29/03/2006 building relationships via e-marketing 1 building relationships via e-marketing dr ilias...

29/03/2006 Building Relationships via E-Marketing

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BUILDING RELATIONSHIPS VIA E-MARKETING

Dr Ilias Santouridis

Assistant Professor of Applied IT

TEI of Larissa

Greece

29/03/2006 Building Relationships via E-Marketing 2

WEAKNESSES OF TRADITIONAL MARKETING

Marketing theory: stuck in its ‘futile search for laws, regularities and

predictability’, using approaches (e.g. the marketing mix) better suited to marketing’s ‘golden age’

proved very restrictive for industrial and services marketing

Customers are viewed as either: manipulation and exploitation targets and passive

recipients of messages or one half of a controversial or adversarial relationship


DEFINING RELATIONSHIP MARKETING (1)

British CIM definition of marketing: “The management process of identifying,

anticipating and satisfying customer requirements profitably”

Early RM definition (Berry, 1983): “The marketing approach aiming at attracting,

maintaining and enhancing customer relationships”



Nonetheless… RM aims at profit and is not guided by altruistic

sentiments NOT ALL RELATIONSHIPS ARE

PROFITABLE (e.g. research shows that 50% of a retail bank’s customers are unprofitable)

Unprofitable customers can be either:De-selected (i.e. dumped) orSubsidised by profitable customers



Refined RM definition (Gronroos, 1994): “The marketing approach aiming to identify and

establish, maintain and enhance and, when necessary, terminate relationships with customers and other stakeholders, at a profit so that the objectives of all parties involved are met;and this is done by mutual exchange and fulfillment of promises”


CUSTOMER LIFE-CYCLE (1)

Offensive marketing

Defensivemarketing

Customeracquisition

Customerretention

Customerbase

Customer base as a leaky bucket


CUSTOMER LIFE-CYCLE (2)

Awareness

Exploration

Expansion

Commitment

Suspects

Prospects

Clients

Partners

(Dissolution)

First-time customers

Repeat customers

Members

Advocates

Tra

nsa

ctio

nal

mar

keti

ng

Rel

atio

nsh

ip m

arke

tin

g

(Based on Dwyer et al,1987)

(Based on Kotler,1997)


RELATIONSHIP DRIVERS

Customer retention vsacquisition costs

Customer switchingcosts

Customer lifetime value

FINANCIAL DRIVERS

Risk, Salience andEmotion

Customer satisfactionPerceived need for

closenessTrust and

Commitment

PSYCHOLOGICAL DRIVERS

Relationship marketing


KNOWING YOUR CUSTOMER (1)

Not all customers contribute equally to the firm’s profit

The consequences of losing a profitable customer may be very significant, whereas the loss of a non-profitable customer may be beneficial

Constant effort must be made to calculate: The customer’s contribution to the profitability of the

relationship The costs of building and maintaining the relationship


KNOWING YOUR CUSTOMER (2)

1 2 3 4 5 6 7 8

1

2

3

4

5

6

7

8

Discourage

Reactive strategy

Large share of big wallet:

Small share of big wallet:

Large share of small wallet:

Small share of small wallet:

Retention strategy

Key target

Hig

hL

ow

High LowPROFIT CONTRIBUTION

PO

TE

NT

IAL


CORE FIRM RELATIONSHIPS (1)

Firm relationship types: Customer partnerships Internal partnerships Supplier partnerships External partnerships


CORE FIRM RELATIONSHIPS (2) CUSTOMER PARTNERSHIPS

Customer – Supplier relationship remains the core issue of RM

BUT IT DIFFERS SINCE…

The focus is not on what you can do to your customer but on what you can do for your customer and what you can do with your customer


CORE FIRM RELATIONSHIPS (3) CUSTOMER PARTNERSHIPS

Company prosperity remains the long-term aim of RM

RM strategies as an answer to the shift of balance of power from producer to consumer

Developing relationships with customers may be an effective way of building competitive advantage, since it is difficult to be replicated by competition


CORE FIRM RELATIONSHIPS (4) INTERNAL PARTNERSHIPS

Internal marketing definition: “A way of enabling an organisation to recruit,

motivate and retain customer-conscious employees in order to boost employee retention and customer satisfaction levels” (Clark, 2000)


CORE FIRM RELATIONSHIPS (5) INTERNAL PARTNERSHIPS

RM implies empowering the employees and breaking down the organisation’s functional barriers leading to: The generation of organisation-wide market

intelligence Dissemination of that intelligence across

departments Organisation-wide responsiveness to it


CORE FIRM RELATIONSHIPS (6) SUPPLIER PARTNERSHIPS

Vertical relationships: all or part of the supply chain is integrated through component suppliers, manufacturers, and intermediaries

Horizontal relationships: organisations at the same point in the distribution channel (including competitors) cooperate for mutual benefit


CORE FIRM RELATIONSHIPS (7) SUPPLIER PARTNERSHIPS

Partnering foundation:

