Customer Relationship Management Strategies

1
Customer Relationship Management Strategies

• Chapter 4

2
Customer Relationship Marketing

• Why do some companies succeed?
• Collaborative advantage

3
Relationship Marketing

• All activities directed toward establishing,
  developing, and maintaining successful changes
  with customers and other constituents.
• Why?

4
Relationship Marketing
5
Relationship Marketing

• Transactional exchange
• Definition
• Distant exchanges
• One of many suppliers
• Few operational linkages
• Whats an operational linkage?

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Relationship Marketing

• Collaborative exchange
• Definition
• Work closely together
• Value-adding exchanges
• Attracting customers? Maintaining customers

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Relationship Marketing

• Nature of relationships
• Transactional
• Standardized
• Competitive bidding
• Collaborative exchange
• Customized product
• Work together through linkages
• Relationship commitment
• Trust
• Reliability and integrity

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Relationship Marketing
Transactional Collaborative
Availability of Alternatives
Supply Chain Dynamism
Importance of Purchase
Complexity of Purchase
Information Exchange
Operational Linkages
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Relationship Marketing

• Strategy Guidelines
• Match purchasing situations and supply chain
  conditions for each customer!
• Collaborative
• How to handle?
• Transactional
• How to handle?

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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

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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

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Measuring Customer Profitability
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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?

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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

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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

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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

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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?

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Customer Relationship Management
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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

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Customer Relationship Management

• Instituting the Best Practices
• Salespeople
• Others
• Motivating Employees
• Why?
• How?
• Retaining Customers
• Why?
• Growth from existing customers
• Evaluate relationships

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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

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Gaining a Position of Advantage

• What works best?