UNIT – V��MARKETING ISSUES OF SERVICES

Advertising-issues involved in advertisement: Branding and Packaging of services; Relationship Marketing and CRM

​

Relationship Marketing (or relationship management) is a philosophy of doing business, a strategic orientation that focuses on keeping and improving current customers rather than on acquiring new customer.

DEFINITION…

What is relationship marketing?

Marketing designed to create, maintain, and enhance strong relationships with customers and other stakeholders.

​

Customer Lifetime Value

Losing an existing customer means losing the entire revenue stream that customer represents – not just that single encounter or sale.

​

Attracting, retaining and �growing customers

Customer delivered value – the difference between total customer value and total customer cost.

Value includes product, services, personnel and image value.

Cost includes monetary, time, energy and psychic costs.

​

Growing “share of customer”

• Increasing the share of the customer’s purchasing in your product category.
• Best way is through cross-selling
• Getting more business from current customers by selling them additional or complementary services

​

Managing your customers

• Relationship marketing is designed to create, maintain, and enhance strong relationships with profitable customers and other stakeholders.
• First need to define what your profit is on specific services…

​

How to calculate profit

• In most business:

Gross income – (cost of goods + expenses) = net profit

• In healthcare:

Reimbursement income – (cost of goods + expenses) = net profit

​

STRENGTHS OF RELATIONSHIP MARKETING

• Focus on providing value to customers.
• Emphasis on customer retention.
• it provides a better basis for achieving Competitive advantage.
• Long-term customers may initiate free word of mouth promotions.
• Long-term customers are less likely to switch to competitors.
• Happier customers may lead to happier employees

PROCESS

• Chart the service delivery system.
• Identify critical service issues.
• Set service standards for all aspects of service delivery.
• Develop customer communication systems.
• Train employees on building and maintaining a good relationship with clients.
• Monitor service standards, reward staff for exceeding service levels.
• Each employee fully understands the importance of quality and relationships in the marketing philosophy.

CUSTOMER RELATIONSHIP MANAGEMENT

INTRODUCTION & OVERVIEW:

• Every business unit emphasizes on spurting a long term relationship with customers to nurture its stability in today’s blooming market. Customer’s expectations are now not only limited to get best products and services, they also need a face-to-face business in which they want to receive exactly what they demand and in a quick time.
• Customer Relationship Management is an upright concept or strategy to solidify relations with customers and at the same time reducing cost and enhancing productivity and profitability in business.
• An ideal CRM system is a centralized collection all data sources under an organization and provides an atomistic real time vision of customer information. A CRM system is vast and significant, but it be can implemented for small business, as well as large enterprises also as the main goal is to assist the customers efficiently.
• Customer relationship management came as a process that dealt with relationships with customers surpassing the whole business.

​

​

Concept of CRM

• Usually an organization consists of various departments which predominantly have access to customer’s information either directly or indirectly. A CRM system piles up this information centrally, examines it and then makes it addressable within all the departments.
• Lets take an example of an international call center which uses a CRM tool called ‘xyz’ and is integrated with a phone and a computer system or laptop.
• Now this system automatically perceives which customer is calling. Before the executive attends the phone the CRM system brings forth the customer details on the computer or laptop screen.
• Also indicates what the opportunity of deals is with that particular customer, what the customer had already purchased or ordered in past and what is the probability of buying in future.
• Not only this, it can also highlight what all products best suit this customer.

Origin of CRM

• CRM originated in early 1970s when the business units had a manifestation that it would be advisable to become ‘customer emphatic’ rather that ‘product emphatic’. Birth of CRM was because of this heedful perceptiveness.
• The famous writer and management consultant Peter Drucker wrote;
• ‘The true business of every company is to make and keep customers’. Traditionally every transaction was on paper and dependent on goodwill which created hindrance in clutching customers.
• People used to work hard in entertaining customers by presenting new products with astonishing services; they were ready to work overtime for grasping more and more customers for increasing business.
• This too resulted in customer satisfaction and loyalty up to some extent, but at the end of the day there was no such bonding or relation between the two to carry on with future business smoothly.

