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Principles of Marketing
Chapter 2: Customer Relationship
Lesson 1: Relationship Marketing Lesson 2: Customer Value Lesson 3: Customer Relationship Development Strategies Lesson 4: Successful Customer Service Strategy in the Philippines Business Enterprise Lesson 1: Relationship Marketing Learning Competency: After going through this module, you are expected to achieve: 1. Define “relationship marketing” 2. Identify and describe “relationship development strategies”
3. Relate the topic in real life experiences or in life.
Today, most organization turn to view
customers as equal partners in the buying and selling transaction. Through encouraging customers to enter a long-term relationship with repeat purchases or buy multiple brands at a time from the firms, marketers are able to get an apparent understanding of customer needs. Relationship Marketing Defined Its activities aimed at developing and managing trusting and long-term relationships with larger customers. Here are the main characteristics of relationship marketing: 1. It focus on the long-term rather than the short-term. 2. It focus on partners and customers rather than on the company products. 3. It puts more emphasis on customer retention and growth that on customer acquisition. 4. It relies on cross-functional teams rather on departmental-level work. 5. It relies more on listening and learning than on talking. 6. Relationship marketing calls for new practices with the 4Ps. (Product, Price, Place and Promotion) Customer Relationship Management (CRM) – is focuses more on long-term customer retention than acquiring large numbers of new and potentially single-transaction customers. Benefits in developing and implementing Customer Relationship Management (CRM) 1. Consistent customer experience 2. Customer Feedback 3. Customer Profitability 4. Customer advocate 5. Innovation Traditional Transaction Marketing – it is viewed as an Independent agency always maneuvering to secure the best terms. We can distinguish five different levels of relationships that can be formed with customers who have purchased a company’s product, such as a car or a piece of equipment: 1. Basic. The company salesperson sells the product but does not follow up in any way. 2. Reactive. The salesperson sells the product and encourages the customer to call whenever he or she has any questions or problems. 3. Accountable. The salesperson phones the customer a short time after the sale to check whether the product is meeting the customer’s expectations. The salesperson also solicits from the customer any product improvement suggestions and any specific disappointments. This information helps the company continuously to improve its offering. 4. Proactive. The salesperson or others in the company phone the customer from time to time with suggestions about improved product use or helpful new products. 5. Partnership. The company works continuously with the customer and with other customers to discover ways to deliver better value. BENEFITS OF RELATIONSHIP MARKETING In the business world, retaining customers has a lesser cost at least eight times compared to acquiring new ones. Thus, this marketing capitalizes on the same fact and is beneficial to the company in several ways. A. Understanding customer characteristics - the company can segregate its customers into groups based on their characteristics like purchasing power, frequency and volume of sale transactions. It also helps the company get valuable feedback from its customers and understand their needs and expectations. B. Delivery and meeting expectations - if the company knows what its customers’ needs are, it will help reduce wastage due to trial and error methods. It is easier to create a product if the features and specifications of the product are known. C. Repeat Business - sellers should maintain good attitude to the buyers. By doing this, buyers will feel that they do not need to switch sellers. D. Prevents negative transition - trust and loyalty go hand in hand and it is super beneficial for all business. It will help prevent customers from turning to competitors. E. Word-of-mouth marketing - satisfied existing customer is 100% more likely to recommend a product/service to a prospective customer. Apart from customer, referrals, there are several other ways to increase customer satisfaction by employing methods of utilizing social networking websites, blogs, informal surveys, benefits on loyalty cards, timely response to complaints and requests as a constant reminder of its presence around and retention equity is improved by enhancing customer satisfaction. F. Reduced marketing cost - benefits also include lesser marketing costs and more value creation. This can be explained by stating the following statistics: every 5% increase in customer retention can increase a company’s annual profits from at least 25% to as much as 125%, while simultaneously leading to a reduction of 10% in marketing costs. An existing customer will spend 33% more than a new customer to buy a company’s product/service. G. Identification with the company - the benefits are reaped both by the company and the customers. It helps customers identify more with the company. Keeping your communication