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Customer Management – Master the MatrixL1: Customer Centric Management Proposed model & operationalization Outcomes & Managerial implica tions
Ramani, G. and Kumar V. (2008), Interaction Interaction orientation reflects a firm’s ability to interact with its individual customers CRM represent the evolution and integration of marketing ideas with technology;
Orientation and Firm Performance, Journal of and to take advantage of the information obtained from them through successive contribution of the study lies in identifying, distilling and specifying an emergent marketing
Marketing, 72 (1), 27 - 45 interactions to achieve profitable customer relationships belief (customer concept) and the technological processes (interaction response capacity)
Customer-based relational performance consists of customer satisfaction, customer and practices (customer empowerment and customer value management) > enhances
ownership (the degree to which customers feel accountable to a firm and actively business performance
seek the firm’s financial wellbeing) and positive word of mouth
Customer-based profit performance consists of identification of profitable customers, Relationship between customer-based relationship performance and customer-based
efficiency of acquisition and retention process, and conversion of unprofitable profit performance was not supported.
customer to profitable ones Customer based-relational performance and customer-based profit performance affect
aggregate business-level performance positively
Components of interaction orientation: The extent of customer-initiated contacts moderates the interaction orientation-
Customer concept (an organization’s fundamental belief, moving from a market performance relationship
segment to an individual approach when analysing the effect of marketing actions), Firms embracing an interaction orientation perform better
Interaction response capacity (processes and systems firms adopt to interact with
heterogeneous customers), Firms must adopt customer-based performance metrics and institute employee rewards
Customer empowerment: extent to which a firm provides its customer avenues to (1) based on these metrics, instead of using aggregate-level measures (i.e. sales, market
connect with the firm and actively shapes the nature of transactions and (2) connect share) to evaluate marketing performance
and collaborate with each other by sharing information/suggestion/ideas etc. Firms must develop their outsourcing capabilities by adopting sound contracting
Customer value management (firms should develop the ability to break down the procedures so they can offer diverse products & services their individual customer desire
revenues & costs related to each firm-customer interaction > marketing resource A customer-interaction orientation is relevant to as well B2B as B2C-markets
allocation decisions) Firms should focus on building an interaction orientation, regardless of whether the
Antecedents of customer orientation; extent of dependence on patents and competitive intensity is high or low
trademarks for success, the extent of institutional pressures to adopt interactive
technologies, the extent to which an employee reward system is based on customer- The results from this study imply that the managerial benefits of adopting an interaction
centric performance measures, the degree of outsourcing expertise possessed by orientation are as follows: (1) The firm is able to attract and retain the most valuable customers,
the firm and whether the firm operates in the business-to-business industry > p. 31 (2) the firm’s customers develop into a skilled resource for the firm, (3) the firm inoculates its
Moderator 1: customer-initiated contacts as these provide rich information a customers from competitors by instilling a heightened sense of ownership of the firm among its
customer’s needs and concern to a firm and enable the firm to interact with the customers, (4) the firm develops a dynamically shifting portfolio of products and services, (5) the
customer and tailor appropriate responses without incurring heavy expenses firm develops the ability to foresee customer responses, and (6) the firm exhibits superior
Moderator 2: competitive intensity. Focussing on customers’ needs prevents aggregate-level business performance because an interaction orientation results in a firm
imitating by competitors so should enhance the effect of interaction orientation on its dynamically maximizing its profit function at every stage of activity across all its customers.
customer-based relational performance) Real-life cases: Boeing, IBM
1.2 Lamberti, L. (2013), Customer centricity: the Some of the most important consulting groups are emphasizing the need for Continuing Existing Literature & Field Study findings combined (CC)
construct and the operational antecedents, companies to assume a customer-centric approach in response to environmental Conceptualization of CC suggest that firms adopting this approach manifest (figure 1):
Journal of Strategic Marketing, 21 (7), turbulence and global competition;
588 - 612 Not clear yet how and why customer centricity (CC) may be beneficial for (1) Continuous interactions with customers aimed at generating intelligence; understanding
companies, how it is possible to implement CC, nor if CC should be a must for every customer explicit and hidden needs (ICRM)
enterprise, or a principle more suited to specific contingencies + CC: firm-consumer trust is key in this, might be achieved only through adaptive learning of
CC literature has fallen short in analysing conditions favouring the implementation. customers needs and preferences, relevance of group dynamics (!), nature of the dialogue
Existing studies analyse the environment and structural factors or stress the areas of based on a mix of relational and hedonic stimuli (!)
