RELATIONSHIP MARKETING

What is Relationship Marketing?

Why Relationship Marketing? Are there any Benefits from RM? What are the Requisites for successful RM? Are there any challenges?
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Relationship Marketing

Strategic orientation, that focuses on keeping current customers and improving relationships with them.
The focus is less on attraction, and more on retention and enhancement of customer relationships.
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Stages in Relationship Marketing

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Underlying Logic of Customer Retention

Customer Satisfaction

Quality service

Customer Retention & Increased

profits

Employee Loyalty

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Need for Relationship Marketing

Transactional Marketing 1. Single sale recruitment 2. Product Features
3. 4.

5.

6.

Relationship Marketing 1. Retention of customer 2. Product benefits & systematic solution 3. Long term Relationship Short term 4. Customer service taken as Little importance to most important element Customer service Communicate to persuade 5. Communicate to make sense & meaning Goal is customer satisfaction 6. Goal is to delight the customer
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Benefits of Relationship Marketing

Customers:
1. 2.

Receipt of greater value Confidence benefits:

trust , confidence in provider, reduced anxiety

3.

Social benefits:
familiarity, social support, personal relationships

4.

Special treatment benefits:

special deals, price breaks

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FIRMS:
1.

Economic benefits:
increased revenues, reduced marketing and administrative costs regular revenue stream

2.

Customer behavior benefits:

strong word-of-mouth endorsements, customer voluntary performance social benefits to other customers, mentors to other customers

3.

Human resource management benefits:

easier jobs for employees, social benefits for employees
employee retention
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Benefits of Relationship Marketing

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Strategies for Building Relationships

Core Service Provision:
Service foundations built upon delivery of excellent service: satisfaction, perceived service quality, perceived value

Quality in the core service

Segmentation and Targeting:
Focus and Competitive Advantage, Not worth the effort , Profitability Segments

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Market Models
Internal

Influence
customer

Referral

Employee

Supplier

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80/20 Customer Pyramid

Most profitable customers
Best Customers What segment spends more with us over time, costs less to maintain, spreads positive word-of-mouth?

Other Customers What segment costs us in time, effort and money yet does not provide the return we want? What segment is difficult to do business with?

Least profitable customers

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Difficulties faced by customers in switching service providers

Switching Barriers:
customer inertia switching costs:

set

up costs, search costs, learning costs, contractual costs, Perceived risk

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RELATIONSHIP CHALLENGES
Not all customers are good relationship customers:

Customer is not always right Wrong segment Not profitable in the long term Difficult customers

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Life Cycle of Satisfied customer

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Conclusion
Relationship marketing is all about creating, building and maintaining the relationships with the customers for the long-term profits.

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THANK YOU
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