1 / 21

Building Customer Relationships

Relationship Marketing Relationship Value of Customers Customer Profitability Segments Relationship Development Strategies Relationship Challenges. Chapter 6. Building Customer Relationships. 6- 1. Objectives for Chapter 6: Building Customer Relationships.

toya
Download Presentation

Building Customer Relationships

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Relationship Marketing Relationship Value of Customers Customer Profitability Segments Relationship Development Strategies Relationship Challenges Chapter 6 Building Customer Relationships 6-1

  2. Objectives for Chapter 6:Building Customer Relationships • Explain relationship marketing, its goals, and the benefits of long-term relationships for firms and customers. • Explain why and how to estimate customer relationship value. • Introduce the concept of customer profitability segments as a strategy for focusing relationship marketing efforts. • Present relationship development strategies—including quality core service, switching barriers, and relationship bonds. • Identify challenges in relationship development, including the somewhat controversial idea that “the customer is not always right.” 6-2

  3. Relationship Marketing • is a philosophy of doing business, a strategic orientation, that focuses on keeping current customers and improving relationships with them • does not necessarily emphasize acquiring new customers • is usually cheaper (for the firm) • keeping a current customer costs less than attracting a new one • thus, the focus is less on attraction, and more on retention and enhancement of customer relationships 6-3

  4. The “Bucket Theory of Marketing” 6-4

  5. Customer Goals of Relationship Marketing 6-5

  6. Exhibit 6.1: A Typology of Exchange Relationships 6-6

  7. Benefits for Customers: Receipt of greater value Confidence benefits: trust confidence in provider reduced anxiety Social benefits: familiarity social support personal relationships Special treatment benefits: special deals price breaks Benefits of Relationship Marketing 6-7

  8. Benefits of Relationship Marketing • Benefits for Firms: • Economic benefits: • increased revenues • reduced marketing and administrative costs • regular revenue stream • Customer behavior benefits: • strong word-of-mouth endorsements • customer voluntary performance • social benefits to other customers • mentors to other customers • Human resource management benefits: • easier jobs for employees • social benefits for employees • employee retention

  9. Profit Generated by a Customer over Time 6-9

  10. Customer Loyalty Exercise • Think of a service provider to whom you are loyal. • What do you do (your behaviors, actions, feelings) that indicates you are loyal? • Why are you loyal to this provider? • What factors have influenced the formation of your loyalty? 6-10

  11. Lifetime Value of a Customer 6-11

  12. Figure 6.4: The Customer Pyramid What segment spends more with Most Profitable us over time, costs less to maintain, Platinum Customers spreads positive word of mouth? Not as profitable: discounts or less loyal Gold Utilize capacity, but do not merit special treatment Iron Lead What segment costs us in time, effort and money yet Least Profitable does not provide the return Customers we want? What segment is difficult to do business with? 6-12

  13. The Customer Pyramid 6-13

  14. Relationship Development Model 6-14

  15. Strategies for Building Relationships • Core Service Provision: • service foundations built upon delivery of excellent service: • satisfaction, perceived service quality, perceived value • Switching Barriers: • customer inertia • switching costs: • set up costs, search costs, learning costs, contractual costs • Relationship Bonds: • financial bonds • social bonds • customization bonds • structural bonds 6-15

  16. Levels of Relationship Strategies 6-16

  17. Alliance Boots • The leading health and beauty retailer in the UK. • Advantage Card, smart card loyalty program with 17million members • Collecting points to redeem a full day treatment at a spa • Sending a health and beauty magazine to the top 3million card holders • They learn that the more customers buy, in more categories over time, the more they visit Boots stores. • http://www.boots.com/

  18. “The Customer Is NOT Always Right” • Not all customers are good relationship customers: • wrong segment: customer whose need firm cannot meet • not profitable in the long term Customers with bad credit or accident-prone drivers • difficult customers 6-19

  19. Ending Business Relationships • Should firms fire their customers? 6-20

  20. Homework: Read Case7_JetBlue

More Related