CHAPTER 2 CUSTOMER RELATIONSHIP:

CUSTOMER SERVICE

Lesson 1: Relationship Marketing

 What is “Relationship Marketing?”
It isn’t “talking to customers,” and
it’s more than “listening to
customers.”
It is actively listening to and being
involved with customers and suppliers
as a normal part of your business.
It is “an organization’s effort to
develop a long term effective link with
all stakeholders for mutual benefit.”
 RELATIONSHIP MARKETING
According to Serrano, Relationship Marketing
includes activities aimed at developing and
managing trusting and long-term relationships
with larger customers. (Customer profile, buying
patterns and history of contacts are kept in a
sales database) Relationship marketing is a
strategy designed for customer loyalty,
interaction, and long-term engagement to be
fostered. Customer Relationship focuses more on
long-term customer retention than acquiring large
numbers of new and potentially single-transaction
customers.
 Characteristics of Relationship
Marketing:
1. It focuses on the long-term
rather than the short-term.
2. It focuses on partners and
customers rather than on the
company’s products.
3. It puts more emphasis on
customer retention and growth than
on customer acquisition.
4. It relies on cross-functional
teams rather than on departmental-
level work.
5. It relies more on listening and
learning than on talking.
Relationship Marketing is designed
to develop strong connections with
customers by providing them with
information directly suited to their
needs and interests by promoting
open communication.
 Relationship marketing calls for new
practices within the 4p’s.

PRODUCTS
▹More products are customized to the customers’ preferences.
▹New products are developed and designed cooperatively
with suppliers and distributors.

PRICE
▹The company will set a price based on the relationship with
the customer and the bundle of features and services ordered
by the customer.
▹In business-to-business marketing, there is more negotiation
because products are often designed for each customer.
 PLACE
▹RM favors more direct marketing to the customer, thus
reducing the role of middlemen.
▹RM favors offering alternatives to customers to choose the
way they want to order, pay for, receive, install, and even
repair the product.

PROMOTION
▹RM favors more individual communication and dialogue with
customers.
▹RM favors more integrated marketing communications to
deliver the same promise and image to the customer.
▹RM sets up extranets with large customers to facilitate
information exchange, joint planning, ordering, and payments.
Customer Value,
Satisfaction and
Retention
 Customer Value
It is the level of satisfaction of your
customer towards your business. The
word “Value” can have a number of
definitions or meanings. It’s often
related to price for those in business, as
well as for many consumers – like if I
were to ask you the value of your home
when you purchased it. It could also be
interpreted as the worth of something,
not necessarily tangible products either.
Both products and services have value.
 Customer Satisfaction
It is a measure of how products and
services supplied by a company meet or
surpass customer expectation.
Customer satisfaction is defined as
"the number ofcustomers, or
percentage of total customers, whose
reported experience with a firm, its
products, or its services (ratings)
exceeds specified satisfaction goals.“
 Customer Retention
It refers to the activities and actions companies
and organizations take to reduce the number
of customer defections. The goal of customer
retention programs is to help companies retain
as many customers as possible, often through
customer loyalty and brand loyalty initiatives. It
is important to remember that customer
retention begins with the first contact a
customer has with a company and continues
throughout the entire lifetime of the
relationship.
Reasons why companies
want loyal customers:
1. Loyal customers buy more
products.
2. Loyal customers less price-
sensitive.
3. Loyal customers spread
positive word of mouth.
Reasons why companies
want loyal customers:
1. Loyal customers buy more
products.
2. Loyal customers less price-
sensitive.
3. Loyal customers spread
positive word of mouth.
Reasons why companies
want loyal customers:
1. Loyal customers buy more
products.
2. Loyal customers less price-
sensitive.
3. Loyal customers spread
positive word of mouth.