Chapter 5
Developing Customer Relationships
Through Quality, Value & Satisfaction
Customer Relationship
Management (CRM)...
Move from ‘acquiring customers’ to ‘maintaining
clients’
Process of identifying, attracting, differentiating &
retaining customers
Integrating a firm’s entire supply chain to create
customer value at each phase (increased benefits
&/or lower costs)
Producing high profits through increased business
from the firm’s customer base
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CRM Considers Key
Stakeholders…
Employees must be satisfied if they are to
serve customers needs
Supply chain partner relationships are key to
satisfying customers
Lateral partners including
government, nonprofit
organizations & facilitating
firm relationships must be
managed
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CRM’s Goal is to Increase the
Share of Customers
Focusing on serving the needs of current
customers
Requires an understanding that all customers
have different needs & therefore not all
customers have equal value to a firm
– 80/20 Rule: 80% of your profits may come from as
little as 20% of your customers
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Requirements for Customized
Marketing Mixes...
Marketing mix (product, price, promotion &
distribution) delivery must be automated to a
degree that makes it cost efficient
Personalization
– giving customers choices in marketing mix
variables
Firms must build ‘relationship capital’
– ability to build & maintain customer, supplier &
partner relationships
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Identify Several Companies that Excel at
Offering Customized Marketing Mixes...
How does the target market for these
companies vary from that of their competitors?
How do you defend developing customized
marketing mixes for customers?
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Quality Considerations in CRM
Core product-part of the product that delivers
the key benefits desired by consumers
Customer services-activities that add value to
the core product, further differentiating it from
competitors
Symbolic attributes-image, style, prestige, &
brand (i.e.-Rolls Royce, Mont Blanc, & Neiman
Marcus)
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Identify Companies that Excel in
Each of the Following Areas...
Core product
Customer services
Symbolic attributes
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Ways Businesses Can Improve
the Quality of their Services...
Understand customers’ expectations, needs &
wants
Translate customer research into specifications for
quality
Deliver on quality specifications
– involves training & motivating employees
Promise only what you can deliver
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Value in CRM...
Value is the customer’s subjective evaluation
of benefits relative to costs
Helps determine the worth of a firm’s product
relative to the offerings of other firms
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Perceived Value
Customer Benefits
– core product quality
• features, brand, styling,
image, durability
– customer service quality
• reliability, responsiveness,
timeliness, friendliness
– experience based quality
• retail atmosphere & décor,
advertising & publicity,
entertainment benefits
Customer Costs
– monetary costs
• transactional
– price, add’l charges, taxes
• life cycle costs
– maintenance, repairs, &
replacement cost
– non-monetary costs
• time
• effort
• risk
• safety & security
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• opportunity
Maintaining Long Term Customer
Satisfaction...
Understand what can go wrong
Focus on issues that are controllable
Make customer satisfaction measurement an
ongoing priority
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Ways to Measure Customer
Satisfaction...
Lifetime value of a customer
Average order value
Customer acquisition/retention costs
Customer retention rate
Referrals
Viral marketing
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