Building Customer Relationship

Customer Value Total Customer Value (Product,Services, Personnel & Image Value MinusTotal Customer Cost( Monetary,Time, Energy & Psychic Costs EqualsCustomer Delivered Value ( Profit to the Consumer

Customer Satisfaction Customer Satisfaction with a purchase depends upon product’s performance relative to buyer expectation. Expectations are based on customer’s past experiences, the opinions of friends & associates & marketer & competitor information and promises

Dilemma of Expectation Setting low expectations may not attract enough buyers while too high expectations may lead to buyer dissatisfaction

5-5 Measuring Satisfaction Periodic surveys Customer loss rate Mystery shoppers

5-6 Framework for CRM Identify prospects and customers Differentiate customers by needs and value to company Interact to improve knowledge Customize for each customer

5-7 CRM Strategies Reduce rate of defection Increase longevity Terminate low-profit customers Focus more effort on high-profit customers

5-8 Reducing Customer Defection Define and measure retention rate Distinguish causes of customer attrition Estimate profit loss associated with loss of customers Assess cost to reduce defection rate Gather customer feedback

Levels of Relationship Basic : Salesperson sells but doesn’t follow up. Reactive : Salesperson sells & encourages customer to call whenever required. Accountable : The sales person calls customer after sometime of sale & ensures smooth running of product.

Levels of Relationship Levels of Relationship Proactive : The salesperson calls the customer from time to time with suggestions about improvement in product Partnership: The company continuously works with customer & with other customers to discover ways to deliver better value.

Steps in relationship marketing Program (a) Identify the key customers meriting relationship management. Choose the good customers & designate them for relationship management. (b) Assign a skilled Relationship Manager

Steps in relationship marketing program ( c ) Develop a clear job description for relationship managers: Describe their reporting relationships, objectives,responsibilities & evaluation criteria. ( d ) Have each relationship manager develop annual & long range customer relationship plans. (e) Appoint an overall manager to supervise the relationship managers.

Building Loyalty Building Loyalty Affinity programs: A marketing effort sponsored by an organization that solicits responses from individuals who share common interests and activities

Frequent-buyer and Frequent-user Programs Frequency marketing: frequent- buyer or user marketing programs that reward customers with cash, rebates, merchandise, or other premiums

Can loyalty be built? Long term contract is a better solution: like subscription

Tools That Aid Relationship Marketing Tools That Aid Relationship Marketing Electronic Data Interchange (EDI) Vendor Managed Inventory (VMI) Database Marketing

Electronic Data Interchange Electronic Data Interchange (EDI) involves computer-to-computer exchanges of invoices, orders, and other business documents EDI is rapidly gaining popularity because it allows firms to reduce their cost and to improve their efficiency and competitiveness

Vendor-Managed Inventory Vendor-Managed Inventory (VMI): is an inventory-management system in which the seller–based on existing agreement with a buyer– determines how much of a product is needed New supplies are then automatically shipped to the buyer