Topic 1 Flashcards
Commoditisation
To commoditise is the act of making a process, goods or services easy to obtain by making it as uniform, plentiful, and affordable as possible
Progress of economic value
- commodities were extracted from the earth and then sold on the open market (agrarian economy).
- companies using commodities as raw materials to manufacture goods. These goods then started to become commoditised (Industrial Revolution)
- commoditisation evolved into customisation, which automatically turned it into a service
- Services started being commoditised, which led to shifting into the experiences economy
Relationship marketing
A forced progression from the traditional marketing model, which was based on consumer development.
Characteristics of relationship marketing
- Classified as a ‘networker’
- Focused on creating long-term relationships with customers
- Maintained relationships will result in a higher profit-line reading of your financial planning practice.
Characteristics of traditional marketing
- Classified as an ‘event coordinator’
- Focuses on bringing in more customers
Main factors that changed the marketing strategy
- An increase in businesses offering the same product.
- An increase in the types of products catering for a single need
- An increase in consumer awareness/knowledge
Relationship marketing strategy
A strategy focusing on building a relationship that benefits both the customer and the business
Cannot be carried out without a CRM system infrastructure
Client relationship management (CRM)
The tool that collects and processes data in order to support the relationship marketing strategy
Makes use of the tools that will assist in carrying out the relationship marketing strategy
Example of tools CRM use
Computer programs identifying client purchasing patterns, and processes, such as a minimum service level agreement, aligned with client preferences and expectations
Main objective of CRM
To use information about clients so as to maximize the lifetime value of a customer to the organization
Types of relationship marketing strategy
- Strategy development process
- Value-creation process (value proposition)
- Multi-channel integration process (operational management)
- Information management process
- Performance assessment process
Strategy development process
Focusing on how it should develop and evolve over time
Decided whether macro-, micro-, or one-to-one segmentation should be applied
Strategy development process CRM tool
Examines existing and potential customer bases per the specific market focus
Segments client database according to the segmentation approach selected at strategic level
Value-creation process (value proposition)
Focus on value derived by the customer, the recognition of and providing for his needs, and positive customer experience throughout his lifetime with the business
Objective is to maximize the lifetime value of desirable customer segments through using improved acquisition strategies
Value-creation process (value proposition) CRM tool
Uses analytical tools to determine the attributes of a product or service that clients most value
Focused on ensuring an even better experience and creating product solutions that are not already catering for your targeted market
Multi-channel integration process (operational management)
Desired outcomes are placed into action
Interactions with client are identified and value-added activities that ensure positive customer experiences are put into action
Multi-channel integration process (operational management) CRM tool
Identify support channels within your organization that are part of providing the clients with a service and provide feedback received to other roleplayers within your organization
Information management process
Information about the client is collected to gain a deeper insight into what your client needs and expects from you
Information management process CRM tool
Identifying communication preferences of clients using database information
Use data-warehousing and data-mining techniques
Performance assessment process
Focuses on driving performance in relation to the RM strategy through
1. Shareholder results
2. Performance monitoring
Performance assessment process CRM tool
- Identifies employee satisfaction, customer loyalty, and shareholder profitability
- Identifies cost-reduction opportunities through deployment of newer tech and updated system
Objective of relationship marketing within financial planning
Attract and identify clients who have a need for the service or product, maintain and enhance relationships with these clients at a profit so that the objective of all parties involved are met
Ways to achieve RM objectives
- Financial planners can identity ways to create new kinds of value
- Clients experience value in service or choose to chase their financial planner
- Client understands his financial plan
- Financial Planning practice can amend business processes on maintaining a positive relationship with clients
Correctly applying RM principles
- Can identify the most profitable clients so that the business can focus its service levels and strategy on these clients
- Can evaluate markets that it can focus on where there is still room for additional business
Lifetime value
The present value of the future profits expected over the client’s lifetime purchases
Result of effective RM approach
A long-term relationship where both the brand and the client have the security of a relationship with each other being established
Advantages of RM strategy
- Provides several competitive advantages
- Increases the cost of switching to other brands or service
- Anticipates customer demands
- Clients experience value in the service offering
- Loyal clients refer their friends, colleagues, and business partners, which means more potential business opportunities
