Principles of BIS

Marketing

Term 1
Customer
Relationship
Management
"Customers are
always right."
Customers enjoy getting good value for their money. They
want to score the best deal when buying-the items they are
paying for may not necessarily be the cheapest, but the
benefits, features, and services they get out of them are
worth more than the actual price. One way of keeping
customers happy is by building a relationship with them.
Most retailers nowadays offer better value by offering
superb service, or giving customers "rewards" that they can
collect and use at a later time. Ensuring a pleasurable
experience for the customer will keep a company in their
mind.
Relationship Marketing

Relationship marketing is a strategy that

concentrates on keeping and improving relationships
with existing customers. It focuses on ensuring that
prospective and current customers maintain a long,
profitable relationship with the company. Some
programs not only enhance the relationship to keep
the customers loyal, but also encourage an increase in
consumption of the company's products.
Customer Value, Satisfaction, and Retention

CUSTOMER
VALUE

CUSTOMER
SATISFACTION

CUSTOMER
RETENTION
Customer Value, Satisfaction, and Retention

CUSTOMER
VALUE

CUSTOMER
SATISFACTION
The customer's
perception of the benefits
that he or she is getting CUSTOMER
from a product, in relation RETENTION
to the price paid to obtain
those benefits.
Customer Value, Satisfaction, and Retention

CUSTOMER
VALUE

CUSTOMER
SATISFACTION
The customer's
perception of the benefits
that he or she is getting The customer's CUSTOMER
from a product, in relation evaluation of the RETENTION
to the price paid to obtain performance of the
those benefits. product in relation to his
or her expectations
Customer Value, Satisfaction, and Retention
CUSTOMER
VALUE
The customer's
perception of the benefits
that he or she is getting
from a product, in relation
to the price paid to obtain
those benefits.
The company's effort to
maintain loyalty of
CUSTOMER customers
SATISFACTION
The customer's CUSTOMER
evaluation of the RETENTION
performance of the
product in relation to his
or her expectations
Customer Value
Customers want to get their money's worth when they purchase
something. Customer value is the ratio between the customer's
perceived benefits and the resources to obtain those benefits. For
example, if you are in the supermarket choosing between soap X
and soap Y, you weigh the benefits of choosing soap X (whitening,
moisturizing) versus soap Y (moisturizing) in relation to their prices
(soap X = P15, soap Y = P12). Whichever brand of soap you choose,
you are buying based on how you perceive the value of the product,
that is, you pay for the product that will give you the benefits that
you seek.
Customer Satisfaction
Customer satisfaction is the evaluation of the product's performance in relation to the
expectations set by the customer. For example, if a female customer bought soap X
because it promises to whiten her skin in seven days while keeping her skin moisturized,
she bases her expectations on that promise. If the product is able to meet the
expectations set by the customer, that is, her skin becomes fairer in seven days, she will be
a happy, satisfied customer. If the expectations are not met, she will be disappointed with
the product.

Customer Retention
Customer retention is an effort made by companies in order to keep customers happy and
loyal. From the very first encounter of customers with the product, companies strive to
maintain a positive relationship with them.
There are many reasons why companies want loyal customers. Among
which are as follows:

• Loyal customers buy more products. If a customer trusts a company, he or

she will buy more products from it, even if these are newly launched products.

• They are less price-sensitive. Customers usually will not mind price
increases or premium prices of a product if it meets their needs. For loyalty-
driven product categories such as skincare products, customers tend to be
loyal to a product as long as it provides solution to a particular skincare problem.

• They spread positive word of mouth. Loyal customers usually spread

positive feedback about a product or a brand. They may either share their
positive experiences about a product or brand to their circle of friends or post
them on their social media accounts.
Relationship Development Strategies
Companies need to exert effort in order to satisfy the needs of their customers and
keep them buying. Three factors affect the rationale of organizations' strategies in
keeping their customers: core service provision, switching barrier, and relationship
bonds.

CORE SERVICE PROVISION

includes service foundations that are built upon delivery of excellent service. In order
to do so, the company must be able to satisfy the customer by meeting the
expectations from a product. This, however, will be influenced by the perceived
quality of the product, or the subjective evaluation of a product's worth by a
customer in relation to his or her expectations from the product; and its perceived
value.
Relationship Development Strategies
SWITCHING BARRIER
It is the economic and psychological difficulty perceived by the customers if
they switch from one brand to another. A student in grade 9 will find it difficult to
transfer to another school because it will be hard for him or her to build new
friendship, or to cope with the lectures in the new school. This may also be true if
you are going to a different supermarket for the first time you will find that you
are unfamiliar with the aisles, so you spend more time finding the things that you
need. Some items may not be available, so you will spend more time and money
moving to another supermarket just to get what you need.
Relationship Development Strategies
RELATIONSHIP BOND
are retention strategies that keep the customer buying the same brand. This
strategy has four levels:

