Monday, 26 March 2018

CUSTOMER RELATIONSHIP Part 4: Basic Steps to Building Relationships in Marketing.

This is perhaps the most instructive of the series and hopefully the last one. Having treated the concepts of relationship marketing as a practice, its benefits to firms and its benefits to customers, it is important to discuss how it can be practiced in order to relish its many benefits. This will particularly be very useful to entrepreneurs and small scale businesses.
Almost all companies can make a start with relationship marketing by identifying the ‘key customers’. But the one thing that must be remembered is that most customers want a single interface with the company; they don’t like to deal with several departments to put together all that they want from the company. So the relationship manager or the account manager, whatever the designation, should have access to enough resources and backup to resolve any problem the client needs tackled. The account manager also needs to be tuned into the client’s organization.
A number of companies are today trying to create structures that allow proper relationship building with their valued clients. The account manager or the relationship manager is one of the keys to relationship marketing. He acts as much as an internal consultant to the customer as the representative of the company he is employed with. The account manager is the main contact point for the customer with the supplying organization and he makes sure that the customer’s needs are taken care of in the most efficient manner possible.
Relationship marketing may be regarded a process which requires basic steps to carrying it out and it would benefit account managers or relationship managers if they consider using the following recommended steps:
- Creating a database
- Gathering more information about enlisted persons
- Identifying key customers
- Creating customer profile
- Getting closer to the customer
- Maintaining relations

In relationship marketing, firms are required to gather intimate information about the customer and then use that knowledge to sharpen the marketing focus. The database, therefore, is at the heart of this new marketing methodology. Many firms acquire the data from database companies like Datamatics or card issuers like American Express, for a fee per name depending on the list quality.
For example, a popular magazine called Reader’s Digest uses its primary source to generate the database. It asks its subscribers to suggest names of 14 people who they think will want to subscribe to the magazine. In return the subscriber gets a small gift, usually a book. On an average, the magazine gets a million names every year to make a pitch for fresh subscription.
Most companies use a combination of commercially available and self-generated database because generally, no single database can cover the full range of customer profile. Established firms can also use their own sales records, bills, invoices and warranty cards to prepare a list of the existing customers.
Firms may try to gather more information about the individuals listed in their computer records through direct mail or cross-references. Refining and updating the database may be necessary if it doesn’t have the requisite segmentation parameter built into it. When the Indian Tobacco Company (ITC) collected the database for its brand Classic cigarettes, the much-needed information on whether the person was a smoker and whether he preferred Classic was not available.
So the firm had to actually conduct a search through telephoning the prospect’s office or club. Once it was established that the person smoked they sent hostesses to his office and offered him a handsome leather case with a box of classics as a gift. In the course of the conversation the hostess would find out the complete smoking pattern of the person. ITC finally ended up with a database of 15,000 executives in Delhi and Bombay.
Relationship marketing takes off only after identification of the key customers by the firm. The revenue pattern of most firms follows the 80/20 rule, i.e., 20 percent customers brings in 80 percent revenue. Modi Xerox, a leading practitioner of relationship marketing, gets more than 30 percent of its business from just 900 corporate clients. In case of HCL-HP, 750 clients cover about 80 percent of its business. The firm may segment these key customers into certain distinct groups to identify distinct purchase patterns. DHL, for example, segments its key customers into three groups: Banks, MNCs and large corporations, and Exporters. Obviously these customers have different needs and they are to be treated differently.
The more you know about the customer, the easier it is for you to build a relationship with him. In case of institutional clients, personal particulars of the decision maker, such as birthday, marital status, anniversaries, children and special interests are very important for the firm. Customers actually appreciate knowing that you are concerned about who they are and are also aware of their needs and interests. Like any other professionals they admire any effort that results in more benefits to them.
Getting a detailed profile of the customer is essential for service organizations such as banks, travel agencies, hotels, airlines and courier firms, because personal factors count the most in a service business. Specific needs can be fulfilled and likes and dislikes taken care of only if the company has a complete profile of the client.
Department store magnate J C. Penney once said, ‘All great business is built on friendship ‘(Fraber and Wycoff 1993). The process of getting to know your customer and letting him get to know you may mark the beginning of a relationship that may turn into a sort of friendship in due course of time. You can’t get closer to your customer if you don’t know what he or she is all about, what problems he/she is facing and how can you help him/her. Getting into some account research and gathering useful information about the needs, purchase pattern and problems of the customer, often proves fruitful to firms.
Many firms have now evolved formalized methods of listening to the customer. They invite two or three people who can give the kind of information the firm is looking for. Such meetings usually take place in a relaxed and informal environment. If a customer meeting is viewed by the firm as an opportunity to learn what it takes to improve performance, strong bonds of relationship and understanding may be created with the customer
The in-house customer meetings provide a powerful forum for finding out how your customer feels about your company, its products, services and support.
Maintaining relationships is more difficult than cultivating relations. Sending a ‘Thank you’ card after a meeting or a sale provides a little extra as a token of appreciation for the customer’s business. Wayne Block, President of Block Business Systems, sold a new piece of business equipment to a firm. He immediately delivered to the chief executive a cake with the company’s logo on it.
Subsequently this token gift became so famous that if the company people were late for some reason, customers would call back and ask for the cake.
Even in India, if you ever buy a pair of spectacles from Lawrence and Mayo, be it a simple reading glass or one of the Ray-Ban types, be assured that you will receive a birthday card for the rest of your life. A thought that keeps the brand alive in your mind and carefully, albeit in an understated manner, builds the relationship value intrinsically.

You may read up the previous posts in this series in order to learn more on the concepts of relationship marketing.

Reference: National Institute of Business Management – Marketing Management – Module II

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