Sustaining Customer Relationships

1
Sustaining Customer Relationships

• Growing Profitable Customer Relationships

2
Sustaining Customer Relationships

• Process of fulfilling mutually agreed-upon
  customer requirements in a superior way over time
• and
• selectively pursuing continuity and growth
  through building mutual interest

3
Supplier and Customer managers must...

• Reach a detailed understanding of customer
  requirements and preferences
• actively communicate how these requirements and
  preferences are changing

• The supplier must anticipate and capably respond
  to these changes
• the supplier strives to become indispensable to
  the customer through market tailored, yet
  flexible offerings

4
Win-Win Outcome is

• Customer is satisfied and remains profitable

• Supplier retains and expands a profitable share
  of the customers business
• Minimizes competitive threat(s)

5
Partnering

• A process where a customer firm and supplier firm
  form a strong relationship over time built on
• social,
• economic,
• service,
• and technical ties

6
Partnering as a Focused Market Strategy

• Managers focus diligently on customer selection
  using selection criteria based on customer firm
  and marketplace characteristics
• philosophy of doing business
• dependence of both supplier and customer on the
  relationship
• technological edge transfer

7
Continuity and Growth

• Continuity
• strive to retain the working relationship as long
  as both parties achieve strategic objectives
• Growth
• supplier firm works to increase its profitable
  share of the customers business
• works to become an irreplaceable partner

8
Continuity in Working Relationship

• Communication
• meet formally and informally to discuss market
  conditions
• promotes personal relationships
• multiple bridges between companies
• Trust and commitment
• dependability fairness
• guarantee partners best interests through
  Service Recovery system

• Coordination
• synchronization of activities, resources, and
  capabilities
• Conflict resolution
• create functional conflict that is resolved and
  leads to improved policies and procedures

9
Customer Retention Planning Process

• Track customer retention (share of business)
• Assess cause(s) of customer defection (ask)
• Analyze complaint and service data constantly and
  consistently (record and track trends)
• Respond to defections (established process
  procedures)
• Reformulate and adapt market offerings

10
Customer Relationship Management (CRM)

• Low tech vs high tech
• focus on systems and procedures, NOT technology
  and software
• monitor lifetime value of customer firm
• evaluate contribution to profitability
  (Activity-Based Costing)

• Use information to direct marketing activities of
  retention, acquisition, and/or growth
• update customer value and anticipate changes
• understand the supply and channel network and the
  interconnected nature of business relationships