Quarter 3 Week 3: Relationship Marketing

Objectives

1. Define relationship marketing;

2. Enumerate the levels of relationship marketing;

3. Explain the value of customers;

4. Describe the tiers of customer value;

5. Discuss the different types of customers;

6. Identify and describe relationship development strategies; and

7. Illustrate the successful customer service strategy in the Philippine business enterprise.

What is RELATIONSHIP MARKETING

is the process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction, thus, brand loyalty is ensured. When customers are satisfied, it is more likely that they will become loyal customers because they will keep on patronizing the brand.

A key factor in relationship marketing is customer loyalty or brand loyalty. This arises when a customer has had several positive experiences with the products and services of the company. Thus, the customer is motivated to continue supporting the company and patronizing its products and services. Customer loyalty tends to persist despite the actions of the company or changes in the business environment.

LEVELS OF RELATIONSHIP MARKETING

Customer loyalty is founded on excellent customer services. The five levels of relationship marketing define the levels of interaction between the customer and the company. It is also a guide for improving customer satisfaction.

1. Basic Marketing

This is also called "direct sales" and is the most basic level of interaction between the company and the customer. In basic marketing, a salesperson takes charge of selling the products or services to consumers

2. Reactive Marketing

The transaction moves to a higher level because the salesperson tells the customer that he or she can be contacted to answer any inquiry about the product or service.

3. Accountable Marketing

At this level, the salesperson voluntarily contacts the customer to ensure that the product is in perfect condition and asks if the product met the customer’s to improve the product or service

4. Proactive Marketing

 The company works closely with a group of regular customers who provide constructive feedback for the improvement of the product or service. This group is a big help in the development of new products or services.

5. Partnership Marketing

  In the final level, the company has already built a loyal group of customers that can help in improving its performance and offerings.

BUILDING CUSTOMER VALUE

Customer value is the satisfaction derived from what a customer may experience or is expected to experience by choosing a particular action relative to the cost of that action. The action can be a purchase, a visit, an order, or a sign-up. The cost refers to anything that can be given up to receive the desired product of service which can be in the form of money, time, knowledge, data; or others. 

For example, when a customer buys an iPhone, he or she may immediately feel a sense of satisfaction relative to the price he or she has paid to get it.

The creation of customer value does not rely on marketing alone. It encompasses other functions such as sourcing, operations, processing, communication, human resource services, administration, finance, and accounting.

These functions directly or indirectly affect customer value because a product or service will not reach the end users without any of them.

LEVELS OF CUSTOMER VALUE

Indicate what the consumers expect and do not expect from their purchase decisions.

1. Basic and expected levels

2. Desired customer value

3. Unanticipated customer value

1. Basic and expected levels 

These levels include the basic requirements for conducting a business. 

For instance, restaurants are expected to have a spacious dining area and clean tables and utensils. If these requirements are not met by the business, it cannot provide high-quality customer value.

2. Desired customer value

This involves what the customers want from the purchase or service experience. This is the first opportunity for a business to get ahead of the competition.

For example, a retail shop can provide friendly and helpful staff who can assist the customers in making the right purchase.

3. Unanticipated customer value

It pertains to an unexpected purchase or service experience that may go beyond the desire of customers.

For example, in a gasoline station, the gasoline boy cleans the car windows after filling up the customer's gasoline tank without an extra charge.

TYPES OF CUSTOMERS

There are four types of customers based on projected customer retention and loyalty to the brand.

1. Strangers - are customers whose needs do not fit the offerings of the company. The company does not need to invest and exert effort to win them.

2. Butterflies - as the name implies, are not loyal to a specific brand because they keep on looking for the best deals which may lead to patronizing other brands. The company can enjoy profits from these customers only for a short period of time.

3. True friends - Have needs that match the offerings of the company. They make repeat purchases and patronize the brand so long as it satisfies their needs. The company must invest in these customers and strengthen its relationship with them.

4. Freeloaders - Are loyal but not profitable because of the limited fit between their needs and the offerings of the company. For example, a few customers of a salon patronize its services regularly. It can not generate enough profit to sustain the maintenance costs but it will earn only if it raises the prices of its services.

RELATIONSHIP DEVELOPMENT STRATEGIES

Recent research has shown that loyal customers prove to be to more profitable than ordinary customers. This is the reason why companies are challenged to maintain customer loyalty. Companies should practice the following relationship development strategies to retain loyal customers:

1. Communicate with customer frequently and effectively

It is important to always get in touch with customers through e-mail and social networking sites to sustain brand recall. Also, they should be provided with various means to give immediate feedback, (such as online customer surveys), so companies can promptly respond to them. 

2. Offer customer rewards

Customer loyalty programs, which include special discounts, perks, and freebies, may work well for various types of products and services. These encourage consumers to remain loyal to the brand because they are rewarded for their patronage.

3. Conduct special events and provide sponsorships

 Companies can hold or sponsor parties, concerts, contests, and the like to boost interaction among loyal customers and company representatives.

4. Enhance customer service

 Some companies outsource their customer services to third-party organizations to cater to complaints and inquiries, promote their latest offerings, and provide technical support.

5. Utilize languages to reach a wider customer base

 Marketers can create promotional. materials in different languages to cater to specific regions. Consumers can also now choose the language they would like to use to communicate with customer service representatives.

CUSTOMER SERVICE IN THE PHILIPPINE BUSINESS ENTERPRISE

Local businesses now utilize customer service tools that fit our customer- oriented culture and extensive technology usage.

1. Customer hotline

2. Email and SMS

3. Social networking sites

4. Live chat support

5. Mobile applications