Managing the change from marketing planning to customer relationship management Merlin Stone, Neil W

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Managing the change from marketing planning to
customer relationship managementMerlin Stone,
Neil Woodcock and Muriel Wilson

• Long Range Planning, Vol. 29, No. 5, pp. 675-683

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What is relationship marketing?

• The use of a wide range of marketing, sales,
  communication, service and customer care
  approaches to
• Identify a companys named individual customers
• Create a relationship between the company and its
  customers that stretches over many transactions
• Manage that relationship to the benefit of the
  customers and the company
• Relationship marketing is how we
• Find you
• Get to know you
• Keep in touch with you
• Try to ensure that you get what you want from us
  in every aspect of our dealings with you
• Check that you are getting what we promised you

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Why relationship marketing is important?

• Increased customer retention and loyalty
• Customers stay longer, buy more, more often
• Higher customer profitability, not just because
  each customer buys more, but because
• Lower costs of recruiting customers, and no need
  to recruit so many to maintain a steady volume of
  business
• Reduced cost of sales, as existing customers are
  usually more responsive

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Stages of the relationship

• Recruitment
• When the customer is targeted as being an
  appropriate customer for the company, and induced
  to join
• Welcoming
• After the customer has joined, depending on the
  complexity of the product or service, it is
  important to ensure that the customer is
  securely on board
• Getting to know
• This is a crucial period, when both sides
  exchange information with each other. Additional
  customer needs may become apparent, and the
  customers profile of use of the product or
  service becomes known. More is also learned about
  the customers honesty, ability to pay.

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Stages of the relationship

• Account management
• The relationship is now being managed securely,
  with additional needs being identified in time
  and met where feasible
• Intensive care
• The customer has such severe problems that
  special attention is needed to ensure that the
  customer returns safely to account management
• Divorce
• Divorce has now taken place, and the customer
  will usually, after a cooling-off period, be
  ready for winback
• Winback
• Sometimes the relationship ended because of high
  price or the wrong product, so winback can be
  initiated when these issues are resolved

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The strategies large companies are following-an
act of faith?

• Conventional approach
• Take on anyone who wants to buy the product
• Manage most of the customersthe largest ones
  excludedin the same way
• New approach
• Identifies which customers to acquire and retain
  and which to discourage
• Develops marketing, service and IT policies to
  create the right relationships with different
  types of customers and prospectis, and to acquire
  and retain the target customers

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The prescriptive model of relationship marketing

• Through media we choose
• In locations we provide
• At times we prefer
• From product and service ranges or potions we
  predetermine

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Do customers want relationships?

• The identification, quality and ranking of the
  components of the interaction between supplier
  and customer
• The importance of these components in determining
  the customers pattern of buying and
  recommendation
• What the supplier can do, in practice, to affect
  the most important components
• What competitors are doing to affect them

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Relationship components

• Customers requirements
• Customers perceptions which companies are seen
  to be providing the best components and how the
  individual companys provision relates to this
• Which components can be acted upon
  cost-effectively to improve the position

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Transparent marketing

• Suppliers role
• To create a strong brand which invites customer
  confidence
• To influence customers to consider the features,
  advantages and benefits of different types of
  relationship
• To provide various modes of access to the
  supplier, their information and processes for
  ordering and obtaining their products and
  services
• To ensure that customers can get information
  about these relationships and their benefits
  easily

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Transparent marketing

• Early experiments with newer technologies
• EDI for electronic trading with business
  customers
• The WWW for computer access
• Advanced call centers, allowing customers to
  steer their way around the supplier using keypad
  entries
• best practice arrangements (people, systems,
  software, processes, etc.) for handling
  unsolicited communications (including complaints
  and requests for information) and integrating
  this inbound communication with core business
  processes

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How transparent marketing allows customers to
assemble components

• Segmentation characteristics
• The importance to the customer of the product and
  the supplier
• The customers past experience of buying, or of
  dealing with the supplier
• The customers skills and knowledge relating to
  buying and using the product
• The customers buying behavior for other products
  of this type

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Key recommendation

• Branding needs to be controlled
• The customer focus needs to be maintained
• Technology is only one part of the customer
  relationship
• Material in digital form will need to be used
  cost-effectively
• Customers can be encouraged to use the
  transparent marketing approach
• The interface with core process of marketing,
  sales, inventory, distribution and finance will
  be complex