multi-channel Support
• Value Co-creation
• Customized Solutions
 Psychological Value Drivers
 Pertains to psychological comfort and peace of
mind (Patterson and Smith 2001)

 Interms of perceptions of reduced anxiety and

enhanced trust

 Customers can come to expect what will be

delivered in a service encounter, reducing risk (Berry
1995)

 Superiorcore services performance can always be

expected by consumers (Gruen et al. 2000; Winer 2001)
Social Value Drivers
 Pertains to the emotional part of the relationship
established (Gwinner et al. 1998) and addresses the basic
human need to feel important (Berry 1995; Jackson 1993)
 Personal recognition – customers are treated holistically
across all points of contact (Byrd 2001; Guleri 2000)

 Fraternization satisfies social need (McAdams 1988)

 Interactivefeedback systems (Srinivasan et al. 2002) and
ongoing 2-way communication (Ryals and Payne 2001 )
exemplify that customers are important, and they are
crucial.
 Economic Benefits
 Takes the form of discounts, special deals (Gwinner et
al. 1998), loyalty rewards (Bolton et al. 2000).

 Also
in terms of time savings as well as
convenience (Berry et al. 2002) via fully integrated multi-
channel support (Rosenbloom 2004; Ryals and Payne 2001).

 Customized solutions are highly valued by

customers (Parasuraman et al. 1991; Srivastava et al. 1999) as they
directly address customers’ idiosyncratic needs
and provide great utilities to them
Definition of RM
 Relationship has been defined as
attracting , maintaining and in
enhancing customer relationships, at a
profit.

 Assumes a need for building lasting

relationships

 Todayit is recognized that all customers are

not equally valuable to the company.
What happens in practice
I currently subscribe to this magazine
 I always go to this store
 This is what I usually buy
 We have a contract
Other nomenclature
 Database marketing
 Individualised marketing,
 Micro marketing
 One to one marketing
 Integrated marketing