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

CREATING A DATABASE

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.

GATHERING MORE INFORMATION

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.

IDENTIFYING KEY CUSTOMERS

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.

CREATING CUSTOMER PROFILE

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.

GETTING CLOSER TO THE CUSTOMER

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 RELATIONS

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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CUSTOMER RELATIONSHIP Part 3: Benefits of Relationship Marketing to Customers

The first part of this series has analyzed the concept of Relationship Marketing while the second part titled CUSTOMER RELATIONSHIP Part 2: Benefits of Relationship Marketing to Firms outlined its benefits to organizations that practice it. Here, I present another sequel and third part of a theme we started couple of months back, which highlights what customers stand to gain when organizations engage in relationship marketing.

Customers many times don’t give deliberate attention to brand loyalty; they just want the best, most affordable or most convenient product or service. But most times they subconsciously find themselves stuck on a product, usually as a result of the relationship marketing tactics deployed by the manufacturer. So, in the long run, the customers enjoy the services being rendered to them and also benefit through relationship marketing because they get a better product, a good backup service and the company is always prepared to listen to their grievances. Such major customer benefits may be summarized as follows:

- Superior value through better products and services

- Attention to customer complaints

- Customization of products and services

BETTER PRODUCTS AND SERVICES

All such firms that have taken the relationship route have invested substantially in improving the quality of products and create systems to provide the requisite backup service. Because to retain a customer it is necessary to keep him/her satisfied.

When Philips NV, the Netherlands-based electronic giant, developed an online product for children that would soon be launched in Europe, they sent industrial designers, cognitive psychologists and sociologists in mobile vans to communities in Italy, France and the Netherlands to help brainstorm for ideas for new electronic products to meet customers’ changing needs. They hosted a dialogue in which specialists ‘and customers interactively imagined new possibilities. Philips looked at all the ideas, narrowed them down and settled on one online interactive product for children. The researchers then went back to the communities and tested the new product idea on the same children.

Another example relates to how Unilever group gave us an insight into how firms are trying to solve their customers’ product application related problems in India. Kitchens of institutions like hotels, hostels, airports and factory canteens work almost continually without enough time available for cleaning. Kitchen grills usually have extremely greasy deposit formations on them, which are tough to clean.

Traditionally, using chlorine has been the preferred method for cleaning them. Besides the fact that chlorine is a hazardous chemical, the process itself is arduous because the grill needs to be dismantled, cleaned and left out to dry overnight. So there is need for a backup grill while one is being cleaned.

Lever Industrial already had its Taski and Clax range of cleaning products for such applications, but when confronted with the problem of cleaning kitchen grills, Lever Industrial found that these products were not fully effective. The company therefore asked its R&D division to develop a new product for this specific application. Within a few months they came out with Suma grill-cleaning liquid. It is non-hazardous in nature and removes deposits without any need for dismantling the grill.

ATTENTION TO CUSTOMER COMPLAINTS

To win and retain customer loyalties, it is essential to hear the complaints and solve their grievances effectively. Philips Electronics started a 24-hour complaint registration service for customers. Some of their service centres offers free check-up of sets to be repaired. Hero Honda and LML Vespa have also substantially beefed up their service centres to offer personalized attention and satisfactory solution to product-related problems. Service organizations such as Apollo Hospitals, Citibank, ANZ Grindlays Bank, Hyat Regency Hotel, HDFC, Federal Express Service and Singapore Airlines are getting specially attuned to listening to customer problems. At times, they even go out of their way to solve customer problems.

CUSTOMIZATION OF PRODUCTS AND SERVICES

Customization means offering a product or service tailor-made to suit the convenience of each individual customer. In the Air India frequent flier scheme (discussed in part 2), for instance, there is a customized chain at work. The database records the customer’s flight and travel preferences and other likes and dislikes. This is updated each time the customer takes a flight. So the system allots the person a favourite seat, his preferred meal and on arrival at destination a room in the hotel where the newspaper he prefers is delivered to him. All of these go into building closer bonds with the customer.

Levi Strauss, the California-based apparel company began marketing a ‘made to order’ service for customizing women’s jeans in selected US locations. Sales clerks measure customers and feed the data into a computer-aided design information system. The customer tries on sample jeans in the store, to perfect the fit. This additional data is also fed into the system. The system forwards the information to a computerized fabric-cutting machine at the factory and the jeans are made to order. The custom jeans cost only US$10 more than the mass-produced jeans.

