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Relationship Marketing by any other name
-most commonly known as CRM (Customer Relationship Management)
-also known as
•One-to-One Marketing
•Permission Marketing
•Customer Intimacy
•Communities of Commerce
-focus on understanding and responding to the customer
- database software and the internet are a means to this end
High
-maintaining long-term
customer relationships
increases profitability
Profitability
-costs less to serve existing
customers (don’t have to
spend money to identify and
persuade)
Low
-some evidence that
established customers will pay
higher prices than new
customers (reward program
with superior customer service
helps take customer’s eyes off
price)
Short
Long
Customer Lifetime
-strong (and trusting) buyerseller relationship increases
likelihood that customer will
disclose personal information
which makes it easier to target
and lowers cost
Moving Through the Relationship Stages
Customers can advance through the stages in several different ways
Awareness
Exploration/
Expansion
Commitment
-no communication yet
-first visits
-registration
-largely through
traditional awarenessgenerating marketing
levers (ex. advertising)
Attraction - perceive
value through better
function, prestigious
brand and emotional
connection
Emotional - ex. HarleyDavidson and Apple
lifestyle and evangelism
-simple web site address
is easier to remember
(ex. monster.com)
-maintain consistency
between mother brand
and web brand (ex.
bmw.com, sears.com)
Trust - “currency of the
web”
-Brand-established brand
or partnered brand (ex.
IBM Business Partner,
Microsoft Certified)
-Security and Privacy (ex.
Verisign credit card
protection)
-Technology
-Order Fulfillment
Customer Service and
Support
-Communication - ex.
Yahoo email and chat
-also related to
community and
sociability
-Customizationcustomers who take the
time to customize a
home page display a
high level of commitment
Dissolution
-customers might switch
to better or different
service
-purchasing decreases
over time
-inconsistent service
-customer outgrows
service (ex music or
video games)
-bad behaviour
(cheating, meanness)
Four Key Stages of Customer Relationships
Awareness
No. 1 general
auction service
on the Internet
Exploration/
Expansion
EBay
encourages
browsing
before
registration for
the purpose of
exploration
Commitment
EBay offers (1)
community, (2)
individualization,
and (3) interaction
Dissolution
Users can stop
buying or selling
at any time
Level
of intensity determined by:
of connection (# of site visits)
Scope of connection (# of points of contact)
Depth of contact (thoroughness of site use)
Level of
Intensity
Frequency
Intensity
Awareness
Exploration
Commitment
Dissolution
Stages of Customer Relationships

The customer relationship stages are:
1. Awareness — The customer recognizes that the firm is a possible exchange
partner, but has not initiated any communication with the firm or purchased its
products
2. Exploration — The customer considers the possibility of exchange, gathers
information and perhaps initiates trial purchases
3. Commitment — The parties in a relationship feel a sense of obligation or
responsibility toward each other
4. Dissolution — This stage signals the separation of buyer and seller — the loss of
connection

The Internet allows firms to interact and to individualize in powerful ways. As a result, firmcustomer relationships can be formed and can progress very quickly

Firms don’t always want a relationship with all customers . . . and vice versa
Relationship Stages
Awareness
Product
Categories of Levers
Price
Commun ication
Commun ity

Commitment

Attributes and featu res

Custome r-specific attributes an d featu res

Fulfillment

Post-sales suppo rt

Mass customized p roduc t

Incremental allocated benefit s

Breadth of invento ry

Experience

Upgrade s

Custome r enab ling commun ity

Funct iona lity

Custome r relationsh ip manag ement

Availabi lity of compl ementa ry p rodu cts

Custome r care
Dissolution

Custome r care

Click- through promoti ons

Targeted p romot ions

Tiered loya lty p rograms

Discontinue pricing promoti ons

Web referral promotion s

Future price pr omotion s

Wide variety of pr icing plans

Reconfigure loya lty programs

Bricks-and -clicks promotion s

Justify p rices

Become e vangelists (affiliate)

Decrease profit prog rams

Web price discount s

Loyalty programs

Profit enhan cing programs

Bundle

Volume d iscount p romot ions

Frenzy pricing

Targeted p romot ions

Prestige

Future price pr omotion s

Price as a sign of quality

Fairness

Hi-lo

Subscription

Dynami c pricing (as a nove l app roach С group
buying, C2C)