intervention for reaching CC in practice. However, 2 basic issues about CC remain (2) Systematic involvement of customer in marketing and NPD decision making (CI)
still uncovered; (1) a definition of the concept, how it is different from established + CC: both the offer and marketing processes are co-created and customized through a co-
marketing theories and (2) what are the firm level antecedents; the firm opting of customer competences, customer integration & involvement is key in value-creating
characteristics favouring/hindering the adoption of CC (3) Coordinated organizational structures, gathering and sharing information about the
General hypotheses is that CC can be implemented only where some contextual customer and responsively and managing the interface along all touch-points (II)
factors are in play at individual (especially for senior managers), intra-organizational + CC: need of a common goal and shared cultural view of the role of the company to implement
, (i.e. related to the relationship among organizational units), inter-organizational (as CC processes (!), concept of customer touch-points and need for marketing insight into all
CC is supposed to impact on the overall supply-chain management policies and functional areas (!), consistence in customer management across departments
infrastructure and system levels. (4) Presence of a supply-chain coordinated with the firm and able to face the customization
Study aim; complementing existing literature on CC with research done from a required by customers (EI)
managerial viewpoint (field study) + CC: shift from demand management to supply management, role of trade alignments &
intermediaries; have big impact on the establishment of a positive customer experience,
Existing literature suppliers are key actors in offer development (especially for technological advanced products,
Customer centricity as the opposite of product centricity innovative contribution of hi-tech suppliers)
PC sees the company as a repository of resources and competences developing
products & services (form core value proposition) Firm-level antecedents of Customer Centricity
CC focuses its attention on the purchaser & establishing mutually satisfactory (1) Individual factors leading to success of CC:
customer relationships; individual customer express needs and customer resources Ability to drive change, cultural leadership and closeness of senior management, importance of
anticipate on it organizational identification and transmitting it along middle management to reach work floor,
Criticism exists on the sustainability of CC > necessary balancing PC and CC company’s propensity toward change, link between CC and top management entrepreneurship,
firm’s interaction orientation according to customers, customer intimacy and sense of oneness
CC is associated with capability to: (2) Intra-organizational factors:
(1) Generating & analysing customer intelligent data to build data banks about Cross-functional integration of processes/people/operations/marketing capabilities (linked to top
customer-firm interactions supporting customized marketing activities (interaction- management willingness to be CC!), facilitating cross-functional team working are inter-
and relationship-based, views on feasibility differ; B2B versus B2C) departmental closeness (enables managing market diversity and complexity fostering the need
(2) Actively involve customer in marketing & innovation processes, co-creation (lever- for CC, locational diversity to be more responsive/agile) and
aging user-generated content > customizing marketing activities to improve CC) Inter-departmental trust (role of departmental isolation) being associated with collaboration
(3) Move the focus from product/service offered to the customer experience in a way between trustee and trustor, confidence, faith in behaving consistent with group goals,
that is intimately related to the individual self of the customer (information sharing uncertainty reduction
along supply-chain is key for customizing solutions. Idea of experience marketing (3) Inter-organizational factors
does not find support in field interviews; CC implies attention along all the customer Relationship commitment is the willingness of a party to invest financial, physical or relationship-
touch-points with the firms and require coordination both of marketing and non- based resources > RC of supplier/distributor influences the CC of a company
marketing functions within the firm and in the supply-chain (4) Infrastructural and system factors
Rewarding employees in line with principles of individual customer satisfaction should orient
people toward the culture of CRM and CC (customer as a core asset; CLV and CE theories)
1.3 Avery, J., S. Fournier and J. Wittenbraker If you are like many marketing professionals working with Big Data and Predictive Analytics, you have extracted the value from CRM though the capture of customer data, enrichment of
(2014), Unlock the Mysteries of Your Customer data via appending socioeconomic & psychographic data, and identification of your key customer segmentations based on profitability, recency, frequency and monetary value. The article
Relationships: Are you connecting with refers to this approach as “an industrial view of customer relationships (lacking relational intelligence), a sign that many firms still think of customers as a resources to be harvested for the next
consumers the way they want you to?, up-sell or cross-sell opportunity rather than as individuals looking for certain kinds of interactions”. This while customers are frequently frustrated by companies’ inability to meet their
Harvard Business Review, July - August, 72 - 81 relationships expectations. Many firms limit their perspectives by viewing data along “demographic, behavior, or value-based customer segmentation(s)”.