In India, Mafatlal sells fabrics as well as branded readymade garments. A research conducted by MARG showed that while most executives buy readymade shirts, only a few preferred to buy readymade trousers because unlike shirts, trousers don’t offer as good a fit as tailored ones. In its quest to get closer to the customer, Mafatlal decided to create a product that offers the purchase convenience of readymade trouser with the fit of a tailored garment. Thus was born the ‘Dial-a-trouser’ service targeted at busy executives. The service was first introduced in Bombay and is now extended to Bangalore and Delhi. The customer may call the company’s showroom to send the tailor to his home or office. The tailor goes there with the shade card and samples of fabrics. The fabric and colour are selected, measurements taken and the trousers are delivered within five days of the order.

One common attribute of the three customer benefits enumerated above is that, they all solve some major consumption related problems, like quality, purchase process, ease of use, product suitability and so on. At the end of the day, all efforts made by firms to retain their customers, as much as it benefits the company’s turnover also end up to the benefit of the customers. So, next time you want to choose a brand, you may want to consider what more is in it for you besides consumption. Adam Smith, a famous economist in his book “Wealth of Nations” in the year 1775 says “Consumption is the sole end and purpose of all production and the interest of the producer ought to be attended to, only so far it may be necessary for promoting that of the consumer”.

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

@TywoAkintoye

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CUSTOMER RELATIONSHIP Part 2: Benefits of Relationship Marketing to Firms

We started this topic about two month ago when I posted CUSTOMERRELATIONSHIP Part 1: The Concept of Relationship Marketing. In that post, we analyzed Relationship Marketing as it is being practiced by various organizations around the world, while we also tried to introduce the concept to those who may not have been familiar with it before now. Here, we have the second part of the series where we are able to begin examining the benefits of Relationship Marketing.

Relationship marketing yields several benefits to the firms that practice it, as also to the targeted customers, but we will examine both of these groups separately starting now with the firms. It is advisable for firms not to expect the full benefits of Relationship marketing immediately; rather it is a practice you imbibe in your organizational culture such that the benefits begin to come to fruition in the long run. These benefits which we will discuss are summarized into four, namely:

• Repeat business
• Enhanced brand loyalty
• Increased long-term profitability
• Brand building

REPEAT BUSINESS

There are several excellent examples of firms using relationship-marketing programmes to gain the repeat business. The Air Taxi Operators (now given the status of an airline) started in India in 1992. Other private airlines like Damania Airways, Jet Airways and Modiluft were also for the first time allowed to compete with the Indian state Airlines. The target segment chosen by these ATOs (Air Taxi Operators) for example was the business and upper class traveller. Their in-flight service was tailored to attract this segment. So, in order to counter the threat to its business, Indian Airlines went in for a new promotional scheme termed as frequent-flier scheme. The scheme was to focus through direct marketing on the class of buyers who were defecting to private airlines. Both Air India and Indian Airlines had a database of regular fliers. They also used secondary sources like Diners Club to start a marketing campaign targeting about 15,000 such prospects all over the country.

The campaign was that as fliers start accumulating points either on IA (Indian Airlines) or AI (Air India) or both, they become eligible for free trips. The threshold was 3 000 points after which free trips could be claimed. There was an entry fee of 1,000Rupees (NGN5,500; U$D15) to join the programme. This was necessary to avoid people who don’t travel by air all that often. The time limit for accumulating the required number of points was three years. From about 1,000 members initially, the membership increased to 20,000 by April 1995.

The move was initiated as a promotional tactic to save the fledgling market share of the airline, but inadvertently this also marked the beginning of a new era of relationship marketing for the airline. The scheme continues to expand till date because the members themselves suggest the names of friends and colleagues who could be involved in the programme.

In case of business-to-business marketing, where firms scramble for new recipes to retain existing customers, relationship marketing can help in reducing the number of lost customers by enhancing customer satisfaction.

The marketing function in any organization is expected to perform the job of turning an unaware person into a satisfied user through the following successive steps.

Unaware

Aware but not knowledgeable

Knowledgeable

Occasional user

Satisfied regular user

Relationship marketing goes one step beyond this and converts satisfied users into life-time customers by sustaining their interest in the product and satisfying their needs more effectively. Little wonder that DHL Worldwide gets its 90 percent business from relationship marketing alone.

