Customer Relationship

Management Strategies
Chapter 4
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
Collaborative exchange
Customized product
Work together through linkages
Relationship commitment
Trust
Reliability and integrity
Relationship Marketing
Transactional Collaborative
Availability of
Alternatives
Supply Chain
Dynamism
Importance of
Purchase
Complexity of
Purchase
Information
Exchange
Operational
Linkages
Relationship Marketing
Strategy Guidelines
Match purchasing situations and supply
chain conditions for each customer!
Collaborative
How to handle?
Transactional
How to handle?
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-to-
Serve 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?