2. chapter 6 Customer Relationships McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved.

3. Customer Relationships — Today’s Objectives Objectives will be to: Develop a clear definition of relationship Explore why firms want relationships with their customers Discuss the relationship stages and interaction intensity Examine the effects of the Internet and 2Is on customer relationships Discuss some final points about customer relationships and the Web

4. Defining Relationship Why Firms Want Relationships With Their Customers The Relationship Stages and Interaction Intensity The Effects of the Internet and the 2Is on Customer Relationships Some Final Points About Customer Relationships and the Web EBay Case Study Conclusion Chapter 6: Customer Relationships

5. Defining Relationship Why Firms Want Relationships With Their Customers The Relationship Stages and Interaction Intensity The Effects of the Internet and the 2Is on Customer Relationships Some Final Points About Customer Relationships and the Web EBay Case Study Conclusion

6. Relationship Type & Involvement Continuums Exchange Relationships Communal Relationships Enduring Involvement Situational Involvement

7. Relationship Involvement Automobile Expensive Watch Scotch Whiskey Wine for Dinner Party Face Soap Eyeglasses Paper Towels Disposable Razor Liquid Bleach Insect Repellent Salad Oil Insecticide Toilet Tissue 35-mm Camera Stereo Component Credit Card Headache Remedy Hair Coloring Deodorant Soap Soft Drink Potato Chips Washer/Dryer High Low Product type (cost, level of symbolism, risk) Purchase situation (visibility, social acceptability) Consumer type (interests, values, attitudes) Exhibit 6.2: A Continuum of Relationship Involvement

8. Chapter 6: Customer Relationships Defining Relationship Why Firms Want Relationships With Their Customers The Relationship Stages and Interaction Intensity The Effects of the Internet and the 2Is on Customer Relationships Some Final Points About Customer Relationships and the Web EBay Case Study Conclusion

9. Exhibit 6.4: Length of Customer Tenure and Profitability Relationship ShortLong Customer Lifetime Low High Profitability

10. Chapter 6: Customer Relationships Defining Relationship Why Firms Want Relationships With Their Customers The Relationship Stages and Interaction Intensity The Effects of the Internet and the 2Is on Customer Relationships Some Final Points About Customer Relationships and the Web EBay Case Study Conclusion

11. Exhibit 6.6: Moving Through the Relationship Stages Commitment Dissolution Exploration/ Expansion Exploration/ Expansion Customers can advance through the stages in several different ways Awareness

12. Exhibit 6.7: Two Alternatives for Customers at the Commitment Stage Commitment Customers can either stay committed or move to dissolution Dissolution Stay Committed Stay Committed Satisfied, profitable customers Unsatisfied or unprofitable customers

13. Exhibit 6.10: Level of Interaction by Stage of Customer Relationships Level of Intensity Four Key Stages of Customer Relationships Level of Intensity Stages of Customer Relationships Awareness Exploration / Expansion Exploration / Expansion Commitment Dissolution Intensity

14. Chapter 6: Customer Relationships Defining Relationship Why Firms Want Relationships With Their Customers The Relationship Stages and Interaction Intensity The Effects of the Internet and the 2Is on Customer Relationships Some Final Points About Customer Relationships and the Web EBay Case Study Conclusion

15. Are Interactivity and Individualization Always Necessary? Low Individualization, Low Interactivity Example: news service Low Individualization, High Interactivity Example: library High Individualization, Low Interactivity Example: bank statement High Individualization, High Interactivity

16. Exhibit 6.12: Online Privacy Attitudes

17. Chapter 6: Customer Relationships Defining Relationship Why Firms Want Relationships With Their Customers The Relationship Stages and Interaction Intensity The Effects of the Internet and the 2Is on Customer Relationships Some Final Points About Customer Relationships and the Web EBay Case Study Conclusion

18. Price Product Promotion Distribution Brand Marketing Levers Four Key Stages of Customer Relationships Exhibit 6.13: Integrative Framework: Building Relationships on the Web Awareness Exploration/ Expansion Exploration/ Expansion Commitment Dissolution

19. Chapter 6: Customer Relationships Defining Relationship Why Firms Want Relationships With Their Customers The Relationship Stages and Interaction Intensity The Effects of the Internet and the 2Is on Customer Relationships Some Final Points About Customer Relationships and the Web EBay Case Study Conclusion

20. Building Relationships at EBay Four Key Stages of Customer Relationships Awareness Exploration/ Expansion Exploration/ Expansion Commitment Dissolution No. 1 general auction service on the Internet EBay encourages browsing before registration for the purpose of exploration EBay offers (1) community, (2) individualization, and (3) interaction Users can stop buying or selling at any time

21. Chapter 6: Customer Relationships Defining Relationship Why Firms Want Relationships With Their Customers The Relationship Stages and Interaction Intensity The Effects of the Internet and the 2Is on Customer Relationships Some Final Points About Customer Relationships and the Web eBay Case Study Conclusion

22. Customer Relationships — Conclusion The customer relationship stages are: 1. Awareness — The customer recognizes that the firm is a possible exchange partner, but has not initiated any communication with the firm or purchased its products 2. Exploration — The customer considers the possibility of exchange, gathers information and perhaps initiates trial purchases 3. Commitment — The parties in a relationship feel a sense of obligation or responsibility toward each other 4. Dissolution — This stage signals the separation of buyer and seller — the loss of connection The Internet allows firms to interact and to individualize in powerful ways. As a result, firm-customer relationships can be formed and can progress very quickly Firms don’t always want a relationship with all customers... and vice versa