lines open and keeping in touch with the customers makes them feel like they are being valued. It will keep customers coming in and build brand equity for the company in the long run. H. Product Market Expansion - the company’s employees must be ready to deliver beyond the company’s boundaries on customer demand. Lesson 2 : Customer Value Learning Competency: * The learners shall be able to explain the value of customers. Customers now have an overwhelming abundance of choice. They are accustomed to competition, and the fragmentation of the market because of the choices this provides. They have high expectations and little loyalty to spare if they are not met. Customer Value is the relationship between benefits and the costs including money, stress, and time to sacrifice that is necessary to get those benefits. Or simply stated in a mathematical equation: Benefits – Cost = Customer Value Importance of Customer Value 1. Designing and providing superior customer value are the keys to successful business strategy in the 21st century. 2. Value reigns supreme in today’s marketplace and market space. 3. Customers will not pay more than a product is worth and will reward excellence. 4. A customer-centric culture provides focus and direction for the organization, ensuring that exceptional value will be offered to customers. 5. Designing and delivering superior customer value propels organizations to market leadership positions in today’s highly competitive global markets – absolute advantage. 6. Providing outstanding customer value has become a mandate for management. In essence, customer value entails extraordinary delivery of four value-points or components know also as SQIP: 1. Service – the tangible value offered to customers. 2. Quality – customers’ perception of how well a company’s products and services meet expectations. 3. Image – customers’ perception of the company or business they interact with. 4. Price - the company can command for its products and services and that its customers are able willing to pay. Customer Relationship Marketing -will make earlier agents of change look inadequate. The key facilitator is technology available to marketers. CRM weds the individual customer and technology in ways that are unique. These fourth-wave relationships, propelled by a confluence of technological advances, will themselves change at geometric rates. (1) One-to-one marketing, (2) Database marketing, (3) Integrated marketing, and (4) Interactivity. (9) Nine Relationship Marketing Strategies and Tools There are some actionable relationship marketing strategies that we hope will be successful for you and your business from www.powerobjects.com . 1. Networking - Networking, online and off, can be a powerful relationship marketing technique. This isn’t just for job seekers! Think about the interests that you have as a business, and then join groups that share your affinities. 2. Cherish Each Customer - Not just in the way that every company says that they do. Make sure that every interaction you have with your customers shows them that they are valued. 3. Listen to Your Customers - Listen to your customers! Every business says they do, but not all follow through or apply what they’ve heard. Even listening and responding to compliments can be beneficial. People love knowing they’ve been heard. Even complaints can be a blessing in disguise. People often just want 4. Build a Brand Identity - A memorable brand will make it easy for customers to find you and your product(s). Customers will gravitate toward what they find that is memorable. 5. Give Your Customers Free Information - What’s better than free? Not much. Your customers are seeking information about your product(s). They have questions. Give them answers! Identify the topics and interests your customers have. 6. Loyalty Rewards - Loyalty programs encourage shoppers to return to stores where they frequently make purchases. 7. Communicate Often - Relationships are based on communication. Your customers and users want to communicate with you, so be sure to communicate with them often. Relationship marketing works well when you strive to be there for your customers. 8. Special Events - Holding a special event for your existing or prospective customers is a great way to build relationships. 9. Face-To-Face Time - Like a lot of what we’ve been mentioning, it comes back to interactions. While electronic communication is great, and often preferred, having a face-to-face meeting can help the customer feel valued. Customer service is the act of taking care of the customer's needs by providing and delivering professional, helpful, high quality service and assistance before, during, and after the customer's requirements are met. Customer service is meeting the needs and desires of any customer. Some characteristics of good customer service include: Characteristics of Good Customer Service: • Promptness: Promises for delivery of products must be on time. Delays and cancellations of products should be avoided. • Politeness: Politeness is almost a lost art. Saying 'hello,' 'good afternoon,' 'sir', and 'thank you very much' are a part of good customer service. For any business, using good manners is appropriate whether the customer makes a purchase or not.
