Understanding

the Value of
Customer
Relationship
“ Is the customer always
right?

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 Relationship Marketing
✓ It is a long-term strategy with the focus
on building close relationships with your
customers.
✓ The goal of relationship marketing (or
customer relationship marketing) is to
create strong, even emotional, customer
connections to a brand that can lead to
ongoing business, free word-of-mouth
promotion and information from
customers that can generate leads. 3
Transactional vs. Relationship
Marketing

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Loyalty Ladder
✓ Loyalty in marketing is defined as
devoted patronage towards the
products.
✓ Adapted from Payne et Al., the
stages referred to make up the
loyalty ladder.

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Stage 1 Prospect- the company identifies the
possible buyers of the products. The company
needs to start engaging the target prospects
to make the first sale.
Stage 2 Customer- the company succeeds
to make a first sale. The prospect become a
customer. The company needs to make sure
that the customer repeats their order.
Stage 3 Client- the company needs to make
sure that the client advocates the product.
Stage 4 Advocate- the advocate is now
brand insistent.
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Customer Lifetime Value
✓ CLV is defined as the total profit of a
business from the lifetime patronage
of a customer.
✓ primary metric for understanding your
customers. To be more precise, it’s a
prediction of the value your
relationship with a customer can bring
to your business.

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 How to compute CLV?
Let us consider a customer of toilet paper.
Assuming that:
✓ A company will have P2.00 profit /roll.
✓ The customer uses 3 rolls a week
✓ The customer is 25 years old and the
lifespan is 60 years.
CLV no.of rolls per week x no. of weeks x
no. of years x profit per roll
CLV 3  52  35 x P2 P10,290

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Relationship
Development Strategies
1. Core Services Delivery
This is defined as delivering the
benefit offering satisfactory. It
takes into consideration customer
expectations from the benefit
offering and meeting these
expectations.

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2. Service Barrier- this is defined as
obstacles for switching. The service
barriers include customer inertia and
switching costs.

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3. Relationship Bonds
This is a strategy that uses
relationship ties to develop customer
loyalty.
✓ Financial bonds- defined as financial
benefits that work toward
strengthening the relationship.
✓ Social bonds - defined as social
connection that works toward
strengthening the relationship.

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✓ Customization bonds- defined as
customized offerings that work toward
strengthening the relationship through
customer intimacy, anticipation/
innovation and mass customization.
✓ Structural bonds - defined as
structural links that work toward
strengthening the relationship through
customized value -added innovation
services to make the customers more
productive.
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