Customer Relationship Management Strategies

1. Customer Relationship Management Strategies Chapter 4

2. Customer Relationship Marketing • Why do some companies succeed? • Collaborative advantage • “

3. Relationship Marketing • “All activities directed toward establishing, developing, and maintaining successful changes with customers and other constituents.” • Why?

4. Relationship Marketing

5. Relationship Marketing • Transactional exchange • Definition • Distant exchanges • One of many suppliers • Few operational linkages • What’s an operational linkage?

6. Relationship Marketing • Collaborative exchange • Definition • Work closely together • Value-adding exchanges • Attracting customers Maintaining customers

7. Relationship Marketing • Nature of relationships • Transactional • Standardized • Competitive bidding • Collaborative exchange • Customized product • Work together through linkages • Relationship commitment • Trust • Reliability and integrity

8. Relationship Marketing

9. Relationship Marketing • Strategy Guidelines • Match purchasing situations and supply chain conditions for each customer! • Collaborative • How to handle? • Transactional • How to handle?

10. Measuring Customer Profitability • Common mistake • Two factors must be present for differentiation to work • Activity Based Costing • Aggregate v. Individual firms • Unlocking Customer Profitability • 20/80 rule • Corollary • Big companies are usually most profitable or least profitable

11. Measuring Customer Profitability • Managing High- and Low-Cost-to-Serve Customers • What makes some customers expensive? • Look inside first • Sharper profit lens • See next slide

12. Measuring Customer Profitability

13. Measuring Customer Profitability • Identifying Profitable Customers • Location on chart • How to maintain? • Identifying Unprofitable Customers • Location on chart • How to improve the situation? • Fire customers?! • Why? • How?

14. Customer Relationship Management • “Cross-functional process for achieving • continuing dialogue with customers • across all their contact and access points, with • personalized treatment of the most valuable customers • to ensure customer retention and the effectiveness of marketing initiatives”

15. Customer Relationship Management • Develop Customer Strategy, THEN choose software • Five Steps for Customer Strategy • Acquiring the right customers • Crafting the right value proposition • Instituting best processes • Motivating employees • Learning to retain customers

16. Customer Relationship Management • Acquiring the Right Customers • Look at current and potential customers • Balance desired level of relationship with profitability of doing so • Choosing accounts • Three factors • How do they define value? • Look at profit potential

17. Customer Relationship Management • Crafting the Right Value Proposition • Value proposition- “the products, services, ideas, and solutions that a business marketer offers to advance the performance goals of the customer organization.” • Look at industry- what are others doing?

18. Customer Relationship Management

19. Customer Relationship Management • Industry bandwidth • The strategies competing firms in an industry pursue • Flaring out by unbundling • Flaring out with augmentation • Create Flexible Service Offering

20. Customer Relationship Management • Instituting the Best Practices • Salespeople • Others • Motivating Employees • Why? • How? • Retaining Customers • Why? • Growth from existing customers • Evaluate relationships

21. Gaining an Advantage at CRM • Customer-Relating Capability • Orientation toward relationships • Customer retention is a shard goal • Organizational members act quickly on info received from customers • All employees understand and appreciate the lifetime value of a customer • Employees have considerable latitude when taking actions • Information about relationships • Configuration • Org. structure and performance measures

22. Gaining a Position of Advantage • What works best?