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McGraw-Hill © 2000 The MGraw-Hill Companies
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Maximizing services
marketing potential
• Relationship Marketing
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What is relationship
marketing?
• Marketing designed to create, maintain, and
enhance strong relationships with customers
and other stakeholders.
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S M Why is it important?
• It costs five times as much to attract a new customer
as it does to keep a current one satisfied.
• It is claimed that a 5% improvement in customer
retention can cause an increase in profitability of
between 25 and 85 percent depending on the industry.
• Likewise, it is easier to deliver additional products
and services to an existing customer than to a first-time “buyer.”
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S M Six types of markets
internal marketssystem in which goods and services are sold by the provider to a range of purchasers within the same organization, who compete to establish
the price of the product)
supplier markets
( A supplier is a person, company, or organization that sells or supplies something such as goods or equipment to customers).
recruitment markets(where employer search for employees and employees search for jobs)
referral markets(Referral marketing is a method of promoting products or services to new customers through referrals)
influence marketsA person who has a greater than average reach or impact through word of mouth in a ...
customer markets
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S M Customer Lifetime Value
• Losing an existing customer means losing the
entire revenue stream that customer represents
– not just that single encounter or sale.
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Attracting, retaining and
growing customers
• Customer delivered value – the difference
between total customer value and total
customer cost. – Value includes product, services, personnel and
image value.
– Cost includes monetary, time, energy and psychic
costs.
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S M Customer satisfaction
• The extent to which a product or service’s perceived performance matches a buyer’sexpectations.
• What are expectations based on?
– Past buying experiences
– Friends, family and other associates
– Information about the competition – Promises made in marketing materials (your
brand)
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Customer loyalty &
retention
• Highly satisfied customers are:
– Less price sensitive
– More likely to talk favorably about you – More likely to refer you to others
– Remain loyal for longer
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Growing “share of
customer”
• Increasing the share of the customer’s
purchasing in your product category.
• Best way is through cross-selling – Getting more business from current customers by
selling them additional or complementary services
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S M Managing your customers
• Relationship marketing is designed to create,
maintain, and enhance strong relationships
with profitable customers and otherstakeholders.
• First need to define what your profit is on
specific services…
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S M How to calculate profit
• In most business:
Gross income – (cost of goods + expenses) = net
profit• In healthcare:
Reimbursement income – (cost of goods + expenses)
= net profit
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S M Calculating profit
• Reimbursement rates of 55% of dollars billed.
For every $1 billed to a payer, only $.55 is
collected.• The cost to provide the service is
approximately 50% of dollars billed. This cost
is the sum of the cost of goods and totalexpense. So, for every $1 billed to a payer, it
costs $.50 to provide the service.
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S M Calculating profit
• Reimbursement income ($.55) – (cost of good
+ expenses) ($.50) = net profit ($.05)
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Not all customers are the
same…
Highly profitable
customer
Mixed-profitability
customer
Losing customer
Highly profitable
product
++ +
Profitable product + +
Mixed-profitability
product
+ _
Losing product _ _
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Delivering customer value
& satisfaction
• Not just the people in charge of marketing arein charge of marketing.
• Must have an effective value chain focused onserving the customer.
• Employees need to be trained and understandwhat expectations are for customer service –
and• Need to be empowered to address certain
situations.
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S M Customer satisfaction
• Satisfaction surveys
– Available at the end of the appointment orincluded in the billing statement – or online
– Don’t forget your referral sources • One-on-one interviews are best
– So what do you do with the data?
• Third party reports are best (don’t shoot the messenger) • Turn the results in to meaningful changes
• Follow-up on specific complaints or incidents – nomatter how trivial – especially with referral sources
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S M Referral sources
• How do you communicate with them?
• Who communicates with them?
• Do you get feedback from them?• Do you get feedback to them?
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S M So what is CRM software?
• Customer Relationship Management software
allows tracking and analysis of each
customer's purchases, preferences, activities,tastes, likes, dislikes, and complaints.
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Three aspects of CRM
systems
• Operational
• Collaborative
• Analytical
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S M Operational CRM
• Provides support to "front office" business processes,
including sales, marketing and service. Each
interaction with a customer is generally added to a
customer's contact history, and staff can retrieveinformation on customers from the database when
necessary.
• Main benefits is that customers can interact withdifferent people in a company over time without
having to describe the history of their interaction each
time.
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S M Collaborative CRM
• Covers the direct interaction with customers,
for a variety of different purposes, including
feedback and issue-reporting. Interaction can be through a variety of channels, such as web
pages, email, automated phone systems.
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S M Analytical CRM
Analyzes customer data for a variety of purposes:
• Design and execution of targeted marketing campaigns tooptimize marketing effectiveness
• Design and execution of specific customer campaigns,
including customer acquisition, cross-selling, up-selling,retention
• Analysis of customer behavior to aid product and servicedecision making (e.g. pricing, new product development etc.)
• Management decisions, e.g. financial forecasting and
customer profitability analysis• Prediction of the probability of customer defection (churn).
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S M When CRM works best
• When it is combined with an enterprise wide system
(billing, medical records, HR systems)
• When it is implemented company wide
• When compliance with data collection is tied to
compensation
• When it is easy to use (fast, streamlined, reliable)
• When report results are shared and not buried
• When patient privacy is respected
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S M Personalized marketing
• How can you make the (brand entity) model
work for you? For example chen one or
amazon
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S M New clients
• Identify new prospects based on the attributes
of current, profitable customers
• Prioritize them – can use other criteria besides profitability
• Develop a relationship plan
– Direct mail/email – Personal meetings
– Speaking engagements/thought leadership
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S M New clients
• Assign top prospects to specific people
• Provide tools to help them keep in touch
– Invitations to events (charity events, lunches,conferences, tours)
– Thought leadership (white papers, CMEs)
– Direct mail/email materials (newsletters, surveys,
blogs)• Enter them into CRM system as prospects and
track ongoing communication
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