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Customer Relationship Management Strategies. Chapter 4. Customer Relationship Marketing. Why do some companies succeed? Collaborative advantage “. Relationship Marketing.
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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 • Transactional exchange • Definition • Distant exchanges • One of many suppliers • Few operational linkages • What’s 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 • 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 • 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 • 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?