Scribd
Upload
43 views

Implementing RM: Strategy, Structure and Systems

The document discusses strategies, structures, and systems for relationship management (RM). It describes the McKinsey 7-S model for analyzing organizations. For strategies, it discusses approaches for initiating, developing, maintaining, and ending customer relationships. It emphasizes strategies like simplifying offers, guaranteeing benefits, and facilitating trials for initiation. For developing relationships, it recommends increasing business scope and ensuring commitment. Relationship maintenance requires communication, loyalty rewards, and support systems. The document also discusses organizational structures and systems like total quality management and business process reengineering that support continuous improvement and RM.

Uploaded by

Wan Muhammad Abdul Hakim
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
43 views

Implementing RM: Strategy, Structure and Systems

The document discusses strategies, structures, and systems for relationship management (RM). It describes the McKinsey 7-S model for analyzing organizations. For strategies, it discusses approaches for initiating, developing, maintaining, and ending customer relationships. It emphasizes strategies like simplifying offers, guaranteeing benefits, and facilitating trials for initiation. For developing relationships, it recommends increasing business scope and ensuring commitment. Relationship maintenance requires communication, loyalty rewards, and support systems. The document also discusses organizational structures and systems like total quality management and business process reengineering that support continuous improvement and RM.

Uploaded by

Wan Muhammad Abdul Hakim
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 27

Implementing RM: strategy,

structure and systems


Figure 1: Framework for Analyzing and
Improving Organizations
McKinsey 7-S model
 Developed by Pascale, Athos, Peters, and
Waterman in 1978.
 A tool for managerial analysis and action that
provides a structure with which to consider a
company as a whole, so that the organization's
problems may be diagnosed and a strategy
may be developed and implemented.
Meaning of Hard Ss

 Strategy – the route that the organization has chosen for its
future growth; a plan an organization formulates to gain a
sustainable competitive advantage.
 Structure – the framework in which the activities of the
organization's members are coordinated. The four basic
structural forms are the functional form, divisional structure,
matrix structure, and network structure.
 Systems – the formal and informal procedures or processes,
including innovation systems, compensation systems,
management information systems, and capital allocation
systems, that govern everyday activity.
The nature of RM strategy
 RM is a strategy in itself.
 Once decided on strategic partners, the way
organization develops its resources, product range and
skills will emerge from dialogue with the customer not
from a unilateral plan.
 The choice of customer and the strategic importance
placed on each customer that forms the predictive
components of RM strategy.
 RM strategist must manage the portfolio of customers
to ensure an even flow of profits in the long term and
to determine when relationships should be initiated.
Strategy and the relationship life
Turnover cycle

Maintaining

Developing

Ending
Initiating

Time
Strategy in initiating relationships
 Usually involve the recruitment of new
customers through advertising, sales promotion
or personal selling.
 Identifying, evaluating and targeting new
customers or initiated with existing
uncommitted customers.
 Involves a negative risk effects from customers
side.
…strategy
Figure 2: Four steps to initiating relationships

