Session

Client Relationship Management

Session Outline

Overview Expectations Complexity CRM Influences 4 C’s

This Session

Weekly Activity: Internal/External Customers Most organisations serve several kinds of customers:

final customers intermediate customers internal customers external customers and stakeholders.

The chain of intermediate customers places each organisation in a position of dependence. As satisfied customers are the best source of referrals it is important to differentiate between them. Thinking about customers as assets give examples of these differing customers and influencers in a retail, manufacturing and family environments.

CRM Essentials

Heda Bejar “The fragance always

remains in the hand that gives the rose.”

CRM Essentials

Fundamentally! Managing the relationships

internally within an organisation as well as the customer interactions between the organisation and it’s customers.

Topic Example Video

The following video explains what is client relationship management (CRM).

Take note of the key points.  

http://www.youtube.com/watch?v=BMtv6sbmdLc

Client Relationship Management

Recognises: Role of technology Importance of self-knowledge Finite nature of customer-business

relationships Need for quality consistency Based on a process Customer expectations need to be

managed.

Role of Technology

How can it help? CRM is a technology that specifies the

steps needed to consistently achieve a particular result.

Self-Knowledge Importance

Corporate culture including employee satisfaction ultimately affects how customers are perceived and treated.

The issue is one of the internal consistency of resources.

Activity: Learning Culture

Thinking about organisations you have been employed with or know of, how did these organisations ensure that their employees learnt the organisations corporate culture?

List down as many different forms you can think of!

So how many came to mind?

Learning Organisational Culture

In addition to explicit orientation and training programs, organisational culture is transmitted in such forms as:

Stories Rituals (recognition awards, Friday drinks) Material symbols (corporate image, décor) Observation & experience (useful if there

is a conflict with what is written) Language (industry jargon).

Finite Nature

Who is in control? The customer is ultimately in control of

the relationship. They can elect to continue the

relationship or walk away. Organisation however does the most

work in maintaining a mutually beneficial relationship.

Need for Consistency

Why?: This is a critical aspect of the

customer-organisation relationship and there is a need to present a consistent image.

Organisations are judged more on their behaviour (actions) that on their words.

CRM is a Process

Meaning! CRM implies a skilled use of

resources. By following a process, greatly

increases the odds of consistent, repeatable and measurable results.

Controlling known resource investments leads to maintaining consistent outcomes.

Managing Customer Expectations

The Goal: Is not to simply please customers, but rather

to foster the right kind of repeat customers. It is one way to keep customers from going

elsewhere. Organisations are able to manage their

resources to maximise their long-term returns however this does not mean they have to retain all their old customers.

Topic Example Video

The following video explains about what is required to maintain customer relationships.

Take note of the key points. http://www.youtube.com/watch?v=parwarCy7

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Developments in Marketing

1950s 1960s 1970s 1980s 1990s 2000s

Consumermarketing

Industr’lmarketing

Non-profitmarketing

Servicesmarketing

Relationshipmarketing

?

Activity: Marketing Developments

In groups of 3-4, discuss where do you see the future of Marketing heading in the next 10 years?

What are likely to be some of the major influences shaping this direction?

Consumer GdsRelationshipMarketing

Influences on RMServices

Marketing

Indu

stria

l (B2B

)

Marke

ting

Nordic School

NetworkApproach

Anglo-AustralianApproach

Strategic Alliances& Partnership

Research

Influences on RM

Anglo-Australian Approach Focuses on the integration of

quality, customer service and marketing.

RM has become a global research concept, however the major research is being undertaken in Europe.

Influences on RM

Nordic School of Service Management The importance and relevance of services

marketing and industrial marketing. An emphasis on customer value. The integration of marketing department function

with other organisational management functions. Less emphasis on quantitative research. More theory generation than theory testing. More inductive and abductive research. Research output that is empirical, theoretical and

holistic.

Relationship Marketing Levels

RM can be seen to being applied at four levels.

First level seen as an elaborate form of database marketing, ie. technology-based tool to facilitate the acquisition and management of customers.

Second level focus on actual or potential relationships between the business and its customer base with a concentration on customer retention.

Relationship Marketing Levels

Third level seen as a form of 'customer partnering' with buyers cooperatively involved in the design of the product or service offering. (Working relationships on this level implied true interaction between the buyer and seller.)

Fourth level RM seen as incorporating 'everything from databases to personalised service, loyalty programmes, brand loyalty, internal marketing, personal/social relationships and strategic alliances‘, hence the term 'catch-all‘.

DatabaseMarketing

Business/CustPartnering

Customer Partnering(Company Relationships)

Catch-allCategory

RM Pyramid

Topic Example Video

The following video explains what is relationship marketing.

Take note of the key points. http://www.youtube.com/watch?v=roVoOm4iv

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PROMOT’N

PLACE

PRICE

Fact Find& Analysis

PhysicalHandling

Servic’g

Display

Packag’g

Promo’s

Advert’g

PersonalSelling

Channelsof Distr.

