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Summary Abstract Relationship Management in the Internet Age
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H1 - Strategic Customer managementCRM built on the philosophy of relationship marketing with the objective of utilising information technology to
develop a closer fit between the needs and characteristics of customers and the organisation’s product and
service offering.
Domain of Strategic Customer Management
The Domain of Strategic Customer Management involves three activities: Relationship Marketing, CRM and
Customer Management.
- Relationship Marketing is the strategic management of relationships with all relevant stakeholders.
- CRM - within Relationship Marketing - is the strategic management of relationships with customers,
involving appropriate use of technology.
- Customer Management - within CRM - is the implementation and tactical management of customer
interactions.
The Development of the Discipline of Marketing
1950 Consumer Marketing (goods)
1960 Industrial Marketing (studies about industrial marketing instead of consumer marketing)
1970 Non-profit Marketing (marketing about both customers and funds/donors)
1980 Service Marketing (opportunities in organizational needs and raised lifestyle expectations)
1990 Relationship Marketing (attracting, maintaining and embracing customer relationships)
2000 CRM (create, develop and enhance relationships to improve customer value)
Social Media has important implications for the development of relationship marketing strategies and the
implementation of CRM initiatives.
Logic Perspective
- Goods-dominant logic perspective: enterprise produces products and customers buy them.
- Service-dominant logic perspective: customers engage in dialogue and interaction with their suppliers
during product design, production, delivery and consumption. This suggests that value starts with the
supplier understanding customer value-creating processes and learning how it can support customers
to co-create value. The terms co-creation or co-production are increasingly used to describe this
dialogue and interaction.
,From Transaction Marketing to Relationship Marketing
Marketing thinking has progressed from a functionally based ‘make and sell’ philosophy to cross-functional
orientation in which the capabilities of the enterprise focus around creating and delivering customer value to
target market segments.
The Marketing Process of Transaction Marketing:
1. The marketing mix - the important internal elements or ingredients that make up an organisation’s
marketing programme (product, price, place, promotion).
2. Market forces - external opportunities or threats in the markets in which an organisation engages.
3. A matching process - the strategic and managerial process of ensuring that the marketing mix and
internal policies are appropriate to the market forces.
Further Marketing Mix Elements (Relationship Marketing) need to be added to address issues of keeping and
growing customers, instead of just winning customers. These elements are:
People staff with knowledge/experience aligning with customer needs.
Processes processes aligning with CRM systems, etc.
Proactive Customer Service because customers often never lodge a complaint/move elsewhere.
Issues of Developing a Marketing Mix Strategy
Marketers need to consider the relationships between the elements in the mix. It has been pointed out that
there are three issues to consider:
1. Consistency logical and useful elements
2. Integration active harmonious interactions between the elements
3. Leverage using each element to best advantage in support of the total marketing mix
Each of the elements of the marketing mix, and their sub-elements, needs to focus on supporting each other in
terms of consistency, integration and leverage, reinforcing the positioning and delivery of the product or
service required by the market segment that is being targeted.
Principles of Relationship Marketing
By the starting of the twenty-first century many basic tenets of marketing were increasingly being questioned.
The marketplace now is vastly different from that of the previous century:
- numerous markets have matured: growth is low or non-existent;
- consumers and customers are more sophisticated and less responsive to advertising;
- consumers and customers are computer literate and are high engaged in social media.
As markets are changing, common practices must end. Companies must move from a short-term
transaction-orientated goal to a long-term relationship-building goal.
Relationship Marketing:
- requires a focus on relationships rather than transactions;
- represents a shift from functionally based marketing to cross-functionally based marketing;
- demands full attention being placed on the creation of value to customers;
- is an approach which addresses multiple ‘market domains’, or stakeholder groups - not just the
traditional customer market;
- involves a shift from marketing activities which emphasise customer acquisition to marketing activities
which emphasise customer retention as well as acquisition.
,Focus on Relationships: You can only focus optimise relationships with customers if you understand and
manage relationships with other relevant internal and external stakeholders.
Cross-functionally based Marketing: Marketing is too important to be left to the marketing department. A
cross-functional approach to marketing requires an organisational culture and climate that encourages
collaboration and cooperation. Everyone within the business must understand that they perform a role in
serving customers, be they internal or external customers.
Value for Customers: There are two types of value. First, there is the value that customers create for the
enterprise. Second, there is the value that the enterprise creates for customers. In many organizations the
focus appears to be on the former type of customer value rather than the latter. Such organisations are
principally concerned with extracting money from the customer, with relatively little attention paid to the value
that is created for customers.
Multiple Market Domains: There are the six key groups, or market domains, that contribute to an
organisation's effectiveness in the marketplace.
- Customer markets wholesalers, intermediaries and customers
- Influencer markets financial/investors, unions, political, government, competitors, media
- Recruitment markets HR strategy (recruitment, selecting)
- Referral markets customer, reciprocal, incentive-based, staff referrals
- Internal markets HR strategy (training, motivating, retaining)
- Supplier/alliance markets suppliers for economical supply; alliances for knowledge
Customer Retention: Loyal customers are an intangible asset that adds value to the balance sheet. They
represent the goodwill earned by the brand. Loyal and repeat customers not only contribute revenue by
returning again and again to purchase from the same company or brand, but act as advocates, referring new
customers and reducing acquisition costs. This is a key consideration in the development of relation-based
strategies in CRM.
Customer Relationship Management
Confusion surrounding CRM may be explained by:
- the lack of widely accepted and clear definition of its role and operation within the organisation;
- an emphasis on information technology aspects rather than the benefits in terms of building
relationships with customers;
- the wide variety of tools and services being offered by information technology vendors, which are
often sold as ‘CRM’.
Varying Perspectives of CRM
- CRM is about the implementation of a specific technology solution project;
- CRM is the implementation of an integrated series of customer-oriented technology solutions;
- CRM is a holistic approach to managing customer relationships in order to create stakeholder value.
Definition of CRM
CRM is a cross-functional strategic approach concerned with creating improved shareholder value through the
development of appropriate relationships with key customers and customer segments. It typically involves
gaining customer knowledge, managing co-creation of customer value, developing integrated channel
strategies and the intelligent use of data and technology solutions to create superior customer experiences.
, Types of CRM
- Operational CRM sales, marketing and customer service automation
- Analytical CRM using data to better serve customers
- Collaborative CRM departments share their customer information
- Strategic CRM CRM part of the aligned business strategy
- E-CRM e-com tools or electronic channels in CRM
- Partner Relationship Marketing CRM activities with alliance partners or VAR
- Social CRM using social media / influence marketing to engage customers
Key CRM processes and a strategy framework for CRM
- a strategy development process creating connection to the business strategy
- an enterprise value creation process creating competitive advantage
- a multi-channel integration process integrate all parts to get a synergic effect
- an information management process collecting and utilising customer and other data
- a performance assessment process improvement in business results
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