Customer perspective in network business

1. Customer perspective in network business Rozhkov Alexander, SU-HSE 09/02/09

2. Research project description • Research questions • Customer Relationship Management (CRM) in B2B (Business to Business) networks: theoretical presentation • Development of customer relationship model B2B (Business to Business) networks: • Relationship management • Communication system • Customer attraction and retention techniques • Network coordination • Customer perspective in Russian business culture: inner and outer customer relationship in company network

3. External factors (as reported) Global factors • Russia is more exposed to crisis processes than Finland • Construction industry is in recession • Companies become more oriented on profit than long term relationship • Number ofcustomers and suppliers is decreasing dramatically • Customer market power is increasing because of decreasing demand Market organization • Russian market is much more dynamic than Finnish • Competition is much more intensive • Legislation and certification

4. CRM model: Relationship management Customer relation building process Main success factors are interpersonal relations and communication Russian sales staff – as one of the most important instruments of adaptation Grey scheme in supply ! Initial contact Initial transaction Repeating transactions Loyal Customer (partner) Legal agreement ! Legislation and certification

5. CRM model: Relationship management (2) Main goals in customer relations • Increase in sales volume • Loyalty (build up by credit lines, interpersonal relations and contract terms fulfillment) • No negative feedback • Private label development (for individual customers) Problem solving • Information support on all delays • Additional discounts • Fees and penalties according the agreement

6. CRM model: customer indicators Initial contact • No particular criteria, all customers are good in crisis period • Company size (?) Repeating transactions • Operation profit • Contract terms fulfillment • Sales volume growth

7. Intermediate Results Areas of uncertainty Russian partners and their customer base. (accessibility) Business culture aspects in Russia == Value chain modification

8. Relevant Literature Intercompany relations Cannon, Joseph P. and William D. Perreault Jr. 1999. “Buyer-Seller Relationships in Business Markets.” Journal of Marketing Research 36 (November): 439-460. K. Möller , A. Rajala “Rise of strategic nets — New modes of value creation” Industrial Marketing Management 36 (2007) 895–908 Methodology Mahmood M. Hajjat Customer orientation: construction and validation of the CUSTOR scale. Marketing Intelligence & Planning 20/7 [2002] 428-441 Saxe, R. and Weitz, B.A. (1982), “The SOCO scale: a measure of the customer orientation of salespeople”, Journal of Marketing Research, Vol. 19, August, pp. 343-51. Eisenhardt K. Building theories from case study research. Academic Management Review 1989;14(4):532 –50. Market orientation (network level) Kohli, Ajay K. and Bernard J. Jaworski. 1990. “Market Orientation: The Construct, Research Propositions, and Managerial Implications.” Journal of Marketing 54 (2): 1-18. H. Terho, A. Halinen “Customer portfolio analysis practices in different exchange contexts/ Journal of Business Research 60 (2007) 720–730 U. Elg Inter-firm Market Orientation: Its Significance and Antecedents in Distribution Networks / Journal of Marketing Management, 2002,18, 633-655

9. Thank You for your attention!