Learning Module in Principles of Marketing

INTRODUCTION

About the Module

Any individual or organization that voluntarily decides to purchase goods and/or services
from other individuals or organizations is referred to as a customer. In these transactions,
money is oftentimes used as an exchange for the value that the customer receives through
the good and/or service acquired. Through these exchanges, business organizations are able
to cover operating expenses and generate profits. Multiple and repeat purchases keep
businesses operating profitably.

How to join the VSMART?

1) Install VSMART application or visit the website:

school.vsmart.ph
2) Log in your given username and password
3) Go to your scheduled lesson

Customer Relationship: Customer Service

Module Objectives
By the end of this module, learners are expected to:
. define “relationship marketing” (ABM_PM1 1 -lc-d-5);

. explain the value of customers (ABM_PM1 1-lc-d-6);

. identify and describe “relationship development strategies” (ABM_PM1 1 -lc-d-7); and

. illustrate successful customer service strategy in the Philippine business enterprise

(ABM_PM1 1 -lc-d-8).

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Module 1: Relationship Marketing

The relationship marketing concept believes

that all marketing activities are for the
purpose of establishing, maintaining, and
strengthening meaningful long term
relationships with customers.

In relationship marketing extensive customer databases are created, maintained, and

updated. Customer profiles, purchase habits, and preferences are tracked and monitored.
This is to ensure that customers’ needs are fulfilled and the relationship with them is
maintained.

To learn more about relationship marketing, you may visit

https://www. Marketing-schools.org/types-of-marketing/relationship-marketing.html.

Customer Relationship (CRM) is the process of

managing an organization’s interactions with
its current and future customers.

Customer Lifetime Value

Customer lifetime value (CLV) ¡s the forecasted sales or profits that a company can derive
from the entire span of the future relationship with a particular customer.

A customer’s lifetime value can be based upon the potential value and profitability of their
relationship with the company.

The CLV perspective has several distinct implications:

It considers a longer-term perspective of a company’s relationship with customers in contrast
to a short-term view of “take the customer’s money and run.”

 It calculates and compares costs of acquiring new customers and keeping old ones.
This can be used to determine the revenues that are lost when an existing customer
switches to another product. Costs for getting new customers are called acquisition
costs, whereas, costs for maintaining existing customers are called retention costs.
These are normally in the form of customer support and promotional incentives.

 It highlights the importance of market segmentation, with the recognition that some
customer groups are more profitable than others.

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CLV can be measured using the formula:
Customer Lifetime Value
Average peso
value of a sale to Number of repeat Average retention Customer
a particular × purchases in a × time in months or = lifetime
customer or or year years value
customer group

If gross profit is used instead of sales, the result will show the total profit that can be
generated from a customer in his/her entire lifetime.

By knowing the value or worth of its customers, a company can focus its resources in
attracting and keeping the “right” type of customers. This focus will improve CRM efforts and
will position the company for innovation and growth.

Companies must, however, exercise care in favoring high-value over medium-value

customers. Sometimes, high-value customers can become “saturated” and limit future
purchases. On the other hand, medium-value customers can be converted into high-value
customers through marketing programs designed to increase usage, usage frequency, or
usage per occasion.

Innovators or early adapters are valuable CLV targets.

These are customers who are quick to buy a new product or try a new service. This is
especially true when they are also opinion leaders and are capable of substantially
influencing demand. Although their CLV may be relatively low because some of them may
not buy again for quite a while, they nevertheless wield a lot of influence to the early majority
or those customers who purchase the product after them.

Successful Customer Relationship

Management Strategies

The following are effective guidelines in the

implementation of customer relationship
management:

 adopt the right mindset toward

customer service;

 purchase or develop CRM software;

 quantify customer acquisition retention costs;

 develop and implement a customer service training program;

 empower salespersons to make decisions;

 establish to communication lines between your customer and customer contact staff;

 shop your competition;

 keep innovating customer service and

 promote genuine customer service with a passion

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Assessment

Essay
1. In 150-200 words, illustrate successful customer service strategy in the Philippine
Business enterprise. Do not forget to cite your sources.