Senior High School

Principles of Marketing
Quarter 1 – Module 3:
Customer Relationship

Writer:
RONIE MARC A. YUSI
T-II Potrero National High School,
Bacolor South
Editors:
JANE P. VALENCIA, EdD – Math/ABM Supervisor
CHAIRMAN
MARK JOSEPH V. SANGIL, DBA – M
 What I Need to Know

This module was designed and written with you in mind. It is here to help you master
Relationship Marketing. The scope of this module permits it to be used in many
different learning situations. The language used recognizes the diverse vocabulary
level of students. The lessons are arranged to follow the standard sequence of the
course. But the order in which you read them can be changed to correspond with the
textbook you are now using.

The module is divided into 2 learning competencies (LC), namely:

Define “relationship marketing”
Explain the value of customers

After going through this module, you are expected to:

1. Identify and describe “Relationship Management”
2. Illustrate Relationship Marketing Best Practices and
3. Explain The Customer Lifetime Value

2
 What I Know

Pre – Assessment
Multiple Choice. Choose the letter of the best answer. Write the chosen letter on a
separate sheet of paper.

1. What is the odds or probability in of selling a product to a new customer?

A. 5–10%
B. 5–15%
C. 5–20%
D. 5–25%
2. RT in CLV formula means what?
A. Retention Time
B. Repeat Time
C. Revisit Twice
D. Repurchase Twice
3. What CLV represents?
A. The total amount of money a customer is expected to spend in your
business.
B. The total amount of investment a customer is expected to invest in your
business
C. The total amount of money a customer is expected to loan in your business
D. All of the above
4. Relationship marketing mainly involves in improvement of what operations?
A. Administrative Operations
B. External Operations
C. Financial Operations
D. Internal Operations
5. What other aspect that also plays an important role in relationship marketing?
A. Competitors
B. Exposure
C. Technology
D. World Wide Web
6. What gauges CLV that associated with a particular customer relationship?
A. Asset
B. Business
C. Liability
D. Profit
7. What is the final component of relationship marketing?
A. Branding
B. Commercial
C. Delivery
D. Exposure
8. Relationship marketing, by contrast, is usually not linked to a single _______ or
_________.
A. Purchase – Offer
B. Product – Offer
C. Purchase – Item
D. Product – Item
9. What allows business to engage their customers in an informal and ongoing way?
A. Information Technology
B. Social Media Sites
C. Websites

3
 D. Yahoo Mail
10.PV in CLV formula means?
A. Peso Value
B. Purchase Value
C. Product Value
D. Price Value
11. Set expectations regarding delivery dates, aiming to ____________ and overdeliver.
A. Overpromise
B. Overprice
C. Underpromise
D. Underprice
12.What relationship marketing tries to foster by providing exemplary products
and services?
A. Customer Behavior
B. Customer Satisfaction
C. Customer Service
D. Customer Loyalty
13.What formula is being used in computing CLV?
A. CLV = (PV)(RB)(RT)
B. CLV = (PV)(RP)(RP)
C. CLV = (PV)(RP)(RT)
D. CLV = (RV)(RP)(RT)
14.How many Relationship Marketing Best Practices where discuss?
A. 10
B. 12
C. 14
D. 16
15.It talks about forming long-term relationships with customers.
A. Customer Relationship
B. Customer Service
C. Relationship Service
D. Relationship Marketing

4
 Lesson

1 Relationship Marketing

Marketing is a form of communicating or promoting the value of a product, service, or

brand to the consumers. Prior to the marketing of specific products and/or services, a
marketing company conducts a thorough analysis of the external environment, the
market, its competitors and consumers, and an incisive audit of its internal operating
characteristics.

What’s In

From previous lesson as being discuss about customer driven marketing, relationship
marketing defining customer service to appreciate the value of customers. We saw and
highlighted the Philippines best practices when it comes to customer service. We also
found out that many companies where competing just to have a loyal customers or
catch new one. For this module we will discussing on how companies make their
customers more loyal to them and how often this customers visit a certain
establishment. How companies get repeat customers and get to know the customers
lifetime value and in the end of this module you will know some successful customer
relationship management practices.