• Professionalism: All customers should be treated professionally, which means
the use of competence or skill expected of the professional. Professionalism shows the customer they're cared for. • Personalization: Using the customer's name is very effective in producing loyalty. Customers like the idea that whom they do business with knows them on a Types of Customers There are four types of customers based on projected customer retention and loyalty to the brand. Strangers - are customers whose needs do not fit the company’s offerings. The company does not need to invest and exert effort to win them. Butterflies - as the name implies, are not loyal to specific brand because they keep on looking for the best deals which may lead to patronizing other brands. The company can enjoy profits from these customers only for a short period. True friends - have needs that match the company’s offerings. They make repeat purchases and patronize the brand as long as it satisfies their needs. The company must invest in these customers and strengthen its relationship with them. Freeloaders - are loyal but not profitable because of the limited fit between their needs and the company’s offering. For example, a few customers of a salon patronizes its services regularly but do not generate enough profit to sustain the maintenance costs, it can earn only if it raises the prices of its services. Lesson 3 : Customer Relationship Development Strategies Learning Competency: * The learners shall be able to identify and describe relationship development strategies. When it comes in increasing profits, it’s tempting to concentrate on making new sales or pursuing bigger accounts. But attention to existing customers, no matter how small they are, is essential to keeping any business thriving. The secret to repeat business is following up in a way that has a positive effect on the customer. Benefits of Developing Customer Relationship Customer Relationship – is a marketing approach that focuses on creating an ongoing and long-term relationship with customers. It is geared toward building and nurturing strong consumers/customer connection and affiliation, rather that pushing sales or purchases. Some of the benefits in developing and implementing customer relationship strategies are the following: 1. Consistent Customer Experience – organization that are aligned across all touch points seamlessly share information and work together to ensure customer’s need are addressed with minimum effort. 2. Customer Feedback - when the organization’s culture facilitates open communication and cooperation, consumer concerns, complaint and compliments can quickly be addressed. 3. Customer Profitability – relevant communications and offers motivate consumers to use the full complement of product and service offerings. 4. Customer Advocates – consumers who are pleased and enjoy a consistent experience increasingly share this information with each other. Increasingly consumers are turning to each other for suggestions and recommendations. 5. Innovation – organizations, like Starbucks through myStarbucksIdea.com invite their customer to provide ideas. Consumers are allowed share, vote and discuss each others' ideas. Differences among Customer Value, Satisfaction and Retention Customer Value The Customer’s perception of the benefits that he or she Customer gets from a product or Satisfaction service, in relation to The Customer’s the price paid to obtain evaluation of the those benefits. Customer performance of the Retention product or service in The company’s relation to his or her effort to build and expectations. maintain loyalty of customers. Strategies in Developing Customer Relationship Customers are known to be indecisive but they are looking for something in common, “value at a fair price.” Customers value relationship a lot, they are always looking for someone to discuss their problems with and this is where the company comes in. 1. Make every customer interaction count – the first strategy to build a strong customer relationship is to make every customer interaction count. 2. Follow-through on commitments and claims about products or services – a business must a specific promise to the customer and deliver on that promise if it intends to win the heart of the customer. 3. Develop employees – customers appreciate service from well- trained and friendly customer service staff. 4. Offer benefit and product value that responds to the customer’s desires – another positive step to building a strong customer relationship is to offer value to the customer. 5. Treat customers as individuals who are respected and value – all businesses know how hard it is to find one good customer. 6. Listen to customers – even complaints can be a gift if handled property and quickly. Be available and accessible when customers have question, concerns, or comments. 7. Build a strong brand identity – make it easy for customers to identify ones business or products in the midst of the crowd. Create a winning slogan, tagged with catchy logo and a unique theme. 8. Surround customers with available information by using emails website content, social media, and other methods of outreach but do not be invasive – keep them informed on the latest trend, price or development. 9. The business must have a website – if the company has none, then it’s time to get one. If is has it should consider making its website user-friendly and easy to navigate for new and existing customers. 10. Reward loyal customers – this a point that can never be emphasized. Most business go after new customers while forgetting that the existing customers need to be taken care of. 11. Nothing strengthens a bond more than appreciation – thanking customers for sticking to the company’s brand will go a long way to make them know they are important. A simple “thank you” package might be all the business needs to connect personally with existing customers. 