Relationship Marketing: Customer Value & Service

• Learning objectives include, defining relationship marketing, explaining the value of customers, identifying and describing relationship development strategies and illustrating successful customer service strategies in the Philippine business enterprise.

Relationship Marketing

• Developed from direct response marketing campaigns.
• Emphasizes customer retention and customer satisfaction rather than sales transactions.
• Extends to include inbound marketing, search optimization, strategic content, public relations, social media, and application development.

Customer

• A person or organization that transacts with a business entity to buy goods or services for monetary or other valuable considerations.
• Acquiring and keeping customers is the end goal of businesses because customers create demand

Customer Service

• Ensures customer satisfaction with a product or service.
• Takes on many forms, including: salesperson assistance, product delivery, technical advice and help desks.
• Involves activities to enhance customer satisfaction, or the perception that a product has met or exceeded expectations.

Managing Customer Service Quality

• Organizations conduct rigid customer service training and assess periodically how services are delivered.
• Assessments result in the identification of customer service problems, areas of improvement, and current levels of customer satisfaction.
• Companies should establish service objectives with specific and measurable targets.
• Sufficient organizational resources are committed towards the achievement of these targets.
• Customer feedback on service quality should be gathered regularly.
• Review target accomplishment and identify customer service weaknesses, then connect them.

Managing Customer Service Differentiation

• Organizations can make their customer service stand out
• They can protect their services from being easily duplicated by competitors
• For physical products, differentiation can be protected through patents however this is not the case with services
• Customer-centered organizations can differentiate their customer service through:
• The development and training of competent customer contact personnel.
• Designing and implementing a superior service delivery environment and process.

Customer Service Practices in the Philippines

• Free delivery is offered by most restaurants and fast food chains.
• Automated in-home ordering systems are used by some supermarkets and drug stores.
• Free gift wrapping/plastic book jackets are provided by some department stores and book stores.
• Merchandise/document pick-up is offered by selected courier services.
• Free parking is available at some churches and religious organizations.
• Valet parking is seen at some hotels and resorts.
• Reservations and installment plans are available at some large department stores and bookstores.
• Complimentary refreshments and waiting lounges are offered at most car dealerships.
• Help desks, touch phone access, and 24-hour customer hotlines are utility telecommunication firms.
• Free appliance installation is offered by most appliance stores.
• Scheduled floral bouquet delivery is made from some flower shops.
• Drive-through service is offered by most fast food outlets.
• Free alterations on garments are done by selected apparel retailers.
• Complimentary massages are provided by some barbershops and salons.

Customer Relationship Management (CRM)

• Includes all the activities, strategies, and technologies that companies use to manage their interactions with current and potential customers.
• A management strategy that results in increased profits for a business.
• Creates a simple user interface for a collection of data that helps businesses recognize and communicate with customers in a scalable way.

Effective Guidelines in CRM Implementation

• Adopt the right mindset towards customer service.
• Purchase or develop CRM software.
• Quantify customer acquisition and retention costs.
• Develop and implement a customer service training program.
• Empower salespersons to make decisions.
• Establish communication lines between customers and customer contact staff.
• Shop the competition, keep innovating customer service, and promote genuine customer service with passion.

Customer Lifetime Value (CLV)

• The forecasted sales or profits that a company can derive from the entire span of its future relationship with a particular customer.
• Can be based on the potential and profitability of the customer's relationship with the company.
• Considers longer-term company relationships with customers, in contrast to a short-term view of "take the customer's money and run."
• Calculates and compares costs of acquiring new customers and keeping old ones.
• Can determine revenues lost when an existing customer switches to another product.
• Acquisition costs are for getting new customers, while retention costs are for maintaining existing customers.
• Highlights the importance of market segmentation, recognizing that some customer groups are more profitable than others.

CVL Measurement Formula

• CVL = (PV) (RP) (RT)
• PV = average peso value of a sale to a particular customer or customer group
• RP = repeat purchase in a year
• RT = retention time in months or years
• CVL = customer lifetime value

CVL Example

• An athlete spends P2,000.00 for every visit to a spa twice a month for an expected time period of five years.
• PV = P2,000.00
• RP = 24 (twice a month for 1 year)
• RT = 5
• CVL = (2000) (24) (5) = P240,000.00
• The athlete's Customer Lifetime Value is P240,000.00