Notes to the Teacher

Review Previous Module for the continuity of the lesson

5
 What’s New

“ Home is where love is”

As they said, there’s no place like home, you will find love and be loved at home.
You can relax at home, you sleep, eat and cuddle at home. Have you experience in
your life that from the moment you woke up, your mother already prepared your
breakfast? Your father is ready to drive you to school? Your brother or sister already
fixed your belongings? Is yes, ask yourself, did you ask them to do that for you? If no,
ask yourself again. Why did they do that for you? If you don’t know the answer, just
read the title of this story. There are things that surprise us every day. Majority of this
surprises happens at home. For the simple things like your mother cooked your
favorite dish. Your father brought you your favorite shirt. Your brother never forget
your special days. Your sister who prepares your snacks. Why they all do these to
you? The simple answer is because they Love you. But that is an obvious answer. If
you will scrutinized the scenario, they all come up doing those things that surprise
you is because they know you. They know a lot of things about you. In order for them
to meet your expectation, they need to go beyond your perception.

What if those surprising moment that you experience at home will happen now
outside your house. Isn’t it amazing? What if you go to your favorite restaurant and
upon entering to that door, they acknowledge you and they call you by your name,
won’t you be shocked? And later then upon seating on that table, they greeted you
Happy Birthday, and you are shocked again as you never told them about your special
day. This moment will make you think that you’re at home because people around you
know you.
Many companies now a days gather data about their customers in order for them to
serve them better and the most is to surprise them and satisfy them. Companies are
investing time in data gathering in order to show how they value their customers and
make them loyal to them. And they want their customer to feel that they are part of the
company and they are very much valued. Just like in your household, your parents and
family member invested time, for them to know what are your needs and wants, for them
to delight you every single day. This is just a simple gesture but at the end of the day, you
felt love and very much appreciated by other people.

What is It

Relationship Marketing
Relationship marketing is about forming long-term relationships with customers.
Rather than trying to encourage a one-time sale, relationship marketing tries to foster
customer loyalty by providing exemplary products and services. This is different than most
normal advertising practices that focus on a single transaction; watch ad A and buy
product B. Relationship marketing, by contrast, is usually not linked to a single

6
product or offer. It involves a company refining the way they do business in order to
maximize the value of that relationship for the customer.

Relationship marketing mainly involves the improvement of internal

operations. Many customers leave a company not because they didn't like the
product, but because they were frustrated with the customer service. If a business
streamlines its internal operations to satisfy all service needs of their customers,
customers will be happier even in the face of product problems.
Technology also plays an important role in relationship marketing. The
Internet has made it easier for companies to track, store, analyze and then utilize vast
amounts of information about customers. Customers are offered personalized ads,
special deals, and expedited service as a token of appreciation for their loyalty.
Social media sites allow business to engage their customers in an informal
and ongoing way. In the past, it would have been impossible to keep useful records
about every single client, but technology makes it easy for companies to automate
their marketing efforts.

Branding is the final component of relationship marketing. A company can form

a long-term relationship with a client if that client feels like the brand they purchase
reflects who they are or who they want to be. Customers are less inclined to switch to
a different brand if they think that switch makes a statement about their identity.

Relationship Marketing Best Practices

1. Conduct regular polls and surveys to solicit feedback from customers.
2. Respect that feedback and incorporate it into the company's
business practices.
3. Use any and all social media outlets to connect with customers.
4. Have effective customer monitoring technologies in place.
5. Use clear policies to dictate how all company employees should interact
with customers in both positive and negative situations.
6. Leverage the value of warm leads – customers who have already expressed
an interest in the company.
7. Have a comprehensive customer relationship management strategy.
8. Conduct regular training sessions for all members of staff.
9. Stay on the cutting edge of product offerings.
10. Do not sacrifice quality for innovativeness.
11. Maintain a high customer satisfaction rate in all areas of the company.
12. Make an effort to inform customers how much they are appreciated

7
What is Customer Lifetime Value (CLV)?
The lifetime value of a customer, or customer lifetime value (CLV),
represents the total amount of money a customer is expected to spend in your
business, or on your products, during their lifetime. This is an important figure to
know because it helps you make decisions about how much money to invest in
acquiring new customers and retaining existing ones.

For example, the CLV of a Honda owner might be as much as $100,000 if

they are happy with their car or minivan choice and end up buying several through
the years. Or the CLV of a regular coffee drinker might be even higher than that,
depending on how many cups of coffee they drink a day and where they buy it.
Conversely, someone who buys a home twice in their life might only be worth, say,
$15,000 to a real estate agent, because while the value of the purchase is huge, the
percentage paid to an agent is only a fraction of that.

In the big picture, CLV is a gauge of the profit associated with a particular
customer relationship, which should guide how much you are willing to invest to
maintain that relationship. That is, if you estimate one customer’s CLV to be $500,
you wouldn’t spend more than that to try and keep the relationship. It just
wouldn’t be profitable for you.

