Customer Relationship Management Strategies

Customer Relationship Marketing

Why do some companies succeed? Collaborative advantage

Relationship Marketing

All activities directed toward establishing, developing, and maintaining successful changes with customers and other constituents. Why?

Relationship Marketing

Relationship Marketing

Transactional exchange
Definition Distant exchanges One of many suppliers Few operational linkages

Whats an operational linkage?

Relationship Marketing

Collaborative exchange
Definition Work closely together

Value-adding exchanges
Attracting customers Maintaining customers

Relationship Marketing

Nature of relationships
Transactional

Standardized Competitive bidding Customized product Work together through linkages Relationship commitment Trust
Reliability and integrity

Collaborative exchange

Relationship Marketing
Transactional
Availability of Alternatives Supply Chain Dynamism Importance of Purchase Complexity of Purchase Information Exchange Operational Linkages

Collaborative

Relationship Marketing

Strategy Guidelines
Match purchasing situations and supply chain conditions for each customer! Collaborative

How to handle?
How to handle?

Transactional

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

Measuring Customer Profitability

Managing High- and Low-Cost-toServe Customers

What makes some customers expensive? Look inside first Sharper profit lens

See next slide

Measuring Customer Profitability

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?

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

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

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

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?

Customer Relationship Management

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

Customer Relationship Management

Instituting the Best Practices

Salespeople Others

Motivating Employees
Why? How?

Retaining Customers
Why? Growth from existing customers Evaluate relationships

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

Gaining a Position of Advantage

What works best?