Lecture

10

Customer Relationships

Customer Relationships — Today’s Objectives

Objectives will be to:

Develop a clear definition of relationship

Explore why firms want relationships with their customers

Discuss the relationship stages and interaction intensity

Examine the effects of the Internet and 2Is on customer relationships

Discuss some final points about customer relationships and the Web

Defining Relationship

Why Firms Want Relationships With Their Customers

The Relationship Stages and Interaction Intensity

The Effects of the Internet and the 2Is on Customer Relationships

Some Final Points About Customer Relationships and the Web

EBay Case Study

Conclusion

Customer Relationships

Customer Relationships

Defining Relationship

Why Firms Want Relationships With Their Customers

The Relationship Stages and Interaction Intensity

The Effects of the Internet and the 2Is on Customer Relationships

Some Final Points About Customer Relationships and the Web

EBay Case Study

Conclusion

Relationship Type & Involvement Continuums

ExchangeRelationships

CommunalRelationships

Enduring Involvement

Situational Involvement

Relationship Involvement

Automobile

Expensive Watch

Scotch Whiskey

Wine for Dinner Party

Face Soap

Eyeglasses

Paper Towels

Disposable Razor

Liquid BleachInsect Repellent

Salad Oil

Insecticide

Toilet Tissue

35-mm Camera

Stereo Component

Credit Card

Headache Remedy

Hair Coloring

Deodorant Soap

Soft DrinkPotato Chips

Washer/Dryer

High

Low

Product type (cost, level of symbolism, risk)

Purchase situation (visibility, social acceptability)

Consumer type (interests, values, attitudes)

A Continuum of Relationship Involvement

Customer Relationships

Defining Relationship

Why Firms Want Relationships With Their Customers

The Relationship Stages and Interaction Intensity

The Effects of the Internet and the 2Is on Customer Relationships

Some Final Points About Customer Relationships and the Web

EBay Case Study

Conclusion

Length of Customer Tenure and Profitability Relationship

Short Long

Customer Lifetime

Low

Hig

h

Prof

itabi

lity

Customer Relationships

Defining Relationship

Why Firms Want Relationships With Their Customers

The Relationship Stages and Interaction Intensity

The Effects of the Internet and the 2Is on Customer Relationships

Some Final Points About Customer Relationships and the Web

EBay Case Study

Conclusion

Moving Through the Relationship Stages

Commitment DissolutionExploration/Expansion

Customers can advance through the stages in several different ways

Awareness

Two Alternatives for Customers at the Commitment Stage

Commitment

Customers can either stay committed or move to dissolution

Dissolution

StayCommitted

Satisfied, profitable customers

Unsatisfied or unprofitable customers

Level of Interaction by Stage of Customer Relationships

Level of Intensity

Four Key Stages of Customer Relationships

Level of Intensity

Stages of Customer Relationships

Awareness Exploration /Expansion Commitment Dissolution

Intensity

Customer Relationships

Defining Relationship

Why Firms Want Relationships With Their Customers

The Relationship Stages and Interaction Intensity

The Effects of the Internet and the 2Is on Customer Relationships

Some Final Points About Customer Relationships and the Web

EBay Case Study

Conclusion

Are Interactivity and Individualization Always Necessary?

Low Individualization,Low Interactivity

Example: news service

Low Individualization,High InteractivityExample: library

High Individualization,Low Interactivity

Example: bank statement

High Individualization,High Interactivity

Online Privacy Attitudes

Customer Relationships

Defining Relationship

Why Firms Want Relationships With Their Customers

The Relationship Stages and Interaction Intensity

The Effects of the Internet and the 2Is on Customer Relationships

Some Final Points About Customer Relationships and the Web

EBay Case Study

Conclusion

Price

Product

Promotion

Distribution

Brand

Marketing Levers

Four Key Stages of Customer Relationships

Integrative Framework: Building Relationships on the Web

Awareness Exploration/Expansion Commitment Dissolution

Customer Relationships

Defining Relationship

Why Firms Want Relationships With Their Customers

The Relationship Stages and Interaction Intensity

The Effects of the Internet and the 2Is on Customer Relationships

Some Final Points About Customer Relationships and the Web

EBay Case Study

Conclusion

Building Relationships at EBay

Four Key Stages of Customer Relationships

Awareness Exploration/Expansion Commitment Dissolution

No. 1 general auction service on the Internet

EBay encourages browsing before registration for the purpose of exploration

EBay offers (1) community, (2) individualization, and (3) interaction

Users can stop buying or selling at any time

Customer Relationships

Defining Relationship

Why Firms Want Relationships With Their Customers

The Relationship Stages and Interaction Intensity

The Effects of the Internet and the 2Is on Customer Relationships

Some Final Points About Customer Relationships and the Web

eBay Case Study

Conclusion

Customer Relationships —Conclusion The customer relationship stages are:

1. Awareness — The customer recognizes that the firm is a possible exchange partner, but has not initiated any communication with the firm or purchased its products

2. Exploration — The customer considers the possibility of exchange, gathers information and perhaps initiates trial purchases

3. Commitment — The parties in a relationship feel a sense of obligation or responsibility toward each other

4. Dissolution — This stage signals the separation of buyer and seller — the loss of connection

The Internet allows firms to interact and to individualize in powerful ways. As a result, firm-customer relationships can be formed and can progress very quickly

Firms don’t always want a relationship with all customers . . . and vice versa