Chapter 7: Building customer relationships

Question 1

Relationship Marketing

Answer 1

There has been a shift from a transactions to a relationship focus in marketing. Customers become partners and the firm must make long- term commitments to maintaining those relationships with quality, service, and innovation.

Question 2

Lifetime Value

Answer 2

Lifetime value sometimes refers to lifetime revenue stream only, but when costs are considered, lifetime value truly means ‘lifetime profitability’.

Question 3

Customer Pyramid

Answer 3

First, in the customer pyramid profitability rather than usage defines all levels. Second, the lower levels actually articulate classes of customers who require a different sort of attention.
- premium
- gold
- iron
- lead

Question 4

Profitability Tiers

Answer 4

Profitability tiers make sense from the company’s point of view, customers are not always understanding, nor do they appreciate being categorized into a less desirable segment.

Question 5

Customer Experience Management

Answer 5

Managing the customer experience during the service encounter, including the interactions with the organization, its facilities and interactions with the service firm’s representatives and other customers is therefore critically important.

Question 6

Touchpoints

Answer 6

It is necessary to understand the journey that the customer goes through when doing business with the organization and determine where things go very well and where goodwill is destroyed.

Question 7

Switching Barriers

Answer 7

Literature suggests that switching barriers influence consumers’ decisions to exit from relationships with firms and, therefore, facilitate customer retention.