Customer Relationship Management Strategies

Customer Relationship Customer Relationship Management StrategiesManagement Strategies

Chapter 4Chapter 4

Customer Relationship MarketingCustomer Relationship Marketing

Why do some companies succeed?Why do some companies succeed? Collaborative advantageCollaborative advantage

• ““

Relationship MarketingRelationship Marketing

““All activities directed toward All activities directed toward establishing, developing, and establishing, developing, and maintaining successful changes with maintaining successful changes with customers and other constituents.”customers and other constituents.”

Why?Why?



Transactional exchangeTransactional exchange• DefinitionDefinition• Distant exchangesDistant exchanges• One of many suppliersOne of many suppliers• Few operational linkagesFew operational linkages

What’s an operational linkage?What’s an operational linkage?


Collaborative exchangeCollaborative exchange• DefinitionDefinition• Work closely togetherWork closely together

Value-adding exchangesValue-adding exchanges• Attracting customersAttracting customers Maintaining Maintaining

customerscustomers


Nature of relationshipsNature of relationships• TransactionalTransactional

StandardizedStandardized Competitive biddingCompetitive bidding

• Collaborative exchangeCollaborative exchange Customized productCustomized product Work together through linkagesWork together through linkages Relationship commitmentRelationship commitment TrustTrust

• Reliability and integrityReliability and integrity


TransactionalTransactional CollaborativeCollaborative

Availability of Availability of AlternativesAlternatives

Supply Chain Supply Chain DynamismDynamism

Importance of Importance of PurchasePurchase

Complexity of Complexity of PurchasePurchase

Information Information ExchangeExchange

Operational Operational LinkagesLinkages


Strategy GuidelinesStrategy Guidelines• Match purchasing situations and supply Match purchasing situations and supply

chain conditions for each customer!chain conditions for each customer!• CollaborativeCollaborative

How to handle?How to handle?

• TransactionalTransactional How to handle?How to handle?

Measuring Customer ProfitabilityMeasuring Customer Profitability

Common mistakeCommon mistake• Two factors must be present for differentiation Two factors must be present for differentiation

to workto work Activity Based CostingActivity Based Costing

• Aggregate v. Individual firmsAggregate v. Individual firms Unlocking Customer ProfitabilityUnlocking Customer Profitability

• 20/80 rule20/80 rule• CorollaryCorollary• Big companies are usually most profitable or Big companies are usually most profitable or

least profitableleast profitable


Managing High- and Low-Cost-to-Managing High- and Low-Cost-to-Serve CustomersServe Customers• What makes some customers What makes some customers

expensive?expensive?• Look inside firstLook inside first• Sharper profit lensSharper profit lens

See next slideSee next slide



Identifying Profitable CustomersIdentifying Profitable Customers• Location on chartLocation on chart• How to maintain?How to maintain?

Identifying Unprofitable CustomersIdentifying Unprofitable Customers• Location on chartLocation on chart• How to improve the situation?How to improve the situation?• Fire customers?!Fire customers?!

Why?Why? How?How?

Customer Relationship Customer Relationship ManagementManagement

““Cross-functional process for Cross-functional process for achieving achieving • continuing dialogue with customerscontinuing dialogue with customers• across all their contact and access across all their contact and access

points, withpoints, with• personalized treatment of the most personalized treatment of the most

valuable customersvaluable customers• to ensure customer retention and the to ensure customer retention and the

effectiveness of marketing initiatives”effectiveness of marketing initiatives”


Develop Customer Strategy, THEN Develop Customer Strategy, THEN choose softwarechoose software

Five Steps for Customer StrategyFive Steps for Customer Strategy• Acquiring the right customersAcquiring the right customers• Crafting the right value propositionCrafting the right value proposition• Instituting best processesInstituting best processes• Motivating employeesMotivating employees• Learning to retain customersLearning to retain customers


Acquiring the Right CustomersAcquiring the Right Customers• Look at current and potential customers Look at current and potential customers • Balance desired level of relationship Balance desired level of relationship

with profitability of doing sowith profitability of doing so• Choosing accountsChoosing accounts

Three factorsThree factors How do they define value?How do they define value? Look at profit potentialLook at profit potential


Crafting the Right Value PropositionCrafting the Right Value Proposition• Value proposition- “the products, Value proposition- “the products,

services, ideas, and solutions that a services, ideas, and solutions that a business marketer offers to advance the business marketer offers to advance the performance goals of the customer performance goals of the customer organization.”organization.”

• Look at industry- what are others doing?Look at industry- what are others doing?



• Industry bandwidthIndustry bandwidth The strategies competing firms in an The strategies competing firms in an

industry pursueindustry pursue

• Flaring out by unbundlingFlaring out by unbundling• Flaring out with augmentationFlaring out with augmentation• Create Flexible Service OfferingCreate Flexible Service Offering


Instituting the Best PracticesInstituting the Best Practices• SalespeopleSalespeople• OthersOthers

Motivating EmployeesMotivating Employees• Why?Why?• How?How?

Retaining CustomersRetaining Customers• Why?Why?• Growth from existing customersGrowth from existing customers• Evaluate relationshipsEvaluate relationships

Gaining an Advantage at CRMGaining an Advantage at CRM

Customer-Relating CapabilityCustomer-Relating Capability• Orientation toward relationshipsOrientation toward relationships

Customer retention is a shard goalCustomer retention is a shard goal Organizational members act quickly on info received Organizational members act quickly on info received

from customersfrom customers All employees understand and appreciate the lifetime All employees understand and appreciate the lifetime

value of a customervalue of a customer Employees have considerable latitude when taking Employees have considerable latitude when taking

actionsactions

• Information about relationshipsInformation about relationships• ConfigurationConfiguration

Org. structure and performance measuresOrg. structure and performance measures

Gaining a Position of AdvantageGaining a Position of Advantage

What works best?What works best?

Documents

Customer Relationship Management Strategies