>> VALUING “FRIENDS” AND “ACQUINTANSES” figure, p.74 (determining which customer relationships offer value) + ADD in ‘ IDEA IN BRIEF’ picture
The authors identify 29 relationship types, of which some are more profitable than others (see the picture below!!!!!!) that help companies classify the kind of relationships that customers have
with their brand, and how they might be managed to migrate to different outcomes. To categorize customers by relationship type a brand needs to gather information that reveals customers’
feelings and expectations about that brand; you’ll need to develop a relational radar to pick up these signals from data like e-mails, online chat sessions etc. These signals convey what kinds
of relationships customer want (and are assuming they have) wit the brand as well as how those relationship may be evolving, the key is to start listening for and capturing them.
Once one has profiled its customer relationships he should take the following rules, which are based on customers’ expectations, of the game into account. Any failure to meet the
expectations will be interpreted as a violation of the rules and the relationship will be undermined, armed with the awareness of the rules, you can act to deliver on your customers
expectations while engineering your portfolio to include an ideal mix of relationships. Sometimes that means;
Bolstering desired connections
If the customer demonstrates a desire for a type of relationships that’s useful to the company (drives profitability, advances its mission i.e.) the firms needs to reciprocate. For example, if
customers show a willingness to go above and beyond or the firm, as the grocery delivery customer did, the company can respond by recognizing him or her as an honored partner who
can influence new product and service designs.
Shifting customer toward more-desirable types
By incorporating singing and dancing into the onboard recitation of safety rules, Virgin Airlines, tries to shift customers into ta more positive bond with the company, such as a buddy
relationship. Customer who have established causal ties with the brand can be coaxed in the direction of best-friends relationships, for example, through interactions that continue to
meet their expectations while surprising them with the added pleasure of greater closeness.
, Changing gears (to nurture the kind of relationships a target customer group would prefer). Targeting new segments may require an adaptation of existing strategies. As the fashion
company Eileen Fisher found that high-touch sales approach that had worked well with fifty-something customers in the company’s retail stores wasn’t working for the forty-something
and younger shoppers the company was starting to attract. They wanted a relationship that was more distanced and transactional so sales assistant had to adjust their approach.
Implications for the structure and function of the marketing organization
It’s critical to regard relationships as long-term assets. The optimal approach is found to be reorienting the marketing function around relationships, creating relationship-oriented roles for
employees, and expanding marketing’s purview.
Reorganize around relationships
Marketing organizations need to identify both the positive lucrative bonds and the negative, less profitable connections tin their companies’ relationship portfolios. After choosing a
strategy – bolster, shift, or change gears – marketers need to educate staff, change their hiring practices, establish appropriate incentives, and shape processes around relationships.
Expand the marketing umbrella
Relational intelligence must pervade every aspect of the company that touches customers/affects interactions, particularly in 2 areas often being outsourced; IT and customer service.
Create new roles for employees
It’s no one jobs to think about relationship segments or to bolster or otherwise manage the various types of bonds that customers form with the brand and company. In industries were
the adversarial relationships are common, companies should consider the use of ‘adversary managers’: employees with specialize conflict management and negotiation skills.
