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    Building Customer Relationships

    Uploaded by

    Madhav Nemalikanti
    service marketing

    Copyright:

    © All Rights Reserved
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    Building Customer Relationships

    Uploaded by

    Madhav Nemalikanti
    38 views13 pages
    service marketing

    Original Title

    Session 6

    Copyright

    © © All Rights Reserved

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    service marketing

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    38 views13 pages

    Building Customer Relationships

    Uploaded by

    Madhav Nemalikanti
    service marketing

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 13

    7

    Chapter
    Building Customer Relationships

    Relationship Marketing

    Relationship Value of Customers

    Customer Profitability Segments

    Relationship Development Strategies

    Relationship Challenges
    2006 The McGraw-Hill Companies, Inc. All rights reserve. McGraw-Hill!Irwin
    Relationship Marketing

    is a philosophy of doing business, a strategi orientation, that


    fouses on keeping urrent ustomers and improving
    relationships !ith them

    does not neessarily emphasi"e a#uiring ne! ustomers

    is usually heaper $for the firm%

    keeping a urrent ustomer osts less than attrating a ne! one

    thus, the fous is less on attration, and more on retention and


    enhanement of ustomer relationships
    2006 The McGraw-Hill Companies, Inc. All rights reserve. McGraw-Hill!Irwin
    &igure 7'(
    Customer )oals of Relationship Marketing
    2006 The McGraw-Hill Companies, Inc. All rights reserve. McGraw-Hill!Irwin
    Benefits of Relationship Marketing

    Benefits for Customers*

    Reeipt of greater value

    Confidene benefits*

    trust

    onfidene in provider

    redued an+iety

    Soial benefits*

    familiarity

    soial support

    personal relationships

    Speial treatment benefits*

    speial deals

    prie breaks

    Benefits for Firms*

    ,onomi benefits*

    inreased revenues

    redued marketing and


    administrative osts

    regular revenue stream

    Customer behavior benefits*

    strong !ord-of-mouth endorsements

    ustomer voluntary performane

    soial benefits to other ustomers

    mentors to other ustomers

    .uman resoure management


    benefits*

    easier /obs for employees

    soial benefits for employees

    employee retention
    2006 The McGraw-Hill Companies, Inc. All rights reserve. McGraw-Hill!Irwin
    &igure 7'0
    Profit )enerated by a Customer
    1ver 2ime
    Source* 3n e+hibit from &' &' Reihheld and 4' ,' Sasser, 5r', 67ero Defetion* 8uality Comes to Servies,99 Harvard
    Business Review, September:1tober (;;<'
    2006 The McGraw-Hill Companies, Inc. All rights reserve. McGraw-Hill!Irwin
    &igure 7'=
    Profit >mpat of ? Perent >nrease in
    Retention Rate
    Source* &' &' Reihheld, 6@oyalty and the Renaissane of Marketing,A Marketing Management, vol' 0, no' B $(;;B%, p' (?'
    2006 The McGraw-Hill Companies, Inc. All rights reserve. McGraw-Hill!Irwin
    2able 7'(
    @ifetime Value of an 3verage Business
    Customer at 2elehek >nternational
    2006 The McGraw-Hill Companies, Inc. All rights reserve. McGraw-Hill!Irwin
    Customer @oyalty ,+erise

    2hink of a servie provider to !ho you are loyal'

    4hat do you do $your behaviors, ations, feelings% that


    indiates you are loyalC

    4hy are you loyal to this providerC

    4hat fators have influened the formation of your loyaltyC


    2006 The McGraw-Hill Companies, Inc. All rights reserve. McGraw-Hill!Irwin
    Most profitable
    customers
    Least profitable
    customers
    What segment spends more with us
    over time, costs less to maintain,
    spreads positive word-of-mouth?
    What segment costs us in time,
    effort and money yet does not
    provide the return we want?
    What segment is difficult to do
    business with?
    Gold
    ron
    Lead
    !latinum
    &igure 7'B
    2he Customer Pyramid
    2006 The McGraw-Hill Companies, Inc. All rights reserve. McGraw-Hill!Irwin
    &igure 7'?
    Relationship Development Model
    Customer "enefits
    Confidene benefits
    Soial benefits
    Speial treatment benefits
    #elationship "onds
    &inanial bonds
    Soial bonds
    Customi"ation bonds
    Strutural bonds
    $witching "arriers
    Customer inertia
    S!ithing osts
    Core $ervice !rovision
    Satisfation
    Pereived servie #uality
    Pereived value
    $trong Customer
    #elationship
    %Loyalty&
    Firm "enefits
    ,onomi benefits
    Customer behavior benefits
    .uman resoure management
    benefits
    2006 The McGraw-Hill Companies, Inc. All rights reserve. McGraw-Hill!Irwin
    Strategies for Building Relationships

    Core Servie Provision*

    servie foundations built upon delivery of e+ellent servie*

    satisfation, pereived servie #uality, pereived value

    S!ithing Barriers*

    ustomer inertia

    s!ithing osts*

    set up osts, searh osts, learning osts, ontratual osts

    Relationship Bonds*

    finanial bonds

    soial bonds

    ustomi"ation bonds

    strutural bonds
    2006 The McGraw-Hill Companies, Inc. All rights reserve. McGraw-Hill!Irwin
    ,+ellent
    servie
    and value
    '(
    Financial
    bonds
    )(
    $ocial
    bonds
    *(
    $tructural
    bonds
    +(
    Customi,ation
    "onds
    Volume and
    fre#ueny
    re!ards
    Bundling and
    ross selling
    Stable
    priing
    Soial bonds
    among
    ustomers
    Personal
    relationships
    Continuous
    relationships
    Customer
    intimay
    Mass
    ustomi"ation
    3ntiipationD
    innovation
    Shared
    proesses
    and
    e#uipment
    5oint
    investments
    >ntegrated
    information
    systems
    &igure 7'E
    @evels of Relationship Strategies
    2006 The McGraw-Hill Companies, Inc. All rights reserve. McGraw-Hill!Irwin
    62he Customer >s F12 3l!ays RightA

    Fot all ustomers are good relationship ustomers*

    !rong segment

    not profitable in the long term

    diffiult ustomers

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