Chapter 5 Managing customer relationships
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This document discusses managing customer relationships and customer service. It defines customer service as an ongoing process of managing the buyer-seller interface to ensure continued customer satisfaction. Customer service has three components: pre-transaction, transaction, and post-transaction. It also discusses measuring customer retention rates, identifying causes of customer defection, and implementing corrective actions like improving employee satisfaction to boost retention.
Chapter 5 Managing customer relationships
- 1. CHAPTER 5 MANAGING CUSTOMER RELATIONSHIPS
- 2. CHAPTER OUTLINES CUSTOMER SERVICE : DEFINITION AND ROLE IN RELATIONSHIP MARKETING COMPONENTS OF CUSTOMER SERVICE : PRE-TRANSACTION, TRANSACTION AND POST TRANSACTION MANAGING CUSTOMER RELATIONSHIP AT PRE-TRANSACTION, TRANSACTION AND POST- TRANSACTION STAGE CUSTOMER DEFECTION AND RETENTION STRATEGIES
- 3. CUSTOMER SERVICE The ongoing process of managing the buyer/seller interface to ensure continued customer satisfaction A process which provide time and place utilities for the customer and which involves pre-transaction, transaction and post transaction considerations relating to the exchange process with the customer.
- 4. CONTINUE La Londe and Zinszer (1976) found a range of views existed as to the definition of customer service which included: All the activities required to accept, process, deliver amd build customer orders and follow up on any activity that erred. Timeliness and reliability of getting materials to customers in acordance with a customer's expectation. A complex of activities involving all areas of business whch combine to deliver and invoice the company's products in a fashion that is perceived as satisfactory by the customer and which advances our company's objectives. Timely and accurate delivery of products ordered by customers with accurate follow up and enquiry response including timely delivery of invoice.
- 5. THREE COMPONENTS OF CUSTOMER SERVICE Pre-transaction are service provided to the customer before entering the store. E.g.: information aids such as what kind of product promte today in the board or convenient hours. Transaction are services provided to customers when they are in the store shopping and transacting business. E.g.: use credit card to shopping, gift wrapping and packaging, have god card member no need to go the shop just telephone and made some order and delivery. Post transaction are services provided to customers after they have purchased the merchandise/service. E.g.: complaint handling, merchandise return, merchandise repair, servicing, delivery, post-sale such as follow up.
- 6. THREE COMPONENTS OF CUSTOMER SERVICE
- 7. Customer Retention Customer retention is the process by which an organization identifies and maintains a relationship with prime customer groups. Such relationships should add value to both producer and consumer, the decision to serve being based on a forecast of the economic lifetime value of the consumer to the organization.
- 8. IMPROVING CUSTOMER RETENTION STEP 1 : MEASURING CUSTOMER RETENTION STEP 2 : IDENTIFