In
marketing literature, the term Customer Relationship Management/Marketing (CRM) and Relationship Marketing (RM) are used interchangeable.
CRM
is attracting, maintaining and enhancing customer relationships. CRM is a comprehensive strategy and process of acquiring, retaining and partnering with selective customers, to create superior value for the company and the customer.
of relationships by prospecting a theory called Bucket Theory of Marketing. He views the market as a big bucket. The sales, advertising and promotional programmes pour businesses into the top of the bucket. As long as these programs are effective, the bucket stays full. However, there is a hole in the bucket. 2
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Effective CRM
Promotional Programme
Sales Advertising
Ineffective CRM
When
the business is running well and very few customers fall through, the problem may not be serious. When the operation is weak and the customers are not satisfied, people fall out through the bucket faster than they can be poured in through the top, problem will be serious. This theory illustrates how a relationship strategy that focuses on plugging the holes in the bucket makes so much sense. 5
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Repeat customer
Ex-Customer Pool
Partners
Advocates
Members
Clients
Relationship Strategies
i. Financial bonds: The customer is tied to the firm primarily through financial incentives lower prices for greater volume purchases or lower prices for regular customers. ii. Social bonds: At this level, the firm intends to develop long-term relationships with customers through social as well as financial bonds. iii. Structural bonds: Organization develops structural or technical relationship with a customer by providing a special equipment or technology in order to enhance the customers performance and profit.
iv. Lead: Customers who generate low revenues to the firm and entertaining them is a costly matter for the company. They claim more than their spending, tie up com-pany resources, and spread negative word-of-mouth.
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Few
High
Good
Platinum Gold
Volume of Customer Profit generation Relationship
Iron
Lead
Many
Low
Poor
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What to Do then?
Firm could not provide all services to all levels. Platinum tier will receive some exclusive
benefits not available to other segments. The benefit levels for platinum and gold customers are often designed with retention in mind. For lead-tier customers, the options are to either move them to the iron segment or terminate them. Migration can be achieved via a combination of strategies, including base fees and price increases.
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Thank You.
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