12. Create a blog about the business where discussion is more casual and inviting – almost all businesses today maintain a blog. A blog is a powerful communication tool that can help a company stays in touch with its customers. Lesson 4 : Successful Customer Service Strategy in the Philippine Business Enterprise. Learning Competency: * The learners shall be able to illustrate successful customer service strategy in the Philippines business enterprise. Good customer service means having thorough knowledge of the inventory, experience with the products, and being able to help customers make the best choices for them. Good customer service is treating customer with a friendly, helpful attitude. CUSTOMER SERVICE STRATEGY DEFINED - Is the act of taking care of the customer’s need by providing and delivering professional, helpful, high quality service and assistance before during, and after the customer’s requirements are met. A customer service strategy consists of the following elements: 1. A vision for customer service – communicating the customer service vision is an important first step in service strategy. Employees need to understand their role in the meeting the needs of customers and how their work contributes to the vision. 2. Assessing customer needs – it is important to find out what customer needs and expects. It can be done by using customer comment cards, satisfaction survey or focus groups. 3. Hiring for service – successful organizations have figured out how to hire service-oriented employees. This is done by screening potential candidates that have a natural tendency for service. 4. Organizational goals for customer service – customer satisfaction should be measured against identified customer needs. There should be measurable customer satisfaction goals, and employees should be aware of those goals so they can help the organization achieve its service objective. 5. Customer service training – every business should develop customized employee training that expresses the organization’s approach to service. 6. Employee accountability – employees should be held accountable for the organization’s customer satisfaction goals. Achieving the goals should be a cultural norm that is incorporated into the performance management process. 7. Rewarding good service – strong service behaviors are reinforced through a defined reward and recognition system. This ensures that employees receive positive feedback when they exhibit the desired customer service behaviors.
The SUKI SYSTEM in the Philippines
The “Suki” system is a system of patronage in which a customer regularly buy their merchandise from a certain client. In the merchandising business, Filipinos often buy from specific suppliers who will grant their customers reduced prices, good quality and credit as well. These factors are the usual components of becoming a “suki”. CUSTOMER SERVICE STRATEGY IN THE PHILIPPINES In the Philippines just like in other parts of the world, the “you-scratch-my-back-I’ll-scratch-yours” concept is a cornerstone of modern marketing, with large companies from airlines and hotels to supermarkets and coffee shops offering reward programs in exchange for customer loyalty. Loyalty and rewards programs is already been a proven method of increasing business profits. Most of the Philippine's businesses invest on this customer service strategy. Example; Cebu Pacific, Starbucks, Globe Telecom, ShoeMart (SM), Bank of the Philippine Island (BPI). CUSTOMER SERVICE in the Philippine Business Enterprise Most companies provide a customer hotline that customers can call inquiries, concerns and technical support. For example, customer can call PLDT to ask for assistance regarding their Internet connection. The Customer Service Representative (CSR) can either provide a step-by-step guide on how to troubleshoot the problem or schedule a visit from a company technician, depending on the issue at hand. 1. Email and SMS (Short Message Service) also help businesses communicate with their clientele more easily as most consumers regularly check their inboxes. 2. Social Networking Sites, aside from their primary function of connecting people, have become a channel for netizens to ask for customer support. Globe Telecom promptly responds to inquiries and complaints on Facebook and Twitters and redirects the customers to the sites private messaging system for further assistance. 3. Live chat support – facilitates real time correspondence between customer and the company representative. Activity: Pictures Game 1. Communicate with customers frequently and effectively 2. Offer customer rewards 3. Conduct special events and offer sponsorships 4. Enhance customer service 5. Utilize languages to reach a wider customer base Activity#2
Role Play Rubrics:
CREATIVITY __________ 25% Group 1: Communicate with customers frequently and effectively COOPERATION________25% Group 2: Offer customers rewards RELEVANCE___________25% Group 3: Conduct special events and offer sponsorships TIME OBSERVANCE____25% Group 4: Enhance customer service
Group 5: Utilize languages to reach wider customer base
TOTAL------------------------ 100% ASSIGNMENT: Write your answers in yellow pad paper.
1. How should the company improve its customer service
through the levels of relationship marketing? 2. Explain how a company goes through the tiers of customer value. 3. Enumerations: a. (5) Five Benefits of Relationship Marketing b. (5) Five Benefits in developing and implementing Customer Relationship Strategies c. (5) Five Elements of Customer Service Strategy