1. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Chapter 6 Building Customer Relationships Relationship Marketing Relationship Value of Customers Foundations for Relationship Strategies The Customer Isn’t Always Right Customer Profitability Segments Levels of Relationship Strategies

2. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Relationship Bonding 联系 Empathy 同理心 Reciprocity 回报 Trust 信任

3. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Relationship Marketing is a philosophy of doing business that focuses on keeping current customers and improving relationships with them

4. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Why Relationship Marketing? is usually cheaper (for the firm) –keeping a current customer costs less than attracting a new one thus, the focus is –less on attraction –more on retention

5. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Figure 6.1 Customer Goals of Relationship Marketing

6. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Figure 6.2 Profit Generated by a Customer Over Time

7. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Table 6.1 Lifetime Value of an Average Business Customer at Telecheck International, Inc.

8. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Customer Loyalty Exercise Think of a service provider you are loyal to. - What do you do (your behaviors, actions, feelings) that indicates you are loyal? Brainstorming

9. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved A Loyal Customer is One Who... Behavioral Commitment –buys from only one provider –buys more –pay higher prices –cost less to serve –bring more new customers

10. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved A Loyal Customer is One Who... Psychological Commitment –has a positive attitude about the provider –says good things about the provider –are more satisfying to serve

11. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Underlying Logic of Customer Retention Benefits to the Organization Customer Retention & Increased Profits Employee Loyalty Quality Service Customer Satisfaction

12. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Benefits to the Organization of Customer Loyalty employee retention is more likely with a stable customer base lifetime value of a customer can be very high

13. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Customer Loyalty Exercise Think of a service provider you are loyal to. - Why are you loyal to this provider? Brainstorming

14. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Benefits to the Customer inherent benefits in getting good value economic, social, and continuity benefits –special deals –contribution to quality of life –avoidance of change –simplified decision making –social support and friendships

15. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Customer Loyalty Exercise Please debate: “The Customer Is Always Right”? “The Customer Is not Always Right” Brainstorming

16. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved “The Customer Is Always Right” The Customer Isn’t Always Right Who is not always right? –wrong segment –not profitable in the long term –difficult customers

17. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved “The Customer Is Always Right” Your customer is the king! Your target customer is the king!

18. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Strategies for Building Relationships Foundations: –Excellent Quality/Value –Careful Segmentation

19. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Strategies for Building Relationships Bonding Strategies: –Financial Bonds –Social & Psychological Bonds –Customization Bonds –Structural Bonds

20. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Excellent Quality and Value I. Financial Bonds II. Social Bonds IV. Structural Bonds III. Customization Bonds Volume and Frequency Rewards Bundling and Cross Selling Stable Pricing Social Bonds Among Customers Personal Relationships Continuous Relationships Customer Intimacy Mass Customization Anticipation/ Innovation Shared Processes and Equipment Joint Investments Integrated Information Systems Figure 6.7 Levels of Retention Strategies

21. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Strategies for Building Relationships Financial Bonds –Stable Pricing –Volume and Frequency Rewards –Bundling and Cross Selling

22. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Strategies for Building Relationships Social & Psychological Bonds –Social Bonds Among Customers –Continuous Relationships –Personal Relationships

23. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Strategies for Building Relationships Customization Bonds –Customer Intimacy –Mass Customization –Anticipation/ Innovation

24. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Strategies for Building Relationships Structural Bonds –Integrated Information Systems –Shared Processes and Equipment –Joint Investments

25. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Strategies for Building Relationships Brainstorming How would you evaluate financial bonds? Which of the four bonding strategies contribute most to strong relationship building?

26. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Social and Customization Bonds Emotional exchange –Provide timely help – 雪中送炭 –To give something additional – 锦上添花

27. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Type of Emotional Exchange Basic Delight Surprise Opportunity

28. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Most Profitable Customers Least Profitable Customers What segment spends more with us over time, costs less to maintain, spreads positive word of mouth? What segment costs us in time, effort and money yet does not provide the return we want? What segment is difficult to do business with? Other Customers Best Customers Figure 6.5 The “80/20” Customer Pyramid

29. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Most Profitable Customers Least Profitable Customers What segment spends more with us over time, costs less to maintain, spreads positive word of mouth? What segment costs us in time, effort and money yet does not provide the return we want? What segment is difficult to do business with? Gold Iron Lead Platinum Figure 6.6 The Expanded Customer Pyramid

30. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Team projects Write a letter to any company from whom one of your team members has received bad service recently. You do not have to extremely upset; it may be simply that the firm did not supply service that met your expectations.

31. McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Team projects In the class in weeks 1 、 Report the company’s response with regard to your complaint to the whole class by PPT. 2 、 Analyze their response if there any or lack thereof.