CUSTOMER RELATIONSHIP MANAGEMENT

Made by Ashish TanejaSem 3

• Relationship marketing has the aim to building mutually satisfying long term relationship with key parties in order to earn and retain their business.

• Relationship marketing builds strong economic, technical and social ties among the parties

• Relationship marketing is based on interaction within networks of relationships

• Relationship marketing seen as relationship networks and interactions

Relationship Marketing Defined

Marketing to establish, maintain and enhance relationship with customers and other partners , at a profit , so that the objectives of the parties are met. This is achieved by a mutual exchange and fulfillment of promises.

RM Vs transactional marketing

• Relationship marketing uses methods to develop long term relationship with customer in order to retain and develop a healthy relationship with their customer.

• Transactional marketing is focusing all of its marketing efforts on attracting customer for one off sale.

Customer relationship marketing

CRM is the values and strategies of relationship marketing with particular emphasis on customer relationship turned into practical application

Customer lifetime value

Losing an existing customer means losing the entire revenue stream that customer represents not just that single encounter or sale.

Customer loyalty and satisfaction

• Highly satisfied customer are ;• Less price sensitive• More likely to talk favorably about

product• More likely to refer products to others• Remain loyal for long

5 levels of relationship marketing

• Basic marketing• Reactive marketing• Accountable marketing• Proactive marketing• Partnership marketing

• Basic Marketing – The salesperson sells to the final customers. This is also known as direct sales.

• Reactive Marketing – The sales person sells the product and encourages the customer to call for any comments or enquiries.

• Accountable Marketing – The sales person calls the customers to ensure whether the product is working as per satisfaction and if there is any problem in the product. Furthermore he also asks the customer for any suggestions / feedback to improve the service / product. Thus he is taking responsibility for the sale.

• Proactive marketing – The company works continuously with its large customers to help improve performance. This is especially seen in financial companies wherein the movement in the financial market induces the company to make changes regularly. However at the same time, these financial companies have to take care of their customers as well. Thus they take regular feedback from their large customers thereby developing their products accordingly.

• Partnership Marketing – The company works continuously with its large customers to improve its performance.

Critical players in relationship marketing

1. Supplier2. Distributors3. End users4. Employees5. Financial firms6. Government7. Media8. Competitors9. General public

Relationship Marketing and the 4Ps

Product • More products are customized to the

customers’ preferences.• New products are developed and

designed cooperatively with suppliers and distributors.

Price • The company will set a price based on the

relationship with the customer and the bundle of features and services ordered by the customer.

• In business-to-business marketing, there is more negotiation because products are often designed for each customer.

Distribution (Place) • RM favours more direct marketing to the

customer, thus reducing the role of middlemen.

• RM favours offering alternatives to customers to choose the way they want to order, pay for, receive, install, and even repair the product.

Communication (Promotion) • RM favours more individual communication

and dialogue with customers.• RM favours more integrated marketing

communications to deliver the same promise and image to the customer.

• RM sets up extranets with large customers to facilitate information exchange, joint planning, ordering, and payments.

Properties of relationship marketing

• Collaboration• Commitment, Dependency • Trust, risk and uncertainty • Power• Longevity• Frequency, regularity and intensity• Closeness and remoteness

• Formality, informality and openness• Routinization• Content

Why RM is important ?• It costs five times as much to attract a new

customer as it does to keep a current one satisfied

• It is claimed that a 5% improvement in customer retention can cause an increase in profitability b/w 25% and 85% depending on the industry

• Like wise it is easier to deliver additional products and services to an existing customer than to a first time “buyer”

Conclusion

• Relationship marketing is the practice of building long-term satisfying relations with key parties—customers, suppliers, distributors—in order to retain their long-term preference and business.

BASIS OF RELATIONSHIP BUILDING

The defining beneficial features of a corporate relationship are based on the assumptions of –

a)Mutual benefits ( the rationale for entering into a relationship)

b)Mutual commitments c)Trustd)The connective links

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