Customer Relationship ManagementCourse Handout- Week 2

Shainesh GProfessor of Marketing Indian Institute of Management Bangalore

© Shainesh G

IDIC Framework

The four steps in the IDIC framework are :

Identify

Differentiate

Interact

Customize

2

© Shainesh G

IDIC Framework

In the first two steps of the IDIC framework, the customers are identified and differentiated on basis on value and needs.

In the next two steps, organizations interact with customers to validate the information they have collected and then customize the product or service based on customers’ needs.

3

© Shainesh G

Ladder of Loyalty

The ladder of loyalty, traces the journey, through the various relationship stages, where one starts as a prospect and then moves on to potentially become a partner.

Targets begin as prospects, then become customers after the first purchase.

A customer turns into a client, when she makes a repeat purchase.

4

© Shainesh G

Ladder of Loyalty

When a client proactively supports the organization, she becomes a supporter.

When a supporter engages with the organization more proactively, in terms of new product development. She turns into an advocate.

5

© Shainesh G

Customer Bonds

Berry and Parasuraman (1991), identified four types of bonds.

1. Financial bonds

2. Social bonds

3. Customization bonds

4. Structural bonds

6

© Shainesh G

Customer Bonds

Financial bonds tie customers through financial incentives. They are the easiest to break since they attract bargain hunters and price sensitive customers.

In social bonding, organizations find better ways to stay in touch with their customers. These bonds are slightly more difficult to break as compared to financial bonds, since they focus on personal relationships.

7

© Shainesh G

Customer Bonds

In customization bonds, marketers leverage their knowledge about customers to customize their marketing mix, and meet the needs tailored to individual customer's requirements.

Structural bonds are the strongest of the 4 bonds. They are typically found in business markets, between organizations.

So, as the organization moves from level 1 to level 4, the bonds grow stronger. The customer loyalty and retention increases.

8

© Shainesh G

Customer Defections

Customers switch from one company to another, for various reasons ranging from-

Perceived indifference

Product dissatisfaction

Competition

Other friendships

Customers who move away

9

© Shainesh G

Types of Defectors 10

© Shainesh G

Strategies to Reduce Defections 11

© Shainesh G

CRM Framework

The stages in the CRM framework are-

Switching

Satisfaction

Trust

Commitment

Loyalty

12