1. Traditional vs.
Marketing
 With the cost of customer attraction escalating,
companies are paying more attention to holding on to
their existing customers
 Long-standing customers are less expensive to reach
and less expensive to serve
 Customer relationships are assets that should be
evaluated and managed as rigorously as any financial
or physical assets
 Relationship marketing not only focuses on customer
retention, but also takes a long-term perspective

2. Fig. 11.1 Traditional Versus Relationship Marketing
Interactive Marketing -
Value-added Product/
Service Emphasized Relationship
Marketing
Customer
Value Created/
Acquisition/
Customer Retention
Satisfaction
Traditional
Marketing
Marketing Mix - Core
Product Emphasized
Short-term Focus Long-term Focus
Adapted from Jag Sheth, AMA Faculty Consortium/Evolution of Global Marketing and the Relationship Imperative, 1996

3. Relationship Marketing Defined
“To establish, maintain, and enhance (usually
but not necessarily long-term) relationships
with customers and other partners, at a profit,
so that the objectives of the parties involved
are met. This is achieved by a mutual exchange
and fulfillment of promises.”
___Grönroos (Service Management and Marketing, 1990)

4. What is Relationship Marketing?
 The cornerstone of marketing is getting close to
customers in order to better identify and satisfy their
needs
 Realize that marketing is responsible for more than
“just the sale”
 The focus is shifting from the transaction to the
relationship
 It is difficult to separate service operations and delivery
from relationship building
 Managing customer relationships continues to be
paramount, so is the growing importance of managing
relationships with suppliers and resellers

5. Relationship Marketing -
Goals and Outcomes
 Whereas the goal of traditional marketing is customer
acquisition, under relationship marketing the focus shifts
to creating value
 The objective is to create more value through
interdependent, collaborative relationships with
customers, the outcome is customer retention
 Relationship marketing is ongoing, constantly looking for
opportunities to generate new value
 Retaining customers requires marketers to exhibit care
and concern after they have made a purchase
 The sale often represents only the beginning of the
relationship between the buyer and seller

6. Building Lasting
Customer Relationships
 Sellers can resist the natural tendency toward decline and
complacency by developing what we refer to as “relationship
enablers”
 It is the seller’s responsibility to nurture the relationship
beyond its simple dollar value
 Using the relationship enablers sellers can minimize
relationship decay and strengthen the bonds that lead to
long-term, perhaps even lifetime associations

7. Supplier Rankings of Relationship Enablers *
TRUST
COMMITMENT
COOPERATION
INFORMATION
EXCHANGE DEPENDENCE

8. Figure 11.3 - Information Sustains a Relationship
Relationship
Selling Partnership
Relationship
that the Buyer is willing to invest in the relationship
Information, Time, or Trust Level
High
Transaction Account
Selling Penetration
Transaction-
Based Low Account
Relationship Penetration
Services that the seller is willing to provide the relationship

9. Customer Relationship Management (CRM)
Definition of CRM
 CRM is a business strategy that involves
selecting and managing customer relationships
to optimize the long-term value of a company
Goal of CRM
 The goal of CRM is to acquire, grow, and retain
the right customer relationships -- those with the
best long-term profit potential
(Bob Thompson, founder of CRMGuru.com)

10. Customer Relationship Management (CRM)
as Collaboration
 CRM is about collaborating with customers and
partners so they receive superior value
 Interactions with customers regardless of the
sales channel should be constantly managed to
optimize the value of those relationships
 Effective CRM systems provide a “360 degree”
view of the customer, including the frequency,
response, and quality of customer interactions

11. Characteristics of a Good CRM System
● A good CRM system is capable of describing customer
relationships in sufficient detail so that management,
salespeople, customer service and even suppliers have
direct and real-time access to customer information
● The information gathered should help match customer
needs with product/service offerings, remind customers of
service requirements, predict future purchases, and alert
the company when a customer’s purchase behavior has
changed
● A key feature of CRM is sharing the customer experience
across the organization and supply chain

12. CRM BUSINESS DRIVERS
Automation/Productivity/Efficiency 33%
Competitive Advantage
22%
Customer Demands and Requirements 15%
Increased Revenue 14%
Cost or Price Reduction 10%
Speed/Saving Time 9%
Keeping Track of All Aspects of Business 7%
Customer Support 7%
Inventory Control/Resource Management 6%
Better/Expanded Communication 6%
Integration
6%
Customer Satisfaction 6%
Accessibility 4%
ConformityStandardization 4%
0% 5% 10% 15% 20% 25% 30% 35%
Source: AMR Research, 2002

13. CRM & Critical Customer Data
Companies should continuously gather critical
customer data known as BADI
☛Behaviors (how often and where customers visit)
☛Attitudes (customers satisfaction, service
quality assessments)
☛ Demographics
☛Insights (share of market,
share of wallet)

14. Marketing Knowledge & CRM
Marketing knowledge forms the basis of a customer strategy
by analyzing, planning, implementing, and control – re:
 a customer-centric orientation
 a clearly defined value proposition
 alignment with key channel partners
 dominating the segment (focused on a particular market
segment) or cycle (dominate the evolving value
proposition aimed a group of customers)
 internal and supply chain process integration.
 the coordination and practice of relationship marketing
activities

15. W h y C R M E f f o r t s F a il
 Lack of focus
 No change management policies
 No buy-in
 Complicated procedures
 Poor training

16. Avoiding CRM Failure
 Careful planning
 Appropriate use of people in the
organization
 Get supply chain members involved
 Using customer-driven processes
 Have a sound platform for introducing
CRM systems and activities