TARGETING,

1

• TARGETING,
• MANAGING RELATIONSHIPS AND
• BUILDING
• CUSTOMER LOYALTY

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Objectives

• Identify foundations of loyalty and commitment
• Explain what relationship marketing is, and is
  not
• Examine the determinants of loyalty

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Review of Market Segmentation

• Segment a group of current and prospective
  customers who share common characteristics,
  needs, purchasing behavior, or consumption
  patterns
• Target Segmenta segment selected because its
  needs and other characteristics fit well with a
  firms goals and capabilities.
• Matching the portfolio with Human resources in
  professional firms.

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Pathways to Growth

• Attract new customers
• Existing customers purchase more units
• Existing customers purchase higher value units
• Reduce churn or customer turnover
• Terminate unprofitable customers
• Note Points 4 5 involve relationship marketing

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Context of Relationships
The six markets framework
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Benefits of Relationship Marketing

• Opportunities to cross-sell
• Higher retention rates
• Reduced operating costs
• Long-term customers buy more
• Spread positive W-O-M

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Relationship Marketing Defined

• Marketing is to establish, maintain and enhance
  relationships with customers and other partners
  at a profit, so that the objectives of (both)
  parties involved are met. This is achieved by a
  mutual exchange and fulfillment of promises.

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Being Appreciated

• Unique to intangible services is the fact that
  the customer is seldom aware of being served
  (well).
• Customers usually dont know what theyre getting
  until they dont get it. Customers will be aware
  of failure and dissatisfaction, not satisfaction.
  Therefore it is easy for competitors to capture
  your customers.
• Once relationship is cemented, the seller has
  created equity. To keep customers the seller must
  regularly enhance relationship, else lose
  customers to a competitor.
• Strategies periodic letters, phone calls to
  remind newsletters, regular visits, non business
  socialising.

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Key Elements in Successful Relationships

• Trust
• Customer satisfaction
• Value (mutual benefits)
• Communication effectiveness
• Social bonds
• Length of patronage

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Other Key Factors

• Switching costs (economic, psychological)
• Attractive alternatives

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Stages of the relationship marketing and
management process
Relationship marketing
Relationship management
Evangelist
Advocate
Customer ladder
Relationship commitment
Client
Customer
Establish
Attract
Create
Develop
Retain
Enhance
Maintain
Prospect
Stages (time)
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• Data-Base Marketing
• versus
• Loyalty Programs
• versus
• Relationship Marketing

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All customers Same relationship?

• The answer is clearly no.

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Jaycustomers

• The Thief
• The Rulebreaker
• The Belligerent
• The Family Feuders
• The Vandal
• The Deadbeat

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The Links in the Service-Profit Chain
Operating Strategy and Service Delivery System
Employee Retention
Revenue Growth
Internal Service Quality
Employee Satisfaction
External Service Value
Customer Satisfaction
Customer Loyalty
Profitability
Employee Productivity
retention repeat business referral

• workplace design
• job design
• employee selection
• development
• employee rewards
• recognition
• tools for serving customers

service concept results for customers
service designed and delivered to meet targeted
customers needs
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Asset Utilization Yield Management

• Asset Revenue-Generating Efficiency (ARGE).
• It helps recognize the notion of Opportunity
  cost.
• Allocation of capacity/resources to service
  class/customer type.
• Yield management and cost allocation

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Sample table
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Role of Marketing

• Market segment identification.
• Forecasting of demand.
• Portfolio analyses (maximizing net revenue versus
  capacity utilization).
• Pricing guidelines.
• Monitoring and control.
• Too much focus on ARGE versus good customer
  relation.

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Creating and maintaining valued relationships

• Customer life analyses
• Rewarding frequent use of service - frequent
  flyer programs.
• Rewarding value of use and not just frequency -
  silver, gold and platinum cards.

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