Summary of the oficial IU Univerisity of applied science course book for Customer Relationship Marketing. This summary has been tailored based exclusively in the content provided in the official course book, including the graphs and references. This document has been corrected by a teacher and used...
1.1 An Overview of Customer Relationship Marketing
• Customer relationship marketing (CRM) is about building, keeping, and enriching solid and long-term
relationships with customers
• The main idea of relationship marketing is to be closely related to customers and to understand each customer
and learn about their individual desires to better serve them continually better.
• Each customer interaction helps the firm to gain a little bit more information.
• Benefit from the long-term purchases referred to as the customer lifetime value (CLV), as well as from the
customers’ engagement and support, which may be manifested as positive word-of-mouth or referrals, for
example.
• Relationship marketing helps firms to reach out to customers with the best possible offer at the ideal time-
• Five ways that a firm can benefit from a strong relationship with customers:
1. Extending the relationship (i.e., keeping more customers for a longer time)
2. Broadening the relationship’s nature (i.e., providing customers with new products or services)
3. Upgrading the relationship’s quality (i.e., encouraging customers to opt for more expensive products or services)
4. Streamlining the relationship (i.e., making it less costly for the firm to serve its customers)
5. Leveraging the relationship (i.e., using current customers’ referrals to gain new customers)
1.2 Foundations of Customer Relationship
• The ideal relationship with customers would have four key attributes, represented as Four Es:
1. Enduring: Goes beyond single sale and try to encourage repeat purchase. Not single time sale profit but
ensure customer satisfaction that might turn into patronage intentions.
2. Exclusive: All customers are not equally profitable. Firm should prioritize and invest in those with more
potential for the company’s profit overtime.
3. Engaging: CRM may incite customers to build emotional connections with the firm overtime.
4. Empowering: Openness to adapt its offer to the preferences of customers.
• Main requirement to build a relationship= TRUST
• Firms should try to understand each customer (shopping habits, responses to offers etc...)
- CUSTOMER ORIENTATION
• CRM is based on customer orientation and customer centricity.
• Customer orientation ≠ Sales orientation.
• Focuses on the total value that customers can generate on the long term so firms should pay particular attention
to customers’ desires.
- FACTORS FOR WHICH CRM HAS GAINED IMPORTANCE
1. Increase in choices, big offer. The existence of a relationship with the customer may help in the decision-making
process.
2. Changing customer preferences, as customers focus less on simple utilitarian needs and go beyond seeking
for variety and showing less tendency to stay with one firm.
, 3. Emergin communication channels makes it much easier for firms to connect with customers.
1.3 Customer Relationship Marketing System
Firms practice Customer Relationship Marketing to enrich their customer bases. Tp achieve this, the process
should integrate the next stages:
1. Customer Acquisition
• Identify potential customers
• Evaluate future profitability
• How to approach potential customers
• How to turn potential customers into actual customers
2. Customer Retention
• How to keep proving value to customers on the long term
• How to take proactive measures to prevent customer churn
• How to constantly strengthen relationships
3. Relation Termination (when necessary)
• Identify customers that are no longer suitable
• How to disengage from a relationship with a customer
2. CUSTOMER RELATIONSHIP STRATEGIES
2.1 Relationship Investment: Creating Value for Customers
First you gain the trust of the client to try a
product (Customer Acquisition), once the
customer tries it, he enters a reinforcing
loop, he likes the product, so he buys more,
and he recommends it to his friends.
• Creating constant value for
customers requires commitment
from the firm. Relationship
Investment (RI) is the sum of all the
sources invested by a firm to build a
solid relationship.
• A firm’s relationship investment
could be financial (price and
discounts), social (entertainment,
status) and structural (offer the best
value to the right customer, customization).
• Financial has been the most used but it is the weakest as competitors can imitate and it is in the short term.
Structural on the other hand, is the strongest.
, 2.2 Emotional Connection to Customers
• Establishing an emotional connection with customers plays a significant role in building and maintaining relations.
• Haenlein (2017) describes customer lifetime value (CLV) as a simplistic approach with limited profitability indicator
and neglects customers' emotional journey.
• Seth (2017) suggests that firms should concentrate relationship efforts in winning customers’ "share of heart"
instead of “share of wallet”.
• Relationship marketing investment could create customer gratitude and customer obligation.
- Social and structural investments create gratitude thus increase loyalty
- Financial investment result in obligation and therefore decrease customer loyalty
2.3 Customer Relationship Quality
• Customers can vary a lot in the different stages of their relationship with a firm.
- Stranger: Never dealt with the firm or considered it.
- Approacher: Start becoming interested in the firm or product
- Probationary customer: They try but do not get fully involved.
- Regular customer: After a few purchases start buying frequently and confidently.
- Dedicated customer: Advocates for the firm, sharing positive evaluations.
• There is always room to improve customer relationship.
• Moving to higher levels reflects maturity of relationship and proof of engagement.
• The goal of CRM is to enhance the patronage intentions of customers by constantly upgrading the levels or
relationship w/firm. 
• The first step is to systematically measure how engaged customers are. How do they perceive the firm? How
satisfied are they with their interactions with the firm?
The answers to these questions determine the nature of the relationship, referred to as relationship quality (RQ).
• Relationship quality is how much customers feel their relationship with the firm is beneficial to them.
• Dimensions of Relationship Quality are:
- Satisfaction. (most important at exploration stage)
- Trust. (Buildup stage)
- Commitment. (Maturity stage)
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