customer relationship management structures chapter 3
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Customer Relationship Customer Relationship Management StructuresManagement Structures
Chapter 3Chapter 3
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?
Relationship MarketingRelationship Marketing
Relationship MarketingRelationship Marketing
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?
Relationship MarketingRelationship Marketing
Collaborative exchangeCollaborative exchange• DefinitionDefinition• Work closely togetherWork closely together
Value-adding exchangesValue-adding exchanges• Attracting customersAttracting customers Maintaining Maintaining
customerscustomers
Relationship MarketingRelationship Marketing
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
Relationship MarketingRelationship Marketing
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
Relationship MarketingRelationship Marketing
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
Measuring Customer ProfitabilityMeasuring Customer Profitability
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
Measuring Customer ProfitabilityMeasuring Customer Profitability
Measuring Customer ProfitabilityMeasuring Customer Profitability
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”
Customer Relationship Customer Relationship ManagementManagement
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
Customer Relationship Customer Relationship ManagementManagement
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
Customer Relationship Customer Relationship ManagementManagement
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?
Customer Relationship Customer Relationship ManagementManagement
Customer Relationship Customer Relationship ManagementManagement
• 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
Customer Relationship Customer Relationship ManagementManagement
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?
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