Branding

Pricing

ProductPlanning

Elements of Marketing Mix

PRODUCT

Borden 1964 McCarthy 1978

Marketing Mix Elements In the 1960s Borden (1964) produced his 12

elements of a marketing programme, which were later simplified further to what became known as the '4Ps of marketing' or the 'marketing mix'.

The traditional marketing framework that developed during this period viewed marketing as a strategic and managerial matching process.

This process sought to ensure that the marketing mix and internal organisational policies were appropriate to the market forces (opportunities and threats) operating within the company's competitive environment.

PROMOT’N

PLACE

PRICE

PRODUCT

Marketing MixNew Product DevelopmentNew Product Development

Brand ManagementBrand ManagementFeatures, BenefitsFeatures, Benefits

Packaging & After salesPackaging & After sales

Channel ManagementChannel ManagementRetail LocationRetail LocationRetail ImageRetail ImageLogisticsLogistics

Costs, Profit,Costs, Profit,LiquidityLiquidity

CompetivenessCompetivenessValue, IncentivesValue, Incentives

MarketingMarketingCommunications Mix,Communications Mix,IntegratedIntegratedCommunicationsCommunications

Marketing Mix

This traditional marketing framework was adopted as an easy, intuitively rational marketing model.

This concept appeared to work well in an era of high consumer trust, effective mass advertising, growing prosperity, homogeneous demand, poorly developed distribution channels and dominant manufacturing power.

The marketing mix does have its place but relationship marketers believed it is peripheral in comparison to relationships.

Service and Marketing Mix

‘Marketing Mix' retained as an easy-to-remember framework to incorporate new marketing ideas.

Further Ps started to be added such as People, Physical Evidence, Processes (Service Mix), Political Power and Public Opinion (Societal Marketing Mix).

Early models of RM used a similar approach by incorporating the concept of 'customer service' and it’s implications.

Customer Service + Marketing Mix

CustomerService

Price

Promotion

PhysicalEvidence

Processes

People

PlaceProduct

Customer Orientated Mix

Kotler took the view that the marketing mix represented the seller's view of marketing.

He proposed that marketers view the 4Ps from a customer-orientated perspective.

The 4Ps became 4Cs where organisations appealed customer needs economically, conveniently and with effective communication.

4Ps to 4Cs

COMMUNIC’N

CONVENIENCE

COST TOCUSTOMER

CUSTOMERNEEDS/WANTS

PROMOT’N

PLACE

PRICE

PRODUCT/SERVICE

Adapted from Kotler et al 1999

Relationship Marketing

Terms used either as substitute for or to describesimilar concepts to Relationship Marketing

direct marketing, database marketing, customer relationship mgt, data-driven marketing, micromarketing, one-to-one marketing, loyalty (or loyalty based) mktg, ‘segment-of-one’ mktg,wraparound marketing, customer partnering, symbiotic marketing, individual marketing, relevance marketing, bonding, frequency marketing, integrated marketing, dialogue marketing interactive marketing

Relationship Marketing

RM is not an easy concept to define. There is a definite marketing shift to

developing and managing relationships with a range of identifiable customers.

Marketing is being transformed to a broad business orientation where delivery of 'superior customer value' is a key objective.

Relationship Marketing

Marketing in this sense needs to create rather than control a market and use techniques such as developmental education, incremental improvement and ongoing processing rather than simple market share tactics and raw sales data.

RM therefore may still be regarded more as a general 'umbrella philosophy‘ because of it’s complexity.

Relationship Marketing

Definition (Grönroos 1994b)

“identify and establish, maintain and enhance and, when necessary, terminate relationships with customers and other stakeholders, at a profit so that the objectives of all parties involved are met; and this is done by mutual exchange and fulfilment of promises”

Six Dimensions of RM

seeks to create new value for customers and share itrecognises the key role that customers have both as purchasers and in defining the value they wish to achieve.businesses are seen to design and align processes, communication, technology and people customer value.represents continuous cooperative effort between buyers and sellers.recognises the value of customer’s purchasing lifetimes (i.e. lifetime value)seeks to build a chain of relationships within the organisation (to create customer value) and between the organisation and its main stakeholders including suppliers, distribution channels, intermediaries and shareholders.

Transactional vs Relationship

TRANSACTIONAL MKTG vs RELATIONSHIP MKTGOrientation to single salesDiscontinuous customer contactFocus on product featuresShort time scaleLittle emphasis on customer serviceLimited commitment to

meeting customer expectationsQuality as the concern of production staff

Orientation to customer retentionContinuous customer

contactFocus on customer valueLong time scaleHigh emphasis on customer serviceHigh commitment to

meeting customer expectationsQuality as the concern of all staff

Activity: Case Study

In groups of three, consider the case study “Now that really radical”.

Answer the following questions. What, according to this case study,

separates the ‘winners’ from the ‘losers’?

Discuss how/whether these organisations have improved their marketing to now.

Next Session

Weekly Activity: CRM Policies Research (3) three organisations that claim to

have Client Relationship Management (CRM) policies in place.

Briefly analyse this organisation in relation to how well they meet the six dimensions of Relationship marketing.

Think about the type of business it is when drawing your conclusions.

Word Count: 200 – 300 words