Calculating CLV
The simplest way to calculate CLV is:

CLV = (PV)(RP)(RT)
Where
PV is the average peso value of a sale to a particular customer or customer
group.
RP is the repeat purchases in a year
RT is the retention time in months or years
CLV is the customer lifetime value

For example, an athlete who spends p2,000.00 for every visit to spa and goes
to the spa twice a month for an expected time period of five years would have a CLV
computed as:

Let PV = P2,000.00
RP = 24 (twice a month for 1 year)
RT = 5 years
CLV=?

CLV = (PV)(RP)(RT)
= (2,000)(24)(5)
= P240,000.00

The athlete’s Customer Lifetime Value is P240,000.00

8
 The Value of Knowing Your CLV
Calculating the CLV for different customers helps in a number of ways, mainly
regarding business decision-making. Knowing your CLV you can determine,
among other things:

How much you can spend to acquire a similar customer and still have a
profitable relationship
What kinds of products customers with the highest CLV want
Which products have the highest profitability
Who your most profitable types of clients are
Together, these types of decisions can significantly boost your business’ profitability.

Boosting Lifetime Value

Since the odds of selling to a current customer is 60-70%, according
to eConsultancy, and the odds of selling to a new customer are 5-20%, investing
your resources in selling more to your existing customer base is the key. So what
tactics will increase the likelihood of a customer buying more from you? Here are
some proven techniques:

Make it easy for customers to return items they’ve purchased from you. Making
it hard or expensive will significantly reduce the odds of them making another
purchase.
Set expectations regarding delivery dates, aiming to under promise and over deliver.
It’s much better to promise delivery by August 1 and have it in their hands by July
20th than the reverse.
Create a rewards program to encourage repeat purchases, with rewards that are
both attainable and desirable.
Offer freebies for doing business with you, to build brand loyalty.
Use upsells to increase the average value of a customer transaction, which is the
equivalent of McDonald’s asking, “Do you want fries with that?”
Stay in touch. Long-time customers want to know you haven’t forgotten them. Make
it easy for them to reach out to you as well.
You’ll build a more profitable, successful business by focusing on attracting and
retaining long-term customers who will become advocates for you, as well as
repeat buyers.

9
 What’s More
Answer the following activity and show your solution on the
space provided.

Activity 1:
From the moment you started Junior High School. You always buy sandwich in
your canteen. You are spending p20.00 for the sandwich every day, Monday to Friday.
Can you compute for your Customer lifetime value if you buy sandwich 20 times every
month within 8 months for an expected time period of 4 years.
__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________
__________________________________________________________________________________

Activity 2:
Since we are in a stay at home policy. Your family tend to purchase essential
good thru online market shop. Your family is spending p5,000.00 twice a month for
online purchase for an expected time period of 1 year would have a CLV computed as:

__________________________________________________________________________________
__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Activity 3:
As a student good grooming is very important. Once month you regularly visit your
favorite local barber shop/salon. For the basic haircut, you are spending p50.00. and you
are expected to do this for 10 years. What would be the customer lifetime value?

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

10
 What I Have Learned

Complete the sentence by filling the spaces with appropriate answer

based on the discussion.

KEY POINTS

Relationship marketing is about forming ______________________with customers.

Relationship marketing mainly involves the improvement of _________operations. If
a business ____________________________to satisfy all service needs of their
customers, customers will be happier even in the face of product problems.
Branding is the final _____________of relationship marketing.
Customers are less inclined to _________________if they think that switch makes
a statement about their identity.
The lifetime value of a customer, or customer lifetime value (CLV), represents
the____________________________________________________________________, or on
your products, during their lifetime.
PV is the average _________________of a sale to a particular customer or
customer group.
Social media sites ______________________their customers in an informal and
ongoing way.
CLV = (PV)(____)(RT)
CLV is a _____________________associated with a particular customer
relationship, which should guide how much you are willing to invest to
maintain that relationship.