Finally, marketing needs to be empowered to share its knowledge of customer with all other customer touching aspects of the business, from public relations to sales to website design so that
this knowledge can be incorporated into everything the company does. Won’t be always ease, Finance for example (focused on ROI) may be unwilling to offer the inducement that facilitate
certain types of relationships and may balk when asked to fund relationships building programs that take years to pay off.
Companies’ inability
.. to understand or deliver on relationships was perhaps excusable when there was no easy access to what was in consumers’ heads and hearts. But now CRM technology enabled them to
develop one-on-one relationships they need to reorient the technology away from collecting economic data and toward capturing relationship data. What is needed is data-driven empathy; a
deep understand of the customer condition so that companies can interact as credible relationship partners.
1.4 Reinartz, W., Krafft, M. and Hoyer, W.D. Organizations are moving away from product- or brand-centric marketing toward a Higher economic perceptual performance is associated with a greater implementation of
(2004), The Customer Relationship Management customer-centric approach CRM processes at the stage of relationship of initiation and especially maintenance
Process: Its Measurement and Impact on Approximately 70% percent of CRM project results in loses or no bottom-line Higher economic objective performance is associated with a greater implementation of
Performance, Journal of Marketing Research improvement in company performance; implementation challenges are huge CRM processes at all stages to a marginally degree.
, 41 (3), 293 - 305 Some companies view CRM primarily as investments in technology and software, So it seems that the more firms engage in implementing CRM processes, especially at the
whereas others treat CRM more expansively and are aggressive in developing initiation and maintenance stage, the better they perform
sound and product relationships with customers The greater the level of CRM-compatible organizational alignment, the stronger is the
Study focuses on CRM process on customer-facing level; the building of a single positive link between perceptual performance and relationship initiation stage (marginally
view on the customer across al contact channels and the distribution of customer sig.) and termination stage (sig.). For objective performance it was only sig. for initiation.
intelligence to all customer-facing functions CRM technology has a positive moderating effect on the CRM processes-economic
Literature suggests that companies should recognize four distinct factor in performance link in the case of termination (perceptual ) and not for economic
conceptualising the CRM process at this level performance at all stages. The sophistication of the CRM technology used is not neces-
(1) Building and managing ongoing customer relationships delivers the essence of the sarily linked to the ability to improve economic performance through CRM processes.
marketing concept (is beneficial to the firm > building the ‘right’ type of relationship!) The findings appear to be significant across industries.
(2) Relationships evolve over phases (longitudinal nature, CRM evolution is subject to
termination through customer causes, expl. ceasing of category consumption) Implementation of CRM processes is associated with better company performance in two
(3) Firms interact with customer and manage relationships at each stage (expl. trying to of the tree stages with the strongest effect for relationships performance followed by r
mature relationships by cross- and up-selling products with high purchase likelihood) relationship initiation.
(4) The distribution of relationship value to the firm is not homogeneous (key goal here Implementation of CRM processes is more likely to improve performance when the
is to define different resource allocations for different tiers of customer, where the company develops an incentive and organizational scheme to support CRM-compatible
customer’s tier membership depends on the economic value of customer segment) behaviour (sig. interaction eff.). It might be argued that CRM processes are alre4ady more
developed at the maintenance stage, which leaves the greatest room for improvement at
CRM process is at the customer-facing level defined as a systematic process to manage the initiation and termination stages.
customer relationship initiation (sub: acquisition & recovery management), maintenance Simply implementing CRM is not sufficient; it must organize itself and install a reward
(sub: retention, up-/cross-selling & referral management) and termination (sub: exit structure to support these processes.
management) across all customer contact points to maximize relationship portfolio value. The successful implementation of CRM requires strong people-related component.
CAM, CE; focus on customer segments as assets, CRM: focus on individual customer As the CRM-performance link is not as strong as expected managers need to evaluate
relationships (identifying profitable customers). Key focus in all: customer satisfaction the contributions of technology differently at the three stages of CRM processes.
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