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Building Customer
Relationships

G. SHAINESH
Professor of Marketing
Indian Institute of Management Bangalore
shaineshg@iimb.ac.in
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Session Coverage

• Six Markets Framework

• Bonding with Customer

• CRM Process Framework

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… Transaction vs. Relationship Marketing
Transaction Marketing Relationship Marketing

One off exchanges Focus Ongoing Exchanges

Customer Management
Brand Management
Short term focus Time Perspective Long term focus

Mass Communication Primary Communication Personal Communication

Isolated Market Research Customer Feedback Ongoing Dialogue
Mechanism
Mass Markets or Market Market Size Markets of One
Segments

Market Share Criterion for Success Mind Share (Share of

Customers)
Profitability of transaction Critical Metrics Customer Profitability
Brand equity Customer Equity
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… Multiple Markets - CRM

Internal Markets

Supplier Markets Customer Markets Referral Markets

Recruitment Markets Influence Markets

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What is the goal of CRM ?
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• Build long term and profitable relationships with chosen

customers

• Get closer to those customers at every point of contact

with them

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Goal of CRM

Enhancing

Retaining

Satisfying

Attracting

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The CRM Process

Learning about Customers Customization of the

1. Knowledge Acquisition
2. Customer Differentiation
Marketing Mix
1. Product / Services
2. Communications
3. Channels
4. Price 5. Place 6. Process
7. People

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… Customer Engagement Value (CEV)
CEV - Total value provided by customers through their i. Purchase transactions ii. Ability to refer
other customers to the firm iii. Power to positively influence other customers about the firm’s
offerings and iv. Knowledge about the firm’s offerings in providing feedback to the firm

Customer Lifetime Customer Referral Customer Influence Customer

Value (CLV) Value (CRV) Value (CIV) Knowledge Value
Measures type, quantity Monetary value of (CKV)
NPV of future cash & effectiveness of paid customer’s social media Value added by a
flows from a customer referrals by a customer influence on other customer
over her lifetime with acquired customers through her
to others
the firm and prospects feedback

Customer Brand Value (CBV)

Customer Behavior / Attitudes/ Firm & Competitive

Network Metrics Actions

Source: V Kumar (2013) ‘Profitable Customer Engagement: Concepts, Metrices & Strategies’, Sage Publications.
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… IDIC Framework

• Identify
• Differentiate
• Interact
• Customize

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… The Ladder of Loyalty

Partner

Advocate

Supporter

Client
Customer

Prospect

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… CRM Process Framework

Relationship
Prospect Customer Client Supporter Advocate Partner
Stages
Psychological Initiation Development Maintenance /
Steps Enhancement
Switching
Satisfaction
Trust
Commitment
Loyalty

Major Role Minor Role

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Customer Bonds
Integrated Volume &
Information Frequency
Joint Systems Awards Bundling &
Investments Cross Selling

Shared
4. Structural 1. Financial
Stable Pricing
Processes & Bonds Bonds
Equipment
Excellent Quality
& Value
Continuous
Involvement 3. Customization 2. Social Relationship
Bonds Bonds
Mass Personal
Customization Relationship
Customer Social Bonds
Intimacy among customers
Source : Berry & Parasuraman, 1991 12
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Session Coverage

• Bonding with Customer

• CRM Process Framework

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Thank You
More Questions?

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