Theme 10: Relationships

Customer Relationship managements (CRM)

The aim of customer relationship management is to produce high customer equity. Customer equity is the total of the discounted lifetime values of all of the firm's customers. Clearly, the more loyal customers, the higher the customer equity.

Rust, Zeithaml and Lemon distinguish three drivers of customer equity:

Value equity
Brand equity
Relationship equity

This formulation integrates value management, brand management and relationship management within a customer-centered focus. So how much should a company invest in building loyalty so that costs don't exceed the gains? Here are five different levels of investments in customer relationship building.

1. Basic Marketing > The salesperson simply sells the product
2. Reactive marketing > The salesperson sells the product and encourages the customer to call if he or she has questions, comments or complaints.
3. Accountable marketing > The salespersonl phones the customer to check whether the product is meeting expectations. The salesperson also asks the customer for any product or service improvement suggestions or any specific dissapointments.
4. Proactive marketing: The salesperson contacts the customer from time to time with suggestions about improved product uses or new products.
5. Partnership marketing

In our Audi case, the most used one's are approach 2, 3 & 4. With a combination of these 3, the salepersons can pass the received information ahead so any problems are tackled to prevent them from happening again, also trying to improve sales by reminding customers about themselves and new coming models of audi.

CRM program: I have been involved in a CRM program within our own company (established in finland). We were selling sports supplements and we had such a CRM program created by Microsoft access and our own database, that we could easily follow which customer have bought the most based on day, week, month or year. How often they purchase from us, which payment methods they choose and what did they purchase. This was made easy for us, obtaining the information that is, because we had a e-commerce shop also to complement our retailing shop. So the customer had to fill some infomartion before making the order, which made the job for us easier. Through this CRM program and info received from it, we would market our products to the appropriate target customers, decreasing marketing costs.

Technology is a great tool in retaining customer relationships, because it's easy to send out a message to existing and possible customers about new products or offers with very low cost. Technology also makes it possible and easy to obtain information about the customers and storing that information, specially through the internet. Customers seem to be willing to give such information because they also think it's better for them and increases the service quality received as the customers are understood better.

Sources:

Marketing Management 11th edition (Philip Kotler 2003)

Marketing 2nd edition (Hill & O'Sullivan 1999)

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