CHAPTER 3: CUSTOMER RELATIONSHIP MANAGEMENT ABD BUILDING RELATIONSHIP.

CRM –is a systematic integration of information technology and human resources designed to provide
maximum value to the customer and to obtain maximum value from customer.

CRM helps salespeople match customers with the products best for, in doing so leverages company
resources into higher sales.

I. RELATIONSHIP ORIENTATION AND CRM

Types of Relationship between Business and customers:

1. Mass Marketing – dealing with customer by offering same product to the entire market.
2. Differentiated Marketing –selling to different groups of customer by offering a unique
product for each group.
3. Niche marketing –offers specialized product or a small range of products to an
individual customer segment with specialized needs.
4. One-on-One Marketing –matches individual products with individual customers.

II. USING INFORMATION TO MEET CUSTOMER NEEDS: THE BASIS OF CRM

A. Production versus Marketing orientation

Production orientation –business focus of producing or manufacturing high volume

efficiently and at a lower cost.
Market Orientation- companies focuses more on making what they can sell, focus on
providing value for customers.

Market oriented firms are customer-centric –customer are the heart of the
business process. Firms focus on customer value.

B. CRM and Repeat Business

CRM based on the premise that companies interact with their customer more than one
and in more than one way.

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 Touchpoint –situation in with the customer and the company come together, either
personally and virtually.

Sales exchange – the act of trading economic resources (usually money) for a specific
set of benefits offered by a company.

C. Types of Exchange Relationship (CRM)

1. Transactional View –each and every interaction with customers is unique and
independent.
2. Relational Selling –both buyers and seller recognized that each transaction is
just one in a series of purchase agreements.

Customer retention – is the percentage of customers who repeatedly purchase

products from the selling firm.

3. Strategic Partnership –the buying and selling firms are so closely intertwined
they sometimes become partners.
- Based more in inter-organizational collaboration than on
arm-length aggressive bargaining and are not viewed as
competitive.

Mutual Loyalty – when both buyer and seller are committed to each other and
avoid behaviors that may damage the relationship.

Vertical integration –is a pattern of controlling and perhaps acquiring assets

and resources at different level of the marketing channel enabling
manufacturers to tightly control production and distribution process,
creating value for the customer.

D. Mechanisms that Govern Exchanges.

All types of exchanges are accompanied by governance, the mechanism that helps
ensure the exchange is fair to all parties involved.

Relationship Governance –include arrangements for sharing information and tasks

between the buying and selling firms, but it does not include specific obligations for
each party.

NATURE OF EXCHANGE RELATIONSHIP

TRANSACTIONAL RELATIONAL PARTNERSHIP
Exchange Competitive Cooperative Collaborative
Environment
Timing of Periodic sale Frequent Interactive
Contract calls contact

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 Service level Good Very Good Intensive
Trust Moderate High Complete
Interdependence Low High Extreme
Sales pattern Independent Renewing Ongoing
Contract Contract
Governance Market focus Contract Relational

III. CRM, CUSTOMER LOYALTY AND LIFETME VALUE

A. Customer Loyalty

Two Components off Customer Loyalty

1. Customer Share – the proportion of resources a customer spends with one

among a set of competing suppliers.
2. Customer commitment –is the bond between the customer and a sales firm
that builds up over time as a customer continues to have rewarding sales
exchanges with a supplier.

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