Chap 007 service market reason
Transcript of Chap 007 service market reason
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Building Customer Relationships
Relationship Marketing
Relationship Value of Customers
Customer Profitability Segments
Relationship Development Strategies
Relationship Challenges
7Chapter
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Obe!tives for Chapter 7"
Building Customer Relationships
#$plain relationship marketing% its goals% and the benefits of long&term relationships for firms and !ustomers'
#$plain (hy and ho( to estimate !ustomer relationship value'
)ntrodu!e the !on!ept of !ustomer profitability segments as astrategy for fo!using relationship marketing efforts'
Present relationship development strategies*in!luding +uality
!ore servi!e% s(it!hing barriers% and relationship bonds'
)dentify !hallenges in relationship development% in!luding thesome(hat !ontroversial idea that ,the !ustomer is not al(aysright'-
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Relationship Marketing
is a philosophy of doing business% a strategi! orientation% that
fo!uses on keeping !urrent !ustomers and improving
relationships (ith them
does not ne!essarily emphasi.e a!+uiring ne( !ustomers
is usually !heaper /for the firm0
keeping a !urrent !ustomer !osts less than attra!ting a ne( one
thus% the fo!us is less on attra!tion% and more on retention and
enhan!ement of !ustomer relationships
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1igure 7'2
Customer 3oals of Relationship Marketing
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Benefits of Relationship Marketing
Benefits for Customers"
Re!eipt of greater value
Confiden!e benefits" trust
!onfiden!e in provider
redu!ed an$iety So!ial benefits"
familiarity
so!ial support
personal relationships
Spe!ial treatment benefits" spe!ial deals
pri!e breaks
Benefits for Firms"
#!onomi! benefits" in!reased revenues
redu!ed marketing andadministrative !osts
regular revenue stream Customer behavior benefits"
strong (ord&of&mouth endorsements
!ustomer voluntary performan!e
so!ial benefits to other !ustomers
mentors to other !ustomers
4uman resour!e managementbenefits" easier obs for employees
so!ial benefits for employees
employee retention
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1igure 7'5
Profit 3enerated by a Customer
Over 6ime
Source" n e$hibit from 1' 1' Rei!hheld and 8' #' Sasser% 9r'% ,:ero Defe!tion" ;uality Comes to Servi!es%>?'
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1igure 7'@
Profit )mpa!t of A Per!ent )n!rease in Retention Rate
Source" 1' 1' Rei!hheld% ,oyalty and the Renaissan!e of Marketing%- Marketing Management, vol' 5% no' /2>>0% p' 2A'
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6able 7'2
ifetime Value of an verage Business
Customer at 6ele!he!k )nternational
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Customer oyalty #$er!ise
6hink of a servi!e provider to (ho you are loyal'
8hat do you do /your behaviors% a!tions% feelings0 that
indi!ates you are loyal
8hy are you loyal to this provider
8hat fa!tors have influen!ed the formation of your loyalty
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Most profitable
customers
Least profitable
customers
What segment spends more with us
over time, costs less to maintain,
spreads positive word-of-mouth?
What segment costs us in time,
effort and money yet does notprovide the return we want?
What segment is difficult to do
business with?
Gold
ron
Lead
!latinum
1igure 7'
6he Customer Pyramid
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1igure 7'A
Relationship Development Model
Customer "enefitsConfiden!e benefits
So!ial benefits
Spe!ial treatment benefits
#elationship "onds1inan!ial bonds
So!ial bonds
Customi.ation bonds
Stru!tural bonds
$witching "arriersCustomer inertiaS(it!hing !osts
Core $ervice !rovisionSatisfa!tion
Per!eived servi!e +uality
Per!eived value
$trong Customer#elationship
%Loyalty&
Firm "enefits#!onomi! benefits
Customer behavior benefits
4uman resour!e management
benefits
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Strategies for Building Relationships
Core Servi!e Provision" servi!e foundations built upon delivery of e$!ellent servi!e"
satisfa!tion% per!eived servi!e +uality% per!eived value
S(it!hing Barriers" !ustomer inertia s(it!hing !osts"
set up !osts% sear!h !osts% learning !osts% !ontra!tual !osts
Relationship Bonds"
finan!ial bonds so!ial bonds
!ustomi.ation bonds
stru!tural bonds
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#$!ellent
servi!e
and value
'(
Financial
bonds
)(
$ocial
bonds
*(
$tructural
bonds
+(
Customiation"onds
Volume andfre+uen!y
re(ards
Bundling and!ross selling
Stable
pri!ing
So!ial bonds
among
!ustomers
Personal
relationships
Continuous
relationships
Customer
intima!yMass
!ustomi.ation
nti!ipationE
innovation
Shared
pro!esses
ande+uipment
9oint
investments
)ntegrated
information
systems
1igure 7'F
evels of Relationship Strategies
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,6he Customer )s GO6 l(ays Right-
Got all !ustomers are good relationship !ustomers"
(rong segment
not profitable in the long term
diffi!ult !ustomers