1. Customer Relationships: The Key Ingredient
Part 4 Focusing on the Customer: Marketing Growth Strategies

2. Looking Ahead After studying this chapter, you should be able to:
Define customer relationship management (CRM) and explain its importance to a small firm.
Discuss the significance of providing extraordinary customer service.
Illustrate how technology, such as the Internet, can improve customer relationships.
Describe the techniques for creating a customer profile.
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3. Looking Ahead (cont’d.)
Explain how consumers are decision makers and why this is important to understanding customer relationships.
Describe certain psychological influences on consumer behavior.
Describe certain sociological influences on consumer behavior.
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4. What is Customer Relationship Management?
Customer Relationship Management (CRM)
A marketing strategy of maximizing shareholder value through winning, growing, and keeping the right customers
Focus of CRM
Customers rather than products
Changes in processes, systems, and culture
All channels and media involved in the marketing effort, from the Internet to field sales
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5. Sources of the Next Sale
Exhibit 13.1
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6. The Importance of CRM to the Small Firm
Economic benefits of maintaining relationships with current customers:
Acquisition costs for new customers are huge.
Long-time customers spend more money than new ones.
Happy customers refer their friends and colleagues.
Order-processing costs are higher for new customers.
Old customers will pay more for products.
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7. Essential Materials of a Successful CRM Program
Exhibit 13.2
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8. Creating Transactional Relationships through Extraordinary Service
An association between a business and a customer that relates to a purchase or a business deal
Beliefs about Exceptional Customer Service
Superior customer service creates customer satisfaction.
Customer satisfaction produces customer loyalty.
Small firms possess greater potential for providing superior customer service than do large firms.
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9. Components of Customer Satisfaction
Key Elements of Customer Satisfaction:
Basic benefits of the product or service
The elements customers expect all competitors to deliver
General support services, such as customer assistance
A recovery process for counteracting customers’ bad experiences
Extraordinary services that excel in meeting customers’ preferences and make the product or service seem customized
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10. Extraordinary Service: Customer Loyalty
Ways to Provide Extraordinary Service:
Naming names (personalized attention), valued 10 times more on the “worthy of loyalty” scale
Custom care in giving the customers what they want on an individual basis
Keeping in touch to let customers know that you’re taking time to think about them; they don’t forget it
“Boo-boo research”—taking the time to reach out to lost customers to learn why they went elsewhere and let them know that you want them back
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11. Consumer Options for Dealing with Product or Service Dissatisfaction
Exhibit 13.4
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12. Handling Customer Complaints
Advantages of Small Firms in Dealing with Customer Complaints
Deal directly with issues as they arise
Easier to give customers attention and respect
Employees are more empowered to resolve complaints
Learning about Customer Service Concerns
Direct personal observation
Feedback forms from customers
Monitoring customer service communications
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13. Using Technology to Support Customer Relationship Management
Telephone Contacts
Online Shopping
CRM Software
Customer Relations
Customer Support
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14. Building Customer Profiles for a CRM Program
Categories of Customer Profile Information
Transactions
Purchase history (price paid, SKU, delivery date)
Customer contacts
Sales calls and service requests (customer- and company-initiated contacts)
Descriptive information
Background information for segmentation and data analysis
Responses to marketing stimuli
Information on customer responses to direct marketing, sales contacts, and/or any other direct contact
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15. Simplified Model of Consumer Behavior
Stage 1
Stage 2
Stage 3
Stage 4
Exhibit 13.5
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16. Stage 1: Problem Recognition
Occurs when a consumer realizes that her or his current state of affairs differs significantly from some ideal state.
A consumer must recognize a problem before purchase behavior can begin.
An entrepreneur must understand the problem-recognition stage in order to decide on the appropriate marketing strategy to use to influence or to react to problem recognition by consumers.
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17. Stage 2: Information Search and Evaluation
Evaluative Criteria
The features or characteristics of a product or service that customers use to compare brands
Evoked Set
A group of brands that a consumer is both aware of and willing to consider as a solution to a purchase problem
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18. Stage 3: Purchase Decision
Factors Affecting the Purchase Decision:
Brands in the evoked set
Brand advertising
Purchase setting: store or non-store outlet
Store, catalogs, TV shopping channels, the Internet
Intention to purchase: planned or spontaneous
Store layout, sales personnel, and point-of-purchase displays
Ease of use of Web site
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19. Stage 4: Post-Purchase Evaluation
Cognitive Dissonance
The anxiety that occurs when a customer has second thoughts immediately following a purchase
Can lead to customer complaints
Can reduced by:
Reassurance by salespersons
Guarantees and trial periods
Customer follow-ups
Confirming information from other users
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20. Post-Purchase Activities of Consumers
Exhibit 13.6
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21. Understanding Psychological Influences on Customers
Needs
Are the starting point for all behavior.
Categories of needs: physiological, social, psychological, and spiritual
Are seldom completely or permanently satisfied (e.g., daily newspaper).
Function together (e.g., the desire for status clothing).
Consumers may purchase the same product to satisfy different needs (e.g., Internet access).
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22. Understanding Psychological Influences on Customers (cont’d.)
Perceptions
The individual processes that give meaning to the stimuli confronting consumers
Whatever is perceived depends on the characteristics of both the stimulus and the perceiver.
Perceptual Categorization
The process of grouping similar things so as to manage huge quantities of incoming stimuli
Creates a barrier (i.e., brand loyalty) to competing brands
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23. Understanding Psychological Influences on Customers (cont’d.)
Motivations
Goal-directed forces that organize and give direction to the tension caused by unsatisfied needs
Analysis of consumer behavior variables is the key to determining which unique motivations the consumer will internalize as an impetus to purchase a good or service.
Attitudes
An enduring opinion based on knowledge, feeling, and behavioral tendency
Can discourage or foster behavioral tendencies to purchase a product
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24. Understanding Sociological Influences on Customers (cont’d.)
Culture
Social Classes
Reference Groups
Opinion Leaders
Consumers
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25. Consumer Behavior Model
Sociological Factors
Culture
Behavioral pattern and values that characterize a group of consumers in a target market
Social class
Societal divisions that have different levels of social prestige
Reference groups
Groups that an individual allows to influence his or her behavior
Opinion leader
A group leader who plays a key communications role
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26. Key Terms customer relationship management (CRM)
transactional relationship
customer profile
evaluative criteria
evoked set
cognitive dissonance
needs
perception
perceptual categorization
motivations
attitude
culture
social classes
reference groups
opinion leader
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