The outgrowth in origin of CRM as a strategic approach is a result of some of the following important perspectives:

• The belief that customers are the real assets and not just the people in the audience.
• The maturation of one-to-one transaction advent.
• Extensive use of software and technologies to maintain useful information and no manual labor.
• The realization of the benefits of utilizing information proactively and not reactively.
• The change of business view to relationship approach rather than transactional approach.
• The approach of concentrating more on customer values rather than concentrating on how the product is delivered to the customer.
• The approach of focusing on customer satisfaction and loyalty rather than focusing self satisfaction and profit.
• The acceptance of the fact that using high end technologies and software the cost can radically be decreased without compromising on quality and service of products.
• The increasing tendency to retain existing customers and trying to get more and more business out of them.
• The realization that the traditional trends of marketing and selling are increasingly fading out in the current economic scenario.

​

FEATURES OF CRM…

Customer Relationship Management is a strategy which is customized by an organization to manage and administrate its customers and vendors in an efficient manner for achieving excellence in business. It is primarily entangled with following features:

• Customers Needs- An organization can never assume what actually a customer needs. Hence it is extremely important to interview a customer about all the likes and dislikes so that the actual needs can be ascertained and prioritized.
• Customers Response- Customer response is the reaction by the organization to the queries and activities of the customer. Dealing with these queries intelligently is very important as small misunderstandings could convey unalike perceptions.
• Customer Satisfaction- Customer satisfaction is the measure of how the needs and responses are collaborated and delivered to excel customer expectation. In today’s competitive business marketplace, customer satisfaction is an important performance exponent and basic differentiator of business strategies.
• Customer Loyalty- Customer loyalty is the tendency of the customer to remain in business with a particular supplier and buy the products regularly. This is usually seen when a customer is very much satisfied by the supplier and re-visits the organization for business deals, or when he is tended towards re-buying a particular product or brand over times by that supplier.

​

CONTD…

• Customer Retention- Customer retention is a strategic process to keep or retain the existing customers and not letting them to diverge or defect to other suppliers or organization for business. Usually a loyal customer is tended towards sticking to a particular brand or product as far as his basic needs continue to be properly fulfilled.
• Customer Complaints- Always there exists a challenge for suppliers to deal with complaints raised by customers. Normally raising a complaint indicates the act of dissatisfaction of the customer. There can be several reasons for a customer to launch a complaint.
• Customer Service- In an organization Customer Service is the process of delivering information and services regarding all the products and brands. Customer satisfaction depends on quality of service provided to him by the supplier.

​

IMPORTANCE OF CRM

1. A CRM system consists of a historical view and analysis of all the acquired or to be acquired customers.
2. CRM contains each and every bit of details of a customer, hence it is very easy for track a customer accordingly and can be used to determine which customer can be profitable and which not.
3. In CRM system, customers are grouped according to different aspects according to the type of business they do or according to physical location and are allocated to different customer managers often called as account managers. This helps in focusing and concentrating on each and every customer separately.
4. A CRM system is not only used to deal with the existing customers but is also useful in acquiring new customers. The process first starts with identifying a customer and maintaining all the corresponding details into the CRM system which is also called an ‘Opportunity of Business’.
5. The strongest aspect of Customer Relationship Management is that it is very cost-effective. The advantage of decently implemented CRM system is that there is very less need of paper and manual work which requires lesser staff to manage and lesser resources to deal with.
6. All the details in CRM system is kept centralized which is available anytime on fingertips. This reduces the process time and increases productivity.
7. Efficiently dealing with all the customers and providing them what they actually need increases the customer satisfaction. This increases the chance of getting more business which ultimately enhances turnover and profit.
8. If the customer is satisfied they will always be loyal to you and will remain in business forever resulting in increasing customer base and ultimately enhancing net growth of business.

