Customer Relationship

Management Strategies
Chapter 4
 Customer Relationship Marketing
 Why do some companies succeed?
 Collaborative advantage
•“
 Relationship Marketing
 “All activities directed toward
establishing, developing, and
maintaining successful changes with
customers and other constituents.”
 Why?
Relationship Marketing
 Relationship Marketing
 Transactional exchange
• Definition
• Distant exchanges
• One of many suppliers
• Few operational linkages
 What’s an operational linkage?
 Relationship Marketing
 Collaborative exchange
• Definition
• Work closely together
 Value-adding exchanges
• Attracting customers Maintaining
customers
 Relationship Marketing
 Nature of relationships
• Transactional
 Standardized
 Competitive bidding
• Collaborative exchange
 Customized product
 Work together through linkages
 Relationship commitment
 Trust
• Reliability and integrity
 Relationship Marketing
Transactional Collaborative
Availability of
Alternatives
Supply Chain
Dynamism
Importance of
Purchase
Complexity of
Purchase
Information
Exchange
Operational
Linkages
 Relationship Marketing
 Strategy Guidelines
• Match purchasing situations and supply
chain conditions for each customer!
• Collaborative
 How to handle?
• Transactional
 How to handle?
 Measuring Customer Profitability
 Common mistake
• Two factors must be present for differentiation
to work
 Activity Based Costing
• Aggregate v. Individual firms
 Unlocking Customer Profitability
• 20/80 rule
• Corollary
• Big companies are usually most profitable or
least profitable
 Measuring Customer Profitability
 Managing High- and Low-Cost-to-
Serve Customers
• What makes some customers
expensive?
• Look inside first
• Sharper profit lens
 See next slide
Measuring Customer Profitability
 Measuring Customer Profitability
 Identifying Profitable Customers
• Location on chart
• How to maintain?
 Identifying Unprofitable Customers
• Location on chart
• How to improve the situation?
• Fire customers?!
 Why?
 How?
 Customer Relationship
Management
 “Cross-functional process for
achieving
• continuing dialogue with customers
• across all their contact and access
points, with
• personalized treatment of the most
valuable customers
• to ensure customer retention and the
effectiveness of marketing initiatives”
 Customer Relationship
Management
 Develop Customer Strategy, THEN
choose software
 Five Steps for Customer Strategy
• Acquiring the right customers
• Crafting the right value proposition
• Instituting best processes
• Motivating employees
• Learning to retain customers
 Customer Relationship
Management
 Acquiring the Right Customers
• Look at current and potential customers
• Balance desired level of relationship
with profitability of doing so
• Choosing accounts
 Three factors
 How do they define value?
 Look at profit potential
 Customer Relationship
Management
 Crafting the Right Value Proposition
• Value proposition- “the products,
services, ideas, and solutions that a
business marketer offers to advance the
performance goals of the customer
organization.”
• Look at industry- what are others doing?
Customer Relationship
Management
 Customer Relationship
Management
• Industry bandwidth
 The strategies competing firms in an
industry pursue
• Flaring out by unbundling
• Flaring out with augmentation
• Create Flexible Service Offering
 Customer Relationship
Management
 Instituting the Best Practices
• Salespeople
• Others
 Motivating Employees
• Why?
• How?
 Retaining Customers
• Why?
• Growth from existing customers
• Evaluate relationships
 Gaining an Advantage at CRM
 Customer-Relating Capability
• Orientation toward relationships
 Customer retention is a shard goal
 Organizational members act quickly on info received
from customers
 All employees understand and appreciate the lifetime
value of a customer
 Employees have considerable latitude when taking
actions
• Information about relationships
• Configuration
 Org. structure and performance measures
Gaining a Position of Advantage
 What works best?