What I Can Do

What Relationship Marketing Best Practices being describe on each

scenarios? Write the Relationship Marketing Best Practices, in the space provided.
1. Burger King regularly ask their customers to fill up their survey form, based on
their food and restaurant experiences.
Ans. ______________________________________________________________________
2. Managers in the Restaurants always train and calibrate the standards of
their employees in order for them to meet the high customer satisfaction.
Ans. ______________________________________________________________________
3. A Company never get tired in replaying on customer’s queries and feedback
and always thanking them to show how much they appreciate them.
Ans. ______________________________________________________________________
4. In spite of completion Samsung never uses low quality materials in making
and innovating their mobile phones to avoid customer dissatisfaction.
Ans. ______________________________________________________________________
5. A company accepts negative feedback and advises from customers and adopt
what they think can be useful to their brand.
Ans. ______________________________________________________________________
6. Mc Donalds uses all multimedia platforms in order for them to connect
with their customers.
Ans. ______________________________________________________________________

11
 7. Department Store nationwide uses standard operating procedures in
answering customer concern whether positive or negative in order for them to
have a unified answers when dealing with customers.
Ans. ______________________________________________________________________
8. At Kenny Rogers Roaster a Guest Comment Card was frequently hand over to
customers to answer and they can write about their restaurant experience.
Ans.______________________________________________________________________
9. Just like Mc Donald, Enervon Vitamins Advertisements can be seen in
Facebook, YouTube, Tweeter and a like.
Ans.______________________________________________________________________
10.Starbucks call their customers by name upon serving their drinks and
connecting with customers by having simple chat with them. This what
makes the coffee shop outstand their competitors.
Ans.______________________________________________________________________

Assessment

Multiple Choice. Choose the letter of the best answer. Write the chosen letter on a
separate sheet of paper.
1. What formula is being used in computing CLV?
A. CLV = (PV)(RB)(RT)
B. CLV = (PV)(RP)(RP)
C. CLV = (PV)(RP)(RT)
D. CLV = (RV)(RP)(RT)
2. How many Relationship Marketing Best Practices where discuss?
A. 10
B. 12
C. 14
D. 16
3. It talks about forming long-term relationships with customers.
A. Customer Relationship
B. Customer Service
C. Relationship Service
D. Relationship Marketing
4. What is the odds or probability in of selling a product to a new customer?
A. 5–10%
B. 5–15%
C. 5–20%
D. 5–25%
5. RT in CLV formula means what?
A. Retention Time
B. Repeat Time
C. Revisit Twice
D. Repurchase Twice
6. What CLV represents?
A. The total amount of money a customer is expected to spend in your
business.
B. The total amount of investment a customer is expected to invest in your
business
C. The total amount of money a customer is expected to loan in your business
D. All of the above
7. Relationship marketing mainly involves in improvement of what operations?
A. Administrative Operations

12
 B. External Operations
C. Financial Operations
D. Internal Operations
8. What other aspect that also plays an important role in relationship marketing?
A. Competitors
B. Exposure
C. Technology
D. World Wide Web
9. What gauges CLV that associated with a particular customer relationship?
A. Asset
B. Business
C. Liability
D. Profit
10.What is the final component of relationship marketing?
A. Branding
B. Commercial
C. Delivery
D. Exposure
11. Relationship marketing, by contrast, is usually not linked to a single _______ or
_________.
A. Purchase – Offer
B. Product – Offer
C. Purchase – Item
D. Product – Item
12. What allows business to engage their customers in an informal and ongoing way?
A. Information Technology
B. Social Media Sites
C. Websites
D. Yahoo Mail
13.PV in CLV formula means?
A. Peso Value
B. Purchase Value
C. Product Value
D. Price Value
14. Set expectations regarding delivery dates, aiming to ____________ and over deliver.
A. Overpromise
B. Overprice
C. Under promise
D. Underprice
15.What relationship marketing tries to foster by providing exemplary products
and services?
A. Customer Behavior
B. Customer Satisfaction
C. Customer Service
D. Customer Loyalty

13
 Additional Activities

To further deepen your understanding about the lesson especially in

Customer Lifetime Value. Kindly study and answer the following activities using the
format provided.

1. Mrs. Abad spends P4,000.00 for every visit to a supermarket twice a month
for an expected time period of five years.
2. Mr. Alfonso spends P1,500.00 every visit to a fast food chain with his wife and 2
children once a month for an expected time period of one year.
3. An Overseas Filipino Worker from Dubai spends P3,000.00 for every package
she sends to the Philippines via courier service once a year for an expected
time period of three years.

PV = _____________
RP = _____________
RT = _____________

Computation:
_______________________
_______________________
_______________________
_______________________

CLV = _____________

References
Principles of Marketing by Real C. SO
Oscar G. Torres
Angeles A. de Guzman, DBA
Published by Vibal Group Inc.
Copyright 2016 by Vibal Group Inc. and
Real C. So and Oscar G. Torres

https://www.marketing-schools.org/types-of-marketing/relationship-marketing.html
https://www.shopify.com/encyclopedia/customer-lifetime-value-clv