ENHANCED BRAND LOYALTY

Marketing programmes of firms are often aimed at identifying prospects and turning them into customers. In order to expand business and achieve growth, firms are required to perpetually design and launch new marketing programmes. This involves a huge cost. However, if a firm is able to retain a certain percentage of customers, the efforts as well as cost of marketing can be reduced substantially.

Relationship marketing takes over from where conventional marketing leaves a customer. Maintaining direct contact with the customer and taking care of his problems to deliver satisfaction may turn an occasional customer into a regular client, and a client to a strong admirer of the firm. Finally it may turn an admirer into an advocate and opinion leader giving positive word-of-mouth to the firm and its products. A positive word-of-mouth from a satisfied customer often works better than the best advertisement, especially in case of high-involvement products and services.

INCREASED LONG-TERM PROFITABILITY

Firms may increase their long-term profitability by extending the concept of relationship marketing to their suppliers, channel members and influence groups. Vendor relationship may help in reducing the number of suppliers and in bringing down the level of inventories. It may save the firm in terms of inventory and warehousing costs as also transportation and material handling costs. The cost of placing orders and paperwork may also get reduced substantially. This is why firms like Xerox, Motorola, General Electric and Ford are reducing their supplier bases and looking for a few select vendors to help them achieve a stronger competitive position.

Research studies in the USA indicate that apart from being able to harness the strengths and skills of suppliers to their advantage, manufacturers in long-term relationships with them may also benefit from improved quality, process performance and continuous cost reductions

Long-term relationship with channel members may ensure better channel support, higher volumes of business and reduced cost of marketing. Strong channel support may also act as hedging against competitors’ marketing efforts. Long-term relationships with various stakeholders and interest groups such as financing institutes, public representatives, trade unions, press or media people, consumer protection groups and environmental groups may help in improving the public image of the firm. This may indirectly contribute to higher volumes of business, improved productivity and profitability of the firm.

BRAND BUILDING

In a competitive environment relationship marketing may be used as an effective tool for brand building. Till the early 1990s, cement was largely regarded as a commodity. Availability and price dictated the purchase decision more often than any other factor. Several players had an equally good quality image and few customers insisted on buying only from a particular company. The customer base for cement is also not homogeneous. There are different categories of cement-buyers in the market—the mason, civil engineer, contractor and institutional or large-scale buyers. In mid-1993, Indian Rayon, makers of Birla brand cement, decided to upgrade certain dealers to become “Birla supershoppes” because the company wanted to change the way it interacted with the customer. The ‘supershoppes’ were to become a hub of relationship with the customer.

The company wanted to guide and educate buyers for using a specific product for specific application. Based on the type of construction, the aim was to recommend the right type of cement to the customer. Each ‘shoppe’ thus employed a civil engineer and a task force to assist him. If necessary, the team visits the sites to demonstrate or to solve the construction-related problems. Advice is also given on the size of the beam to be used or the kind of steel reinforcement needed in the column.

To consolidate the relationship further, each ‘shoppe’ organizes a regular customer meet, where the actual users are invited and given technical advice and practical solutions. Results of this relationship approach have been spectacular. Each ‘shoppe’ is doing on an average; double the business a normal dealer does anywhere. As at 1995, Indian Rayon had 50 shoppes and 20 more were to be set up by the end of 1996.

Multinational brands such as Reebok, Seagram, Citibank, DHL Worldwide Express, and Indian firms such as Mafatlal, Ceat tyres, Lakme are now taking the relationship route to strengthen their brand equities

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

@TywoAkintoye

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Project Management: Certification or Education?

When I decided to venture into project management some years ago, the first step I took was to register for a training program and it turned out to be one of the best career decisions I ever made. This training opened my eyes to a profession which by the virtue of its importance should be as prominent as economics and Information Technology in the development of any nation.

But how was the knowledge of project management being sold to Nigerians? I observed that, beyond the very common 35-hour PMP trainings offered by many consulting firms across the country, no training service offers real Project Management education where the students are taught the skills of a project manager through workshops, case studies and so on, except a program by the Project Management College UK., a three month course called Advanced Diploma in Project Management delivered then at their Lekki-Lagos study center.

