Customer Relationship
Management Strategies
Chapter 4
Customer Relationship Marketing
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Why do some companies succeed?
Collaborative advantage
•“
Relationship Marketing
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“All activities directed toward
establishing, developing, and
maintaining successful changes with
customers and other constituents.”
Why?
Relationship Marketing
Relationship Marketing
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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
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Standardized
Competitive bidding
• Collaborative exchange
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Customized product
Work together through linkages
Relationship commitment
Trust
• Reliability and integrity
Relationship Marketing
Transactional
Availability of
Alternatives
Supply Chain
Dynamism
Importance of
Purchase
Complexity of
Purchase
Information
Exchange
Operational
Linkages
Collaborative
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-toServe 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?!
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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

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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
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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
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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
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What works best?