Supplemental Material on Relationship Marketing

1
Supplemental Material on Relationship Marketing

• John T. Drea
• Associate Professor of Marketing
• Western Illinois University

2
What is relationship marketing?

• It isnt talking to customers, and its more
  than listening to customers.
• It is actively listening to and being involved
  with customers and suppliers as a normal part of
  your business.
• It is an organizations effort to develop a long
  term effective link with customers (and
  suppliers) for mutual benefit.

3
Reactive Customer Contact Systems

• Reactive customers initiate contact
• Customer Service Department
• the downward spiral of quality
• 1-800 Hotlines
• the art of the efficient delay
• Sales Contact
• talking to yourself

4
Proactive Customer Contact Systems

• Proactive business initiates contact with
  customers
• Executive Contact regular interact w/ customers
  by top management
• Customer Visits manager-to-manager contact
• New product development/beta tests use of open
  product development systems
• Customer panels
• Customer representatives on internal teams

5
Finding the right partner...

• A partner whose customers fit your target market
  segment.
• A partner whose service and product positioning
  fit your service and product positioning.
• A partner who has superior marketing,
  merchandising, and distribution processes.
• A partner whose employees are creative and know
  how to implement marketing plans.

6
Examples of Good Fit

• Nexus hair care products - hair salons
• Swatch watches - boutiques/dept. stores
• Compaq - independent computer retailers

7
Establishing a Customer Responsive Strategy

• Step 1 Establish a relationship with the
  customer. Each customer has three needs
• How well will this supplier meet my needs?
• How much will it cost?
• How much hassle will there be?

8
Establishing a Customer Responsive Strategy
(continued)

• Step 2 Diagnose the individual customers needs.
• Past experiences with the customer can be a
  guide, but you must actively listen to what is
  being said.

9
Establishing a Customer Responsive Strategy
(continued)

• Step 3 Determine the organizations ability
  (both capability and capacity) to meet individual
  customer needs
• Fixed capacity organizations typically use
  reservation systems
• Variable capacity organizations out-source
• This is a potential fail point in the process -
  data must be captured.

10
Establishing a Customer Responsive Strategy
(continued)

• Step 4 Commit to the customer
• If the organization has the capability and
  capacity to provide the desired benefits, the
  customer contact person can make a commitment to
  the customer.

11
Establishing a Customer Responsive Strategy
(continued)

• Step 5 Enable customer response.
• Time for the customer to make a decision.
• If the customer hesitates, the CCP can suggest
  options
• This is another fail point - data must be captured

12
Establishing a Customer Responsive Strategy
(continued)

• Step 6 Develop delivery plans
• The organization must commit the capacity and
  establish delivery/production milestones.
• An information system which is dynamic is needed
  - otherwise, the CCP will lack necessary
  information.

13
Establishing a Customer Responsive Strategy
(continued)

• Step 7 Coordinate the dispatching of the work.
• Example A travel agent makes a reservation, but
  does not deliver the service.
• Someone else must typically be involved to
  provide the service -- an effective, dynamic
  interface is vital.

14
Establishing a Customer Responsive Strategy
(continued)

• Step 8 Monitor the delivery process.
• Mass-produced items can be monitored periodically
  to see if they are being produced in conformance
  with standards.
• Services must be monitored independently -
  quality is a function of the quality of a service
  for a particular individual, not an industry
  average

15
Establishing a Customer Responsive Strategy
(continued)

• Step 9 Mentoring
• Empower CCPs to respond to individual customer
  needs
• Managers of CCPs take on more of a mentoring role
  rather than a supervising role.
• Emphasis her is to get CCPs to share experiences
  and effective ways to deal with those experiences.

16
Creating a Relationship Marketing Strategy Amtrak

• Who rides Amtrak?
• In FY96, there were 98,309 riders on Chi-Qcy
• 59.6 stay overnight - 16.7 stay in hotels
• 52.6 travel alone, 26.8 w/ 1 other
• Average rider makes 4.1 trips to Chicago per year
  by train, 4.4 trips by car, 1.4 by air
• Most common income range 50-75,000
• 66.6 female, 68.1 have at least some college
• 25.9 are students, 10.5 business, 64 leisure
• 23 are age 55, 37 are 24 or under

17
Creating a Relationship Mktg. Strategy Amtrak
(continued)

• Three market segments students, business and
  leisure.
• Given the available information, who has similar
  targets?

18
Relationship Mktg. - What Can We Do For Each
Other?

• Amtrak can deliver customers to your event.
• Amtrak can provide a direct benefit (cost
  reduction in travel)
• Amtrak has a captive audience
• Partners can provide a conduit for Amtrak
  information
• Partners can deliver ticket buyers and broaden
  our ridership base