The Advance Diploma by PM College UK which cost about four hundred thousand naira (N400,000) in 2010, I thought was VERY expensive by Nigerian standards, but I later realized, after getting exposed to the world of project management training internationally how fair the pricing was, especially after attending further trainings in the USA myself. The truth is, Project management education is not cheap, except you’re satisfied with attending fast track PMP or PRINCE-2 certification exam preparation trainings which offer nothing except “exam prep” without any guarantee of exam success.

I got curious, how do we bring affordable Project Management education to Nigerians? PM education focuses on proficiency, it offers you the skills required to manage projects successfully, it takes time, you can’t rush it like the exam prep, you need facilities, templates and course materials to learn with, not just by studying the PMBoK or cramming the PRINCE-2 manual, you need practicing project managers as facilitators to help create the scenario expected in a project management office (PMO) for the students to gain richly. Then my brainstorm began.

Why is Project management skill still so important to me? I had a critical look at my environment. Unemployment has been a major problem in Nigeria; in fact, statistics from the National Youth Service Corps (NYSC) showed that an average of 1.8million youths has been graduated into the Nigerian labour market as at the year 2011. According to the chairman of the Subsidy Reinvestment and Employment Programme (Sure-P) under the previous administration of President Goodluck Jonathan, not fewer than 40 million people were unemployed in Nigeria as at 2013. These were very alarming figures!

The National Bureau of Statistics shows that unemployment rate in Nigeria had increased to 23.90% in 2011 from 14.60% in 2006, with figures forecasted to have risen to 24.30% by December 2012 and above that by December 2013. Despite a notable change in the political system after the 2015 general elections which promised economic transformation, youth unemployment rate has continued to rise with statistics showing a 24% rise as at July 2016.

The Honorary International Investors Council (HIIC) linked the growing unemployment rate to the rising number of poor skilled workforce in the country, so, it is somehow right to believe that the employment problem in Nigeria is not entirely because there are no job opportunities, but lack of skills to fill the available positions. Then, why don’t we as a nation pay more attention to empowering our youths with skills rather than the exaggerated degree certificates from our tertiary institutions where we consistently produce poorly skilled and unemployable graduates?

I observed as well, that the entrepreneurial attitude of an average Nigerian graduate is very poor; most only consider it an alternative means of living after failing to secure regular paid employment. This is quite unfortunate in a world where many countries like China depend on the growth of SMEs for the development of their nation’s economy; with obvious results there for us all to see.

The reasonable solution would be for the government to improve on its synergy with the various industries in order to build basic education geared towards enhancing the capacity of our workforce for the industrialisation of our economy. We need to develop more job creators than job seekers, more entrepreneurs than employees. There are jobs in Nigeria, available for those who can create them, but they need to be educated on how to identify opportunities and above all how to acquire skills to start-up and manage their ventures.

Professional certifications are good too, but how many certified project management professionals are actually skilled without practical experience? I’ve seen people study vary hard to pass professional examinations mainly for the purpose of seeking new opportunities either in form of new jobs or promotion in their current jobs, but most of the time they lack requisite competence to back up their application. It turns out that these certifications are fast becoming as exaggerated as some of our university degrees and we need to start looking in the direction of proficiency.

Here in Nigeria, we run a capitalist economy, where all means of production like land, labour and capital is freely owned by individuals or organizations and they are at the liberty of using it whichever way they chose to. There also exists economic freedom where individuals or organizations are free to produce what they want and consumers are also free to consume as they want, a system which directly affects demand and supply and also allows people to do whatever kind of job they prefer or invest in any business they so wish. Fortunately for us, our huge population favours local consumption which consequently encourages the profit motive which exists in a capitalist economy like ours. This means entrepreneurs have a big chance of avoiding major loss provided we can manage the dynamics of our business terrain and the competition which is common in this system.

Like Business Development, Economics and Information Technology, Project Management is one of such vital skills which I have always believed can be very valuable to entrepreneurs, but the first hurdle is to address its own challenge which is to “bring affordable Project Management education to Nigerians”. Life itself is a project and we need to begin to see all our endeavors as individual projects which require skills to manage properly. However, in the context of economic development and youth empowerment, we should consider a kind of project management education which stimulates entrepreneurship in the hearts of our youths, thus, making them more of job creators than job seekers.