EDLP

Dynami c pricing (group bu ying, C2C)

Terminate direct marketing

EDLP

Television

Television

Permission marketing with ta rgeted offe rs

Magazines

Radio

Loyalty programs

Radio

Newspape rs

Custome r service

Yellow p ages

Packaging

Loyalty programs

Telemarketing

Loyalty programs

Custome r service

Billboa rds / o utdoo r adve rtising

Custome r service

Permission e-mail

Online bi llboards ( banne rs / b uttons )

Loyalty programs

Personal ized pages

Search eng ines

Inte ractive onl ine b illboar ds lending to webs ite

E-mail

Links from sea rch lead to webs ite

Viral ma rketing

E-mail with inf ormation and link to website

Viral ma rketing lead ing to website an d / or
download

Website

Serial ma rketing

Outline co mmunit y benef its clearly a nd ea rly on in
the p rocess

Makes commu nity exp loration e asy thr ough
efficient s ite structure

Increase equ ity bui lding (e.g., throu gh tie red loya lty
programs, increased rewards)

Spot depa rting friends early a nd find solutions to
preve nt di ssolution

Ant icipate an d readily answer quest ions and
concerns, quickly e stablishing a sense of t rust

Show eve ryo ne ind ividual attenti on (e.g.,
welcoming e-mai ls, guide s for nov ices, chat
conve rsations for new memb ers, use of CRM
marketing to tailor site funct ional ity)

Recognize individua lsХcont ribution s and
participation

Make the Тleavi ng processУfair and effi cient

Seek and listen closely to feedba ck

Develop membe rs (e.g., th rough leade rship
oppo rtunities, commun ity roles С guides or watchpersons)

Allow the option of r eturning

Distribution
Packaging
Exploration / Ex pansion
Establish a ca ll for action and fu rther exp loration

Begin the process of equ ity creatio n (e.g., membe r
points a nd loyalty programs )

Numbe r of intermed iaries

Degree of integ ration

Degree of interest

Eliminat ion of t ypes

Numbe r of channe ls

Numbe r of channe ls

Inte rmed iary t ype

Redu ction of inte rmed iaries

Numbe r of channe ls

Redu ction of integ ration

Inte rnal funct ion
Branding
Taking full advantage of the 2Is can move users through the customer relationship stages much faster than traditional
media.
Individualization
Interactivity

Individual controls
information flow

Allows consumers to
specify preferences

Allows more targeted
communications


Individualized
marketing
communications are
more relevant to the
consumer
Facilitates relationship
building through twoway communication

Allows tracking of
consumer response to
marketing
communications
Communication
The 2Is Streamline Advancement Through the Stages
One Seamless Experience
2Is
Banner Ad
(to promote
awareness)
2Is
Website
User can set up the webpage
according to personal preferences,
register for e-mails, give feedback,
or make a purchase
User clicks on banner
to find out more
Awareness
Personalized
Website
 Permission emails
 Individualized
offerings
Exploration
Commitment
Online and Offline Levers
-all points of contact with the firm
Offline
Outdoor
Advertising
(Billboards)
Radio
Yellow
Pages
Public
Relations
Televisio
n
Telemarketing
Brochure
s
Direct
Mailings
Newsletter
s
Magazine
s
Newspapers
Point-ofPurchase
Displays
Sponsorship
s
Websites
Banner Ads
Online
Sales
force/Faceto-Face
Customer Service
-can help move customer
into committment
Personal
Websites
Wireless
Devices
Interstitials
-between pages; includes pop-up windows
-strong brand recall and better click
throughs than banners
Rich
Media
Classifieds
& Listings
Search
Engines
Mass
Dynamic
Ads
Interactiv
e
Television
Personal
E-Mail
Marketing
Profiles of Online Media Types
Medium
Advantages
Disadvantages
Websites/Personalized
websites
Communicate rich, detailed information that users
can navigate at will; can track users and customize
site accordingly.
Narrow reach
Banner ads
Link directly to buying opportunity; easy to measure
effectiveness; wide reach; potential for effective
targeting
Low attention and click-through rates; short life;
limited “pass-along” audience; very high clutter;
fleeting exposure
Interstitials
Catch users’ attention; link to buying opportunity
Can annoy users; limited “pass-along” audience
Rich media
Attention-getting; link to buying opportunity
Can annoy users without broadband access
Dynamic ad placement
Serves up customized ads to users in real time
Difficult to execute well; can annoy users, other
advertisers
Search engines
Good credibility; high believability; guarantee of
position available; significant audience at major sites
High competition; information overload; limited
“pass-along”
Classifieds and
listings
Relatively inexpensive, potential for wide exposure;
qualified audience
Clutter
Opt-in e-mail
High demographic selectivity; high credibility;
significant flexibility; proven high click-through rates;
absolutely inexpensive; some pass-along
Requires substantial user base before effective;
high clutter
Mass e-mail
High reach; inexpensive; flexible
Low attention and significant resentment (spam
image)
Customer service
Interested parties asking for help, thus high targeting
value; generates loyal customers
Very expensive to provide comprehensive
telephone, e-mail, and online support
Internet Ad Terms
Ad Views
(Impressions)