1. Financial Bond - At this level, the customer patronizes a brand because of

the financial incentives that he or she may receive from the company. These
may be in the form of discounts lower prices, or rewards points. Customers
who own a loyalty card in a supermarket may choose to buy from the same
establishment more frequently in order to collect points that can be
converted into rewards (gift items or cash credits).
Relationship Development Strategies
2. Social Bond - This type of bond focuses on the social and interpersonal relationship
men on between the company and the customer. This may be commonly observed in a
customer's relationship with his or her hair stylist, massage therapist, or even doctors.
Because this bond is not price-sensitive (consumers will not readily switch because of
the competitor's lower price), it may be difficult to make a customer switch to another
company.

3. Customization Bond- Customer loyalty may be encouraged when customers are

allowed to avail of tailored services to fit their individual needs. Simple customization,
such as granting a customer's request to remove beans from his or her halo-halo or
allowing a wet market suki to choose the best parts of meat, fall under this level.
Elements in levels 1 and 2 may be combined at this level, because a customer may enjoy
the extra service and incentives extended to him or her as a result of the social bond
developed with the business.
Relationship Development Strategies
4. Structural Bond - At this level, financial, social, and customization bonds are all
combined in order to deliver services that fit the need of the client or customer.
This may apply to business-to-business transactions--for example, the
company that is the official provider of uniforms most likely has a structural
bond with your school. The company provides timely delivery of school uniforms
upon the order of the school. and their agreement is covered by a contract that
specifies the quantity that the school orders from the uniform company, the
sizes and other customizations, and the terms of payment. Over time, as the
relationship develops, the uniform company may provide additional incentives or
discounts to the school for its loyalty and continued patronage.
Relationship Development Stages
Businesses deal with customers on a daily basis. A company's
relationship with various customers differs depending on how well
the staff knows the customer, how long the customer has been
shopping at the store, and how knowledgeable the customer is of
the company's products, among others.
Relationship Development Stages
Partners - Enhancing

Friends - Retaining

Acquaintances - Satisfying

Strangers - Acquiring
Relationship Development Stages
Customer as Stranger
A company's relationship with its customers starts as strangers. In
this stage, the customers are not familiar with the company's
products. They may have heard of the company, but they are not
entirely aware how they can benefit from the company. Because
the company is introducing itself to its customers, its marketing
goal is to acquire customers and earn their confidence. This can be
done through advertising, social media campaigns, sales
promotions, product trials, and other promotional activities.
Relationship Development Stages
Customer as Acquaintances
Once the customers understand what the company can do for them, they
move to the next stage: acquaintances. Here, the customers are trying out
the products of the company and investing a little by buying a product or
two. The goal of the company is to satisfy these new customers. Because
the relationship is still fragile at this point, the company should avoid
making a mistake and instead focus on providing superior customer
service and product quality. The customers may ask a lot of questions,
and may even doubt the effectiveness of the company's products, but
may be willing to take the risk so they can try the products.
Relationship Development Stages
Customer as Friends
Over time, customers who are satisfied with the company's products and services
will develop loyalty. In this stage, the company and the customers become friends.
The company's goal is to retain the customers and keep them close through different
marketing activities. Customers will only stay loyal if the company's products
continuously satisfy them. Maintaining product quality and consistent customer
service is important to ensure that customers continue valuing the company's
products, and will not stray to the competitors. Offering sales promotions from time
to time gives customers added value to their purchase. Giving superior customer
service, like sending customers a message when new stocks arrive, remembering the
customers' preferences, and knowing them by their first name may seem trivial but
are important simple services that the sales staff can be trained to do.
Relationship Development Stages
Customer as Partners
The last stage is when companies and customers are already partners.
Companies not only want to maintain the loyalty of their customers but also
enhance their relationship to ensure that the customer will always choose
to buy from them and not from the competitors. Enhancing the customer
relationship also strengthens the company's brand equity, or its credibility in
the eyes of the consumers. They are partners because as the company
provides value to the customers through loyalty programs, the customers
also provide value to the company by recommending it to friends, talking
about it on social media, promoting it in their social circle, and keeping it in
their top-of-mind choice.
Relationship Development Stages
 Learning Activity
Answer the following questions.

Have you ever has a bad

experience in a Do you have a favorite Why should companies
restaurant? What store that you always buy value customers as
happened? Did you go from? What makes you friends and partners?
back after your go back to buy again How can the company
unsatisfactory from that store? benefit from the
experience? Why or why customers, and vice
not? versa?