Relationship Marketing MARKETING CHANNELS Relationship Marketing and Customer Service Berman Chapter 5 Version 3.0

Relationship Marketing 1. Introduction - a,b,c,d 2. Evaluating the Use of Relationship Marketing 3. Developing a Customer Service Strategy 4. Implementing a Customer Service Strategy 5. Customer Service Standards in Physical Distribution 6. Evaluating Customers on the basis of Multiple Customer Service Standards

1 a. Transactional Marketing multiple sources of supply switches frequently among suppliers buys largely on price basis focuses on exchanges in single transactions adversarial in nature maximize short term profitability little trust or commitment

1. a Transactional Marketing Three fundamental assumptions buyer plays off suppliers to gain price concessions and ensure continuity of supply buyer allocates an amount to suppliers to keep them in line buyer assumes arms-length posture buyer uses only short term contracts criticisms - too little attention to holding existing customer through superior customer service and loyalty

1. b Relationship Marketing basis - building and maintaining long term relationship between buyers and sellers based on trust and commitment elements - similar to personal relationships shared values, trust, mutual respect, mutual benefit, frequent communications, honest feedback, cooperation, flexibility, understanding, relationship commitment

1. b Relationship Marketing emphasis keeping existing customers forming and maintaining strong long-term ties social (friendship) economic ( joint investment) technical ( joint product development) basis communications, consultancy, conflict resolution, value added services, coordinated responsibilities, long term relationships

1. c Levels of Relationship Marketing One financial bond, customer marketing orientation, low degree of service customization, low potential for sustained competitive differentiation

1. c Levels of Relationship Marketing Two social bond client marketing orientation medium degree of service customization medium potential for sustained competitive differentiation

1. c Levels of Relationship Marketing Three structural bond client marketing orientation medium to high degree of service customization, high potential for sustained competitive differentiation

1. d Implications of Relationship Marketing opportunity costs Distributor Decision Making Product Decision Making Pricing Decision Making Promotion Decision Making

2. Evaluating the use of Relationship Marketing Strategy Advantages and Disadvantages When transactional and relationship marketing are best used lost-for-good customers always-a-share customers

3. Customer Service Strategy A. Definition of Customer Service a customer-oriented corporate philosophy integrated and managing all elements of the customer interface to meet or exceed expectations of customer service quality

3. Customer Service Strategy a. development Components by stage pretransaction - internal operations transaction - physical appearance,order status, order accuracy posttransaction - startup, problem handling service gap process related activities outcome related activities zone of tolerance

3. Customer Service Strategy b. Economics Three approaches loss in profits due to defecting customers impact of small changes in customer retention on sales and profits impact of changes in customer service is determined on sales

3. Customer Service Strategy c. Models Porter’s Value Chain high reliability, ease of use, ease of repair product adequacy determination SERVQUAL dimensions (Zeithaml) reliability, responsiveness, assurance empathy, tangibles

4. Customer Service Strategy a. Implementation A. Total quality management and Customer Service constant feedback benchmarking use of multifunctional task forces total employee involvement

4. Customer Service Strategy b. Common principles have a written customer service policy monitor customer service levels get employees close to the customer study customer service as defined by the customer empower the employee facilitate customer access to the company resolve complaints favorably for customers

b. Common principles think in terms of lifetime income think in terms of profit stream utilize technology make customer service part of the career path be concerned with customer retention obtaining new customers

5. Customer Service Standards in Physical Distribution Characteristics ease of inquiry, order placement,order retention timely, reliable order delivery and communications accurate, complete, undamaged orders and error free paperwork accurate, timely generation and transmission of information to support planning, management and execution of the above activities

Characteristics (cont) availability timeliness quality reliability measure service failures fraction of demand billed from stock minimum sum of the cost of inventory and backorders

6. Evaluating Suppliers Multiple Customer Service Standards A. the linkage between quality measures product sales installation repair billing

A. The Linkage Between Quality Measures -reliability 40% product - easy to use 20% 30% - features/functions40% - knowledge 30% sales - response 25% 30% - follow-up 10% Overall Quality - delivery interval 30% installation - doesn’t break 25% 10% - installed when promised 10% - no repeat troubles 30% repair - fixed fast 25% 15% - kept informed 10% - accuracy,no surprises 45% billing - first call resolution 35% 15% - easy to understand 10%