Partners share proprietary data and processes used in decision making


CORE FIRM RELATIONSHIPS (8) EXTERNAL PARTNERSHIPS

Industry collaborations are formed by competitors from the same market sector

It should be a ‘win-win’ relationship if it is to succeed

The main objectives may include: Effectiveness and efficiency of distribution channels Servicing or other support facilities Market sector growth Market sector dominance


CORE FIRM RELATIONSHIPS (9) EXTERNAL PARTNERSHIPS

External collaborations are formed by firms from different market sectors, bringing different skills, competences and assets

The main objectives may include: To take advantage of a new sector (e.g. web portals

owned by media and retail stores) To improve the total package offering (e.g. airlines and

car rental companies) To promote existing sector differentiation (e.g. TV

companies and football teams)


E-MARKETING SITUATION

B2B C2B

C2CB2C

FROM

TO

•Auctions (QXL,EBay)•Consumer reviews(Bizrate.com,Deja.com)

•Customer bids:(LetsBuyit.com,Priceline.com)

•Organisationsites (Dell)•Business marketplaces(CommerceOne,VerticalNet)

•Organisationsites(Dell, Amazon)•Consumer marketplaces(Kelkoo.com,Shopsmart.com)C

onsu

mer

sB

usin

ess

Business Consumers


E-MARKETING OBJECTIVES

Sell – using the internet as a sales tool Serve- using the internet as a customer

service tool Speak – using the internet as a

communications tool Save – using the internet for cost reduction Sizzle – using the internet as a brand-

building tool


E-BUSINESS FRAMEWORK

SupplierOrganisation

(In-side)CustomerInterm

ediariesInterm

ediaries

Upstream supply chain

Buy-side e-business and e-models

Downstream supply chain

Sell-side e-business and e-models

E-Business


SUPPLIER RELATIONSHIPS E-MODELS (1)

Internet technology can be used to facilitate an organisation in areas such as: Purchasing (E-Procurement) In-bound logistics Stock management Re-ordering


SUPPLIER RELATIONSHIPS E-MODELS (2)

The organisation can create extranets to open up certain aspects of its business to selected suppliers to build an ‘extended enterprise’

A great facilitator towards that direction is the integration of the partnering organisations IT systems

This sharing of information and goals move the partners from independence to interdependence


INTERNAL RELATIONSHIPS E-MODELS (1)

The organisation intranet can: Replace cumbersome paper-based systems Create ‘responsive knowledge workers’ Lead to better decisions Support employee ‘just-in-time learning’

processes


INTERNAL RELATIONSHIPS E-MODELS (2)

Examples of organisation intranet IT tools: File management systems Document management systems Workflows Timesheet Message boards


CUSTOMER RELATIONSHIPSE-MODELS (1)

Maintaining online customer relationships is not an easy task: “That’s what’s so scary about customer retention

in the online space. We’ve created this empowered, impatient customer who has a short attention span, a lot of choices, and a low barrier to switching” (Laurie Windham, 2001)



The IDIC approach for using the web to form and build relationships with customers (Pepper and Rogers, 1998):

1. Customer Identification: identify each customer on their first and subsequent visits

2. Customer Differentiation: build profiles to segment customers

3. Customer Interaction: online interactions (e.g. customer enquiries, tailored product)

4. Customer Communications: personalisation or mass-customization of content or emails according to segmentation



The marketer must continuously measure the success of customer relationship drivers with metrics such as: Order fulfilment: % that ship on time exactly as

the customer specified Product performance: frequency of problems

experienced by customers Post-sale service and support: % of problems

solved on the first visit


CUSTOMER RELATIONSHIP MANAGEMENT (1)

Customer Relationship Management (CRM) definitions: A continuous performance initiative to increase

a company’s knowledge of its customers The capabilities of a company to build profitable

relationships with loyal customers A system designed to impact your customers so

they’ll be satisfied and maintain long relationships with you



CRM database: a database used to hold and analyse customer information, thereby helping create strategies for marketing

A database stores: Historical data (e.g. names, addresses, responses

to offers, recency, frequency, amount and category of purchases)

Predictive data used to indicate customers’ future behaviour (e.g. type of house and business, past behaviour)



CAUTION!

Data captured for data’s sake does not make a good database

The important question is :what will you do with the data?

“Without a corresponding marketing programme, database marketing should not be introduced” (Rohner, 2001)



It is of utmost importance that the database is kept updated and maintains its integrity

Databases can become ‘dirty’ due to: Incorrectly captured data Change of customer information Data duplication



Acquisition

•Promotion•Incentives•Services•Profiles•Customer service•E-mail

Retention

•Extranets•Personal- isation•Community•Promotions•Loyalty•E-mail

Extension

•Direct e-mail•Learning•Onsite promotions

29/03/2006 building relationships via e-marketing 1 building relationships via e-marketing dr ilias...

Documents

building relationships

customer relationships

customer slide

relationship marketing

customer base

costs of building

marketing approach

non profitable customer