​

CRM & MARKETING

• Web Marketing- With the growing popularity of web, customers are tending towards web marketing or web shopping. This helps both customers and suppliers to transact in a real time environment irrespective of their locations. Some of the major advantages of Web Marketing are listed below:
• It is relatively very inexpensive as it reduces the cost for physically reaching to the target customers for interaction.
• Suppliers can reach to more number of customers in lesser amount of time.
• The online marketing campaigns can be easily tracked, traced, calculated and tested.
• The selection process of any product or brand is simplified due to proven online research and analysis techniques.
• Online marketing campaigns are more promotional as compared to manual campaigns.
• Email Marketing- Email marketing has turned out to be more efficacious and inexpensive as compared to mail or phone based marketing strategies. Email marketing is direct marketing which is data driven and leads to more accurate customer response and effective fulfillment of customer needs. More attractive features include newsletters, sending of eCoupons, eCards, provision of saving events into calendars etc.
• Analyzing customers buying behavior online- A CRM system provides a platform to analyze the customers buying behavior online. This interactive strategy provides great accuracy with high speed which includes profiling services furnishing elaborated bits of information regarding customers purchasing habits or behavior. Individualized analysis of this behavior also helps to identify to which product or brand the customers are more tended.
• Forecasting future marketing strategies- Down the line marketing strategies keeps on changing according to the emotional behavioral change of customers. CRM market forecasting techniques help to understand this change through regression and statistical analysis of customer behavior online.
• Building business impact models- It is important for an organization to have check on marketing performance regularly so that the techniques never deteriorate and always match to yield greater results. These CRM oriented models help in delivering accurate measurement of marketing performance throughout the organization and to do better every time.

​

WHAT IS CUSTOMER RELATIONSHIP?

Relationship with customers can change from time to time because it is evolved under distinguished situations. Following are the stages from where the relationship with customers can evolve-

• Exploration- Exploration is the process when customer investigates or tests the supplier’s capabilities and performance or cross verifies the product’s or brand’s usefulness. If the test results fail to satisfy customer’s demands, the relationship can drastically come to an end.
• Awareness- Awareness is the process when the customer understands the motivational values of supplier or the products he sells.
• Expansion- Expansion is the process when the supplier wins customer’s faith and customer falls under huge interdependence of the supplier. This is time when there are more chances of business with that particular customer and expand business.
• Commitment- Commitment is a powerful stage when suppliers learn to adapting business rules and goal to excel.
• Dissolution- Dissolution is a stage when customer requirement suddenly changes and he looks for better perspectives. This sudden change is the end of relationship.

​

TYPES OF CUSTOMERS

• Loyal Customers- These types of customers are less in numbers but promote more sales and profit as compared to other customers as these are the ones which are completely satisfied. These customers revisit the organization over times hence it is crucial to interact and keep in touch with them on a regular basis and invest much time and effort with them. Loyal customers want individual attention and that demands polite and respectful responses from supplier.
• Discount Customers- Discount customers are also frequent visitors but they are only a part of business when offered with discounts on regular products and brands or they buy only low cost products. More is the discount the more they tend towards buying. These customers are mostly related to small industries or the industries that focus on low or marginal investments on products. Focus on these types of customers is also important as they also promote distinguished part of profit into business.

​

• Impulsive Customers- These customers are difficult to convince as they want to do the business in urge or caprice. They don’t have any specific item into their product list but urge to buy what they find good and productive at that point of time. Handling these customers is a challenge as they are not particularly looking for a product and want the supplier to display all the useful products they have in their tally in front of them so that they can buy what they like from that display. If impulsive customers are treated accordingly then there is high probability that these customers could be a responsible for high percentage of selling.
• Need Based Customers- These customers are product specific and only tend to buy items only to which they are habitual or have a specific need for them. These are frequent customers but do not become a part of buying most of the times so it is difficult to satisfy them. These customers should be handled positively by showing them ways and reasons to switch to other similar products and brands and initiating them to buy these. These customers could possibly be lost if not tackled efficiently with positive interaction.
• Wandering Customers- These are the least profitable customers as sometimes they themselves are not sure what to buy. These customers are normally new in industry and most of the times visit suppliers only for confirming their needs on products. They investigate features of most prominent products in the market but do not buy any of those or show least interest in buying. To grab such customers they should be properly informed about the various positive features of the products so that they develop a sense of interest.

​