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

2. 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

3. 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

4. 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

5. 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

6. 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

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

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

9. 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

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

11. 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

12. 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

13. 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

14. 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

15. 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

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

17. 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

18. 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

19. 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

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

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

22. 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%