Part 3 Ch7: Building Customer Relationship

Question 1

Relationship Marketing

Answer 1

• keeping current customers and enhancing relationships with them
• Shifts from a transactional approach to a relationship focus, treating customers as partners and co-creators.
• retaining a current customer is cost-effective compared to attracting new ones

Question 2

Evolution of relationships

Answer 2

Strangers - Acquaintances - Friends - Partners

Question 3

Determinants of Relationship Type:

Answer 3

Customers have diverse expectations from provider relationships.

• nature of the service
• the level of customer interest
• desires.

Question 4

Types of customer expectations of
relationship with service firms

Answer 4

1. Transactional Expectations:
2. Active relationship
3. Passive relationship
4. Symbolic relationship

Question 5

Transactional expectations

Answer 5

customers want a solution to their needs at an acceptable price.

Question 6

Active relationship

Answer 6

customers are looking for ways to interact with service providers to
get additional value
e.g. looking for rent

Question 7

Passive relationship

Answer 7

customers will contact service provider if they want/have
e.g. maintanence service

Question 8

Symbolic relationship

Answer 8

Customers desire a relationships to obtain symbolic value over services.
e.g. celebration of your anniversary in a romantic restaurant

Question 9

Benefits for Customers in Relationship Marketing

Answer 9

1. Greater Value:
   Beyond the basic service, receive special treatment,
2. Confidence Benefits:
   Trust
   Confidence in the service provider
   Reduced anxiety
3. Social Benefits:
   Familiarity
   Social support
   Personal relationships
4. Special Treatment Benefits:
   Special deals
   Price breaks

Question 10

Benefits for Firms in Relationship Marketing

Answer 10

• Economic benefits:
  
  • Increased revenues
  • Reduced marketing costs
  • Regular revenue stream
• Customer behaviour benefits:
  
  • Positive WOM, increased brand reputation
  • customer becomes advocate for firms, influence purchase decision
• Human resource management benefits:
  
  • Easier jobs for employees
  • Employee retention

Question 11

Relationship Value of Customers

Answer 11

evaluates customers based on their lifetime profitability

Question 12

Strategies for building relationships

Answer 12

1. Core service provision
2. Switching barriers
3. Relationship bonds

Question 13

Core Service Provision

Answer 13

• managing the customer experience during service delivery to facilitate interactions and enhance service quality. -> overseeing interactions to ensure they are positive and smooth
• Best Strategies:
  Implementing Customer Relationship Management (CRM) across all service touchpoints.

Question 14

Switching Barriers

Answer 14

• factors that make it challenging for customers to switch from one service provider to another
• Reasons
  • Customer inertia, involving habits that keep customers with their current provider
  • Switching costs, which include any costs or efforts involved in switching to a new service provider.

Question 15

Relationship bonds:

Answer 15

1. Financial bonds e.g. loyalty programmes
2. Social bonds e.g. social and interpersonal interaction
3. Customisation bonds e.g.
   mass customisation and
   customer intimacy
4. Structural bonds e.g.
   integration between
   organisations

Question 16

Retention Strategies 1 - Financial Bonds

Answer 16

• Volume and Frequency rewards
• Stable pricing
• Bundling and cross-selling

Question 17

Retention Strategies 2 - Social bonds

Answer 17

• Continuous relationship
  establish an ongoing and continnuous relationship
• Personal relationship
  understand customer preference and needs on a personal level
• Social bonds among customers
  sense of community

Question 18

Retention Strategies 3 - Customization bonds

Answer 18

• Customer intimacy
• Mass customimzation
• Anticipation/innovation
  retain customers by anticipating their future needs and consistenly innovate to provide them novel things

Question 19

Retention Strategies 4 - Structural bonds

Answer 19

• shared process and equipment
  establish relationship with other organizations
• joint investments
  Building strong connections through shared financial commitments
• integrated information system
  Enhancing communication by integrating their information systems

Question 20

Relationship challenge 1: The customer is NOT always right

Answer 20

Not All Customers Are Good Relationship Customers:
1. Wrong Segment:
Customers who do not align with the target market

2. Not Profitable in the Long Term:
3. Difficult Customers:
   Customers who may pose challenges in terms of demands, complaints
4. Some Customers Do Not Want a Relationship

Question 21

Firing a Customer

Answer 21

• Troublesome Customers Are Less Profitable
• Difficult customers can affect the performance and quality of the firm’s employees.
• How to Do It?
  
  • Avoid Negative WOM:
  • Helping Customer to Find a New Supplier
  • Increase Prices or Reduce Benefits