Chapter 4

Managing Customer Relationship

 Pre-Industrial Age - Personalised 1:1
relationship between producer and consumer
 Industrial Age - Mass production/creation
desegregation between producer and consumer
 Service Economy Age - Production combined
with intangibles to deliver solution to
consumers
 Knowledge Economy Age - Information
combined with products and services to deliver
personalised customized solutions
Relationship needs arise out of four goals that
exist when an organization/consumer are
engaged with each other on a win-win basis:
 Need fulfillment goal
 Economic goal
 Security goal
 Esteem goal
Key Principles of Relationship
Management
 Manage customers as an asset
 Rate customers on basis of their profit stream

– current and future potential

 Customize relationship to individual

customer – using information based decision

making capabilities
 Implement innovative ways and means to get

close to the customer to hear the ‘Voice of

the Customer’
To succeed in the relationship economy companies must:

Create the capabilities to service the new customer

 Driven by voice of the customer

 Listening and learning process

 Customer experience mapping

 Appropriate level of segmentation

Connect the Business to the Customer

 Align mindset and connectivity
 Invest in enough knowledge to get the job done
 Balance elements of model business(strategy, people,
process, knowledge and technology)
 Develop efficient and effective fulfillment solutions (self
Service v/s full service)
Techniques and Applications to
Manage Relationships
 Acquisition Stage:
 From the time a company decides to target a prospective
customer to the time a customer makes the final purchase -
relationship management needs to focus on ensuring that
customer expectations of product features, quality and cost
are:
 Well understood by consumers – through ‘correct’ advertising,
sales promotion material, trade communication, product
literature, etc.
 Providing consumers avenues to easily raise any relationship
disconnects and issues during the acquisition process.
 ‘Product’/ ‘Service’ return guarantee in case consumer does not
want to continue relationship post acquisition for whatsoever
reasons.
 Post Acquisition Stage
a) Single product/service user:
Education, Complaint/Request and Query
management support , Relationship recognition
b) Multiple product/service relationship:

Recognition of ‘Total Share of Wallet’ instead of

discrete spends made by the consumer, Catering
to individualized/personalized needs
c) More favourable terms for additional business
Acquisition Cost v/s Relationship Cost

 Relationship management entails expenditure

on maintaining the various relationship
programmes/processes. While acquisition
costing/profitability are well understood, it is
found that companies struggle to appropriate
a correct costing structure to support
relationship management aspects.
 This cost can be spread over the following:
 Post purchase transaction handling:Cost incurred
on the contact center, collection, showroom, front
desk, web support, etc.
 Loyalty programmes:This can be of following
kinds – Continuity Marketing Programmes which are
designed for:
--Retaining Customers
--Increasing Loyalty
 Partnering programmes:Co-Branding, Affinity Partnering

 Personalised services:One to One Marketing

Customer Experience Management –
Psychological and Behavioural Principles
 Sequence Effects
 Duration Effects
 Rationalisation Effects
Five Operating Principles from the
above behavioural findings:
 Principle1 - Finish Strong
 Principle 2 - Get the Bad Experiences Out of

the Way Early

 Principle 3 - Segment the Pleasure - Combine

the pain
 Principle 4 - Build Commitment through

Choice
 Principle 5 - Give People and Stick to Them