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Chapter 5

Developing Customer Relationships Through Quality, Value & Satisfaction

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Customer Relationship Management (CRM)...

Move from ‘acquiring customers’ to ‘maintaining clients’Process of identifying, attracting, differentiating & retaining customersIntegrating 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


CRM Considers Key Stakeholders…

Employees must be satisfied if they are to serve customers needsSupply chain partner relationships are key to satisfying customersLateral partners including government, nonprofit organizations & facilitating firm relationships must be managed


CRM’s Goal is to Increase the Share of Customers

Focusing on serving the needs of current customersRequires 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


Requirements for Customized Marketing Mixes...

Marketing mix (product, price, promotion & distribution) delivery must be automated to a degree that makes it cost efficientPersonalization– giving customers choices in marketing mix variables

Firms must build ‘relationship capital’– ability to build & maintain customer, supplier &

partner relationships


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?


Quality Considerations in CRM

Core product-part of the product that delivers the key benefits desired by consumersCustomer services-activities that add value to the core product, further differentiating it from competitorsSymbolic attributes-image, style, prestige, & brand (i.e.-Rolls Royce, Mont Blanc, & Neiman Marcus)


Identify Companies that Excel in Each of the Following Areas...

Core productCustomer servicesSymbolic attributes


Ways Businesses Can Improve the Quality of their Services...

Understand customers’ expectations, needs & wantsTranslate customer research into specifications for qualityDeliver on quality specifications – involves training & motivating employees

Promise only what you can deliver


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


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• opportunity


Maintaining Long Term Customer Satisfaction...

Understand what can go wrongFocus on issues that are controllableMake customer satisfaction measurement an ongoing priority


Ways to Measure Customer Satisfaction...

Lifetime value of a customerAverage order valueCustomer acquisition/retention costsCustomer retention rateReferralsViral marketing