RELATIONSHIP MARKETING For Senior High School

Q1, Module 2

UNDERSTANDING RELATIONSHIPS - relationship quality, customer satisfaction, loyalty

and business performance, reaching the satisfaction – profit chain, relationship management
theories, planning, and implementing CRM projects

RELATIONSHIP - a relationship is composed of a series of interactive episodes between

dyadic parties overtime. A relationship exist only when the parties move from a state of
independence to dependence or interdependence
Ex. When a customer buys an occasional latte from a coffee shop, this is transaction, not a
relationship. If the customer returns repeatedly he/she likes the store atmosphere, the way the
coffee is prepared, this looks more like a relationship.

Relationship change over time. The 5 phases through which customer-supplier relationship can
evolve are:

1. Awareness – each party comes to the attention of others

2. Exploration – period of investigation and testing of products
3. Expansion – stage of increasing independence. More transactions takes place and trust begin
to develop
4. Commitment – automated purchasing processes
5. Dissolution – termination can be both bilateral and unilateral

CUSTOMER SATISFACTION

- is defined as a measurement that determines how happy customers are with a company’s
products, services and capabilities. The most common way of quantifying satisfaction is to
compare the customer’s perception of an experience with the expectations. If customers
perceive their expectations to be met, they are satisfied. If their expectations are
underperformed, this is negative disconfirmation and they are dissatisfied.

Customer Loyalty
Two major approaches to define and measure loyalty:

1. Based on behavior – it is measured with reference to customer purchasing behavior thru RFM
measures. Most loyal are those who have high scores on the 3 behavioral variables: recency of
purchases (R), frequency of purchases (F), Monetary value of purchases (M)
R = time elapsed since last purchase
F = number of purchases in a given time period
M = monetary value of purchases in a given period
2. Attitudinal loyalty - is measured by reference to components of attitude such as beliefs,
feelings and purchase intention. Those customers who have a stronger preference for,
involvement in, or commitment to a supplier are the more loyal in attitudinal terms.
There are 4 forms of loyalty on relative attitudinal strength and repeat purchase behavior

Dick and Basu’s Model

A. Loyals – are those who have high levels of repeat buying and a strong relative attitude.
B. Spurious loyals – they have high levels of repeat purchase but weak relative attitude. Their
repeat purchasing can be explained by high switching costs.
C. Latent loyalty – exist when strong relative attitude is not accompanied by repeat buying. This
might be evidence of weakness in the company’s distribution strategy, the product or service is
not being available when and where customers want. Ex. Amazon delivery

CONCEPT OF RELATIONSHIP MARKETING

A. According to Gilaninia et al (2011), Relationship Marketing involves creating, maintaining

and enhancing strong relationships with customers and other stakeholders. Increasingly,
marketing is moving away from a focus on individual transactions and towards a focus on
building value-laden relationships and marketing networks. Relationship marketing is oriented
more towards the long term. The goal is to deliver long- term value to customers and the measure
of success is long-term customer satisfaction. Relationship marketing requires that all the
company's departments work together with marketing as a team to serve the customer. It
involves building relationships at many levels - economic, social, technical and legal - resulting
in high customer loyalty.
B. Forbes.com defined Relationship marketing is a strategy designed for customer loyalty,
interaction, and long- term engagement to be fostered. It is designed to develop strong
connections with customers by providing them with information directly suited to their needs
and interests by promoting open communication.
Customer relationship is the development of an ongoing connection between a company and its
customers. The relationship involves marketing communications, sales support, technical
assistance and customer service. Customer relationship is a big part of marketing. Relationship
marketing is an interaction with current customers and potential ones.

Characteristics of Relationship Marketing

1. It focuses on the long-term rather than the short- term.
2. It focuses on partners and customers rather than on the company's products.
3. It puts more emphasis on customer retention and growth than on customer acquisition.
4. It relies on cross-functional teams rather than on departmental-level work.
5. It relies more on listening and learning than on talking

Benefits in Developing and Implementing Customer Relationship

1.Consistent customer experience
2. Customer Feedback
3. Customer Profitability
4. Customer advocate
5. Innovation

Benefits of Relationship Marketing

In the business world, retaining customers has a lesser cost at least eight times compared
to acquiring new ones. Thus, this marketing capitalizes on the same fact and is beneficial to the
company in several ways.
A. Understanding Customer Characteristics - the company can segregate its customers into
groups based on their characteristics like purchasing power, frequency and volume of sale
transactions. It also helps the company get valuable feedback from its customers and understand
their needs and expectations.
B. Delivery and Meeting Expectations - if the company knows what its customers' needs are, it
will help reduce wastage due to trial and error methods. It is easier to create a product if the
features and specifications of the product are known.
C. Repeat Business - sellers should maintain good attitude to the buyers. By doing this, buyers
will feel that they do not need to switch sellers.
D. Prevents Negative Transition - trust and loyalty go hand in hand and it is super beneficial
for all business. It will help prevent customers from turning to competitors.
E. Word-of-Mouth Marketing - increasing customer base - satisfied existing customer is 100%
more likely to recommend a product/service to a prospective customer. Apart from customer,
referrals, there are several other ways to increase customer satisfaction by employing methods of
utilizing social networking websites, blogs, informal surveys, benefits on loyalty cards, timely
response to complaints and requests as a constant reminder of its presence around and retention
equity is improved by enhancing customer satisfaction.
F. Reduced Marketing Cost - benefits also include lesser marketing costs and more value
creation. This can be explained by stating the following statistics: every 5% increase in customer
retention can increase a company's annual profits from at least 25% to as much as 125%, while
simultaneously leading to a reduction of 10% in marketing costs. An existing customer will
spend 33% more than a new customer to buy a company's product/service.
G. Identification with the company - the benefits are reaped both by the company and the
customers. It helps customers identify more with the company. Keeping your communication
lines open and keeping in touch with the customers makes them feel like they are being valued. It
will keep customers coming in and build brand equity for the company in the long run.
H. Product Market Expansion - the company's employees must be ready to deliver beyond the
company's boundaries on customer demand.

We can distinguish five different levels of relationships that can be formed with customers who
have purchased a company's product, such as a car or a piece of equipment:

1. Basic. The company salesperson sells the product but does not follow up in any way.
2. Reactive. The salesperson sells the product and encourages the customer to call whenever he
or she has any questions or problems.
3. Accountable. The salesperson phones the customer a short time after the sale to check
whether the product is meeting the customer's expectations. The salesperson also solicits from
the customer any product improvement suggestions and any specific disappointments. This
information helps the company continuously to improve its offering.
4. Proactive. The salesperson or others in the company phone the customer from time to time
with suggestions about improved product use or helpful new products.
5. Partnership. The company works continuously with the customer and with other customers to
discover ways to deliver better value