Simplify the product offer

Guarantee the core benefit

Facilitate no-commitment trial

Identify best prospects for


relationship development
 Tactics to counteract negative effects of risk at
initiating relationships:
1. Simplifying the service offer – lack of clarity
regarding the benefits received from the
supplier, the conditions of use and the terms of
payment will increase the risk perceived by the
customer.
2. Guaranteeing the core benefit
3. Encourage trial
Strategies in developing
relationships
 Focus shift to the identification of opportunities
for increased business and the development of
systems that support the relationship.
 In the case where new customers represents a
significant proportion of the supplier’s business,
a new systems and structures must emerge to
meet their requirements.
 Supplier should ensure that the customer also
make commitment to the relationship at this
stage.
Strategies at developing
1. Increasing the scale or scope of the business relationship- the
more frequent the contact between the customer and the
supplier the more positive the view of the customer towards the
supplier; therefore to increase the relationship- increase the
volume and/or variety of product sold.
2. Legal/financial agreements
3. Resources and information – a customer that has invested
resources whether tangible or intangible will have greater stake
in the continuation of the relationship; greater commitment will
exist if resources or valuable information are shared between
two parties.
4. Time, effort and involvement – time, physical exertion and
mental effort all represent an investment on the customer’s part
in the relationship with the supplier. The greater the investment,
the greater the commitment will be.
Strategies at maintaining
relationships
 Neglecting existing relationships is a common mistake.
 Although the maintenance of mature relationships
often requires fewer resources, they are clearly critical
to the success of RM strategy.
 This stage represent the “pay off” from effort to build
the relationship.
 With well developed system, focus of this strategy is
on monitoring and control, safe guarding the
customer’s satisfaction and trust in supplier.
Strategies at maintaining
relationships
1. Communicate – to fostering trust & creating
satisfaction. Ex: newsletter, site visits,
personal sales contacts.
2. Reward loyalty - customers will remain
loyal to the supplier as long as the perceived
benefit outweigh the perceived sacrifice.
3. Develop supporting systems – implementing
systems for managing communications,
product quality and service recovery.
Strategies at ending relationships
 Ending of a relationship should ideally be a
conscious decision.
 In b-to-b relationships, resource ties and the
complexity of commercial links between the
buyer and supplier usually mean the process of
dissolution must be carefully considered.
 High value, complex consumer products where
the bonds between supplier and customer are
many and varied.
STRUCTURES
 ALLOCATION OF AUTHORITY,
RESPONSIBILITY AND RESOURCES WITHIN
AN ORGANIZATION.
1. Separating out jobs
2. Ensuring that people are accountable for what they
do
3. Adding value to work as it progresses through the
organization.
4. Providing vehicle for performance through the
organization.
5. Motivation and direction of staff
6. Flow of information
7. Understanding of organizational roles
 Disadvantages:
1. Promote internal focus-managerial attention
become focus on the struggle between
departments for resources and prestige.
2. Obstruct information flow through the
formal lines of communication. Segregation
inhibits inter-functional coordination.
3. Reduce flexibility-especially when strictly
procedures, lines of comm and
responsibilities.
 RM strategies need inter-functional coordination.
 How?
1. Flatter structure –elimination of layer
2. Decentralization-to facilitate close and fast support to
customers- respond immediately to changing
customer needs, customizing the services.
3. Organizing business teams and functions around
customers – reorganization of the buss into key
processes such as sales generation or customer
service and multifunctional teams.
4. Customer champions – organizing teams or
individuals responsibilities around customers or
customer groups.
Structures
 The functions of organizational structure
 structure is defined as the allocation of authority,
responsibility, and resources within an organization
 help staff understand their roles and responsibilities, and
how they fit with, and are separated from, others in the
organization

 Disadvantages of corporate structures


 the creation of formal lines of communication can
actually obstruct the flow of information
Systems
The importance of systems

 The organization systems is very crucial in implementation of


RM in any organization

 RM requires careful attention be paid to the design and


maintenance of systems and processes in the organization
…systems

Organization Systems (for continuous


improvement)

 Total Quality Management (TQM)

 Business Process Re-engineering (BPR)


Total Quality Management
…systems
 TQM systems is the development of quality specifications for the product or
service with reference to customers.

 Quality is commonly defined as ‘fitness for use’ (Juran & Gryna, 1988),
hence the creation of quality products or services can only be achieved by
exploring the uses to which the product is put by the customers.

 Reliability: to develop processes that ensure the production consistently


meets the quality specification

 Continuous improvement (Kaizen): to develop mechanism for continuously


improving the quality of its products in the eyes of the customers

 Mechanistic approach to TQM: organization comprising of different


departments that work together to create the final product through TQM
program (guiding principles; target and strategies; performance measures
and check points; supporting process and actions, deadlines and
responsibilities).

 Humanistic approach to TQM: the creation of quality culture in which staff


use their own initiative and judgment to deliver quality products or
services.
…systems
Figure 3: Deming Wheel or the
Quality Cycle
PLAN

REFINE IMPLEMENT

EVALUATE
…systems

Business Process Re-engineering (BPR)

 BPR is an extension of TQM


 BPR advocates that the organization be totally redesigned
to meet a customer-driven quality specifications
 BPR movement is led by Michael Hammer
Key steps in BPR
Establish business
vision and objectives

Identify core
business process

Analyse the
business environment

Streamline around
core process

Control and improve


previous steps
…systems

“Companies and economies flourish


because of pressure, challenges and new
opportunities, not a docile environment
or outside ‘help’ that eliminates the need
to improve.”
Michael E. Porter
Harvard
Business School

Michael E. Porter

Harvard Business
School
Relationship Marketing is a more holistic
approach than marketing mix – 4Ps. As part
of marketing strategy, they both seek to
recruit and retain customers. However,
relationship marketing has communication at
its center

Eddie (UK), User.


Points to ponder

Consider the following statistics:


 Repeat customers spend 33% more than new

customers.
 Referrals among repeat customers are 107% greater

than non-customers.
 It costs six times more to sell something to a prospect

than to sell that same thing to a customer.


Laura Lake
“Customer Relationships Are Key to Your Marketing Strategy”
http://marketing.about.com/od/relationshipmarketing/a/crmstrategy.htm

You might also like