1. Relationship Marketing (Part II) Jeremy Kees, Ph.D.

2. Just to Review…. Transaction–based marketing (Simple exchanges) Relationship marketing –Lifetime value of a customer –Converting new customers to advocates

3. From transaction-based marketing to relationship marketing…

4. Relationship Marketing

5. Bonding: two parties must bond to one another in order to develop a long-term relationship Empathy: the ability to see situations from the perspective of the other party

6. Relationship Marketing Reciprocity: every long-term relationship includes some give- and-take between the parties Trust: reflects the extent of one party’s confidence in another party’s integrity “credibility and honesty” –CitiBank spotCitiBank spot –CitiBank spot2CitiBank spot2 –“Lifetime Guarantee”

7. Three Levels of Relationship Marketing CharacteristicLevel 1Level 2Level 3 Primary bondFinancialSocialStructural Degree of customization LowMediumMedium to high Potential for sustained competitive advantage LowModerateHigh

8. Customer Relationship Management (CRM) The combination of strategies and tools that drive relationship programs, re- orientating the entire organization to a concentrated focus on satisfying customers

10. Strategies for Building Customer Relationships Affinity Programs –a marketing effort sponsored by an organization that solicits responses from individuals who share common interests and activities –BOABOA

11. Strategies for Building Customer Relationships Frequency Marketing –frequent-buyer or user marketing programs that reward customers with cash, rebates, merchandise, or other premiums –Examples?? –Thankyou Rewards SpotThankyou Rewards Spot –But not just for hotels andBut not just for hotels and airlines…

12. Strategies for Building Customer Relationships Database Marketing –software that analyzes marketing information, then identifies and targets messages toward specific groups of potential customers –http://www.wyndham.comhttp://www.wyndham.com

13. Strategies for Building B2B Relationships Strategic Alliances –a partnership formed to create a competitive advantage –These more formal long-term partnership arrangements improve each partner supply-chain relationships and enhance flexibility –Wal-Mart!

14. Strategies for Building B2B Relationships Electronic Data Interchange (EDI) –involves computer-to-computer exchanges of invoices, orders, and other business documents Vendor Managed Inventory (VMI) –is an inventory-management system in which the seller–based on existing agreement with a buyer– determines how much of a product is needed

15. Evaluating Relationships Lifetime Value (LTV) –Refers to the net present value of the potential revenue stream for any particular customer over a # of years –Starts with current purchase activity then extrapolates to include potential additions from cross-selling, upgrades, total ownership, etc.