Relationship Marketing
(Part II)
Jeremy Kees, Ph.D.
Just to Review….
• Transaction–based marketing
(Simple exchanges)
• Relationship marketing
– Lifetime value of a customer
– Converting new customers to
advocates
From transaction-based marketing to
relationship marketing…
Relationship Marketing
Relationship Marketing
• Bonding: two parties must bond to
one another in order to develop a
long-term relationship
• Empathy: the ability to see
situations from the perspective of
the other party
Relationship Marketing
• Reciprocity: every long-term
relationship includes some giveand-take between the parties
• Trust: reflects the extent of one
party’s confidence in another
party’s integrity
• “credibility and honesty”
– CitiBank spot
– CitiBank spot2
– “Lifetime Guarantee”
Three Levels of Relationship Marketing
Characteristic
Level 1
Level 2
Level 3
Primary bond
Financial
Social
Structural
Degree of
customization
Low
Medium
Medium to high
Potential for
sustained
competitive
advantage
Low
Moderate
High
Customer Relationship
Management (CRM)
The combination of strategies and tools
that drive relationship programs, reorientating the entire organization to a
concentrated focus on satisfying
customers
Strategies for Building
Customer Relationships
• Affinity Programs
– a marketing effort sponsored by an
organization that solicits responses
from individuals who share common
interests and activities
– BOA
Strategies for Building
Customer Relationships
• Frequency Marketing
– frequent-buyer or user marketing
programs that reward customers with
cash, rebates, merchandise, or other
premiums
– Examples??
– Thankyou Rewards Spot
– But not just for hotels and
airlines…
Strategies for Building
Customer Relationships
• Database Marketing
– software that analyzes marketing
information, then identifies and
targets messages toward specific
groups of potential customers
– http://www.wyndham.com
Strategies for Building B2B
Relationships
• Strategic Alliances
– a partnership formed to create a
competitive advantage
– These more formal long-term
partnership arrangements improve
each partner supply-chain
relationships and enhance flexibility
– Wal-Mart!
Strategies for Building B2B
Relationships
• Electronic Data Interchange (EDI)
– involves computer-to-computer
exchanges of invoices, orders, and
other business documents
• Vendor Managed Inventory (VMI)
– is an inventory-management system
in which the seller–based on existing
agreement with a buyer– determines
how much of a product is needed
Evaluating Relationships
• Lifetime Value (LTV)
– Refers to the net present value of the
potential revenue stream for any particular
customer over a # of years
– Starts with current purchase activity then
extrapolates to include potential additions
from cross-selling, upgrades, total
ownership, etc.