The Basics of Relationship Marketing

1. The Basics of Relationship Marketing

2. Perceptual Illusions

4. http://dragon.uml.edu/psych/

5. http://dragon.uml.edu/psych/

6. http://dragon.uml.edu/psych/

7. http://dragon.uml.edu/psych/

8. Who Are The British ?

9. Robbie Williams

10. Mr Bean

11. David Beckham

12. Sherlock Holmes

13. Dido

14. Prince Charles

15. Football Hooligans

16. James Bond

17. Who Is Finnair ?

18. Who Is Fortum ?

19. The psychology of customer relationships and loyalty is complex & determined by individuals in situations

20. Right Conditions Right Customer

21. Disloyalty =

22. Right Conditions Right Customer Measure Gap

23. Right Conditions Right Customer Control Gap

24. Right Conditions Right Customer Efficiently

25. Right Conditions Right Customer Loyalty Marketing

26. Generally, there is no ‘half-way house’ with utilities dis-loyalty, either all the dis-loyalty factors coincide or incumbent loyalty occurs

27. CurrentSituation Future Prediction Present loyalty depends on predictions • Service • Price • Alternatives • Risk • etc.

28. Strong Relationships can also be Simple

29. Social Responsibility– Meaning to the Relationship

30. Giving Personality to the Relationship

31. Giving Affinity to the Relationship

32. Giving Emotion to the Relationship FINNAIR

33. Giving Excuses to the Relationship

34. Super Value Gives You What You Want • - Excellent Overall Quality at the things which matter, • Very Competitive Prices • Excellent Economies of Scale / Cost-Efficient Quality • Missing Something ? Perhaps, but that doesn’t bother all • Improving Image and Quality all the time.

35. Company X 30 PerceivedService-Level Improvements require full-stage perceptual leaps (no half-way house) to higher schemata 25 20 15 10 5 0 Appalling Normal Below Normal Nearly Appalling Above Normal Outstanding Nearly Outstanding

36. Loyalty Satisfaction Typical Correlation: 0.1-0.4

37. WHY? It’s often measured wrongly It’s just one of many loyalty issues It’s relative to perceived alternatives Customers are in Fickle relationships

38. Relationship Marketing (RM)

39. Relationship Marketing Defined 1.

40. Definition of Relationship Marketing ”identify and establish, maintain and enhance and, when necessary, terminate relationships with customers and other stakeholders, at a profit so that the objectives of all parties involved are met; and this is done by mutual exchange and fulfilment of promises.” Source: C.Grönroos (1994) – From Marketing Mix to Relationship Marketing: Towards a Paradigm Shift in Marketing, Marketing Decisions, 32(2), pp4-20.

41. Definition of Relationship Marketing But No real agreed definition RM ”is in itself ’shorthand’ for quite a wide range of ’relationship-type’ strategies that have developed over the past few decades in product as well as service markets and in consumer as well as business-to-business sectors although not necessarily with the same intensity or success.” Source: John Egan (2001) - Relationship Marketing, Exploring Relational Strategies in Marketing, Pearson Education Ltd, pp1.

42. What is CRM ? Customer Relationship Management CRM is a slightly larger issue, including more logistical issues etc.

43. Supporting Definitions • Service Provider Any organization or individual that provides service to customers • Customer / ConsumerA customer may mean a person who is in a purchasing agreement with a company, or a person who has completed an agreement but is still in contact with a company, or it may mean the same as ‘consumer’: a person person who has the ability to make a purchasing agreement now or in the future, and who may or may not have been or be in contact with a company • Customer Care / Customer ServiceThe total package of products & services provided to a customer by a company • Service Quality / Perceived Service QualityThe absolute or relative standard of a service and all its components. ‘Perceived service quality’ is the service quality as believed by customers • Customer SatisfactionThe overall feeling a customer has about a product / service / provider having used it. This includes considerations of price, quality and other elements. • Continuous ImprovementManagement led improvement of a company’s performance through evolution.

44. Achieving RelationshipValue 2.

45. How Much Are Customers Worth?

46. The Primary Logic Achieve Customer Loyalty Increase Relationship Profitability

47. Utility Customer Lifetime Value Customer Lifetime Value Gradient represents customer profitability Length of Relationship (Months) Customer Loyalty

48. Relationship Revenue new price carriers Relationship Longevity relationship structure $ relationship strength Relationship Costs Source: Storbacka & Lehtinen 2001 - dimensions for relationshp profitability Dimensions of Relationship Profitability

49. Achieving Relationship Value & Profitability Core Product(s) Price Develop Maximize Understanding the Psychology of Loyalty New Price Carriers Customers Keep/Gain Minimize Costs Source: Adapted and developed from amongst others: Storbacka & Lehtinen 2001

50. 3. RelationshipChannels