MARKETING III

Managing profitablecustomer relationships

LEARNING OBJECTIVES

…to understand the strategic role of Customer Relationship Management (CRM)

…to recognise the benefits with relationship marketing

RELATIONSHIP MARKETING

“The consistent application of up-to-date knowledge of individual customers to product and service design… In order to develop a continuous long-term relationship.”

(Cram) Not mass marketing. Aimed at individual. Customer retention. Not attraction. Long term, ongoing relationships. Regular customer contact. Trust based.

MANAGING CUSTOMER RELATIONSHIPS

Transaction customers Volatile demand Little loyalty Price oriented

Relationship customers Loyal (or potential for being loyal) Value oriented (reliability) Less time consuming Cost effective

STONE’S CRM REQUIREMETNS

Analysis of customers behaviour and value Planning of customer interaction Proposition development Use of information technology Bespoke customer management personnel Process management Customer focused Measurement of value

CUSTOMER RELATIONSHIP MANAGEMENT (CRM)

“Uses technology-enhanced customer interaction to shape appropriate marketing offers designed to nurture ongoing relationships with individual customers within an organisation's target markets”

(Dibb et al., 2006)

THE COMPONENTS OF CRM

Information based operation activities Technological development Pull driven systems

Effective leadership Business process change

Responsiveness Long-term relationships A holistic business approach

WHY CRM FAIL

Failure to identify CRM as a complex business process

Lack of focused business objectives Insufficient investment in information

technology Failure to recognise customer service as a

value adding activity