Number of times a banner ad is downloaded to a user’s browser and presumably looked at
Click-Through

Percentage of ad views that are clicked upon; also “Ad Click Rate”
CPC
(Cost-per-Click)

Formula used to calculate what an advertiser will pay to an Internet publisher based on
number of click-throughs a banner generates

Cost per thousand impressions of a banner ad; a publisher that charges $10,000 per
banner and guarantees 500,000 impressions has a CPM of $20 ($10,000 divided by 500)

Measurement recorded in server log files that represent each file downloaded to a
browser; since page design can include multiple files, hits are not a good guide for
measuring traffic at a website

Number of individuals who visit a website in a specified period of time; requires the use of
registration and cookies to verify and identify unique users

A series of requests made by an individual at one site; if no information is requested for a
certain period of time, a “time-out” occurs and the next request made counts as a new visit
— a 30 minute time-out is now standard
CPM
Hit
Unique Users
Visits
Six Steps of the Communication Process
Step 1
Identify the Target Audience
Step 2
Determine the
Communication Objective
Step 3
Develop the Media Plan
Step 4
Create the Message
Step 5
Execute the Campaign
Step 6
Evaluate the Effectiveness
of the Campaign
A Process for Defining Media Choice and Mix
Communication
Criteria

Behavioral
objectives

Available
spending

Customer
segments
Media
Criteria

Ability to
further
behavioral
objectives

CPM

Ability to
reach target
segments
Choose
Media Mix

Direct mail,
Internet,
broadcast,
print, pointof-sale, etc.
Tie Back to
Overall
Plan
Allocate
Spending

Allocation
of spending
across
media mix
elements
and time
periods
based on
relative
priority

Tie media plan
back to
communications
plan (e.g., make
sure the media
plan will drive
the trial or
awareness
required)
Exhibit 9.13: Exploring the Levers Across the Relationship Stages
Exploratory /
Expansion
Awareness
Television, iTV
Magazines and newspapers
Radio
Yellow pages
Billboards / outdoor
advertising
Banner ads


Rich media ads and
dynamic ad placement

Website

Search engines
Listings
Classifieds

E-mail


Direct mail
Telemarketing

Public relations

Sales force










Commitment
Television, iTV
Magazines and
newspapers
Radio
Dissolution


Website
Personalized pages


E-mail

Permission e-mail

Direct mail

Permission direct mail

Telemarketing

Customer service

Customer service

Sales force

Sales force
Terminate marketing
Communication — Conclusion

Effective marketing communications must be integrated and work together with synergy,
and they must be consumer-centric

The communication marketing levers include various communication types that can be
organized into the following categories: mass offline, personal offline, mass online,
personal online

The communication process involves six steps: 1) Identify the target audience, 2)
determine the communication objective, 3) develop the media plan, 4) create the
message, 5) execute the campaign and 6) evaluate the effectiveness of the campaign

Specific levers can be applied that are appropriate for each relationship stage