Flashcards in Chapter 6 Deck (39):
What is relationship marketing?
Philosophy of doing business, focusing on keeping current customers and improving relationships with them
Is realtionship marketing cheaper?
What are the 4 goals of relationship marketing in order
What are the 4 benefits for customers of relationship marketing?
1. Receipt for greater value
2. Confidence benefits (trust, confidence in provider, reduced anxiety)
3. Social benefits (familiarity, social support, personal relationships)
4. Special treatment benefits (special deals, price breaks)
What are the three benefits for firms of relationship marketing?
1. Economic benefits
2. Customer behaviour benefits
3. Human resource management benefits
What are 3 economic benefits to firms of relationship marketing?
1. increased revenues
2. reduced marketing and admin costs
3. regular revenue stream
What are 4 customer behaviour benefits to firms of relationship marketing?
1. strong word of mouth
2. customer voluntary performance
3. social benefit to customers
4. mentor to other customers
What are 3 HR management benefits to firms of relationship marketing?
1. Easier jobs for employees
2. Social benefit to employees
3. Employee retention
What are the 4 levels of profitable customers from least to most profitable?
How do you map profitability of customers through customer pyramid?
-spend more time with us
-costs less to maintain
-spreads positive word of mouth
vice versa for less-profitable
What are platinum tier like on the customer period?
-not price sensitive
-willing to invest in and try new offerings
-committed customers of the firm
What are gold tier like like on the customer period?
profitably second highest
-more price sensitive, want discounts
-sometimes heavy users, but not as loyal
What are iron tier like like on the customer period?
Essential customers that provide volume needed to utilize the firm capacity
-but not loyal or substantial enough for individual special treatment
What is the lead tier like like on the customer period?
These cost the firm money:
Demand more attention and sometimes problem customers. They complain about the firm and ty up firm resources
What are the 4 segments to the commitment and profitability customer chart?
Top left: Butterflies (high CLV and low R commitment)
Bottom left: Strangers (Low CLV and low R commitment)
Top right: True Friends (high CLV and high R commitment)
Bottom right: Barnacles (low CLV and high R commitment)
CLV is Customer Lifetime value (profitability)
R Commitment is relationship commitment (attitudinal loyalty)
What are 3 strategies for building relationships?
1. Core service provision
(How well the core service is delivered)
2. Switching barriers
(how hard it is to switch)
3. Relationship Bonds
(financial, social, customization, and structural bonds)
What are the 4 types of bonds from low to high.
1. Financial bonds
2. Social bonds
3. Customization bonds
4. Structural bonds
Explain financial bond
-volume and freq rewards
-bundling and cross selling
like cable company
Explain social bond
-social bonds among customers
so like tea snobs with a cafe
Explain customization bonds
So a cafe knows that the prof likes the old littler mug, not the new big one.
Explain structural bonds
-integrated info systems
-Shared processes and equipment
So customer and company is tied and investing in each other. So like Walmart and P&G inventory system
What are 3 reasons customers may not be good relationship customers?
CUSTOMERS IS NOT ALWAYS RIGHT
1. Wrong segment
2. Not profitable in the long term
3. Difficult customers
There has been a shift to transactions to relationship focused marketing, which have firms making long-term commitments to maintaining these relationship with what three things?
How is a big bucket with holes representative of relationship marketing?
Well the bucket is filled with new customers and increased purchases by some customers. And the holes are leaking lost customers and decreased purchases by some customers. Relationship marketing focuses on patching up the holes, rather than dumping more customers in.
What are the 4 evolution levels of customer relationships?
1. Customers as strangers
2. Customers as Acquaintances
3. Customers as friends
4. Customers as partners
Define customers as strangers and the marketing goal with this segment?
These have no interactions with company and may not even know about them. Goal is to attract and acquire them
Define customers as acquaintances and the marketing goal with this segment?
These are when awareness and trial of services has happened, and the goal is satisfying this customer
Define customers as Friends and the marketing goal with this segment?
This is as the customer makes purchases form firm, and receives value. As the firm collects these customers needs, the goal is for customer retention, by knowing what these friends unique needs are and catering to them
Define customers as Partners and the marketing goal with this segment?
At the partnership stage, both are invested in each other and firm is concerned with enhancing relationship
What is the primary goal of relationship marketing?
Build and maintain a base of committed customers who are profitable for the organization
Who's benefit is it to establish customer-firm relationship?
Both customer and firm!
When will customer remain loyal to a firm?
When they receive greater value relative to what they expect from competing firms
Whats the diff between lifetime value and lifetime profitability?
Lifetime value is revenue being brought in
Lifetime profitability looks at costs as well
What three things goes into strong customer relationship (loyalty)?
Core Service Provision
What is the core service provision?
Factors directly into strong customer relationship, and it is the satisfaction, perceived service quality, and perceived value from firm
What are two switching barriers?
1. Customer Inertia
(May take effort to switch to another firm)
2. Switching Costs
(Like switching dentists is going to need all new expensive x-rays and whatnot in America)
What are 3 factors that could create relationship challenges and actually make it not worth it to create relationship?
1. Being the wrong Segment
2. Not profitable in the long term
3. Difficult customers
How should firm terminate customer relationship?
By clearly communicating their reasons for wanting or needing to terminate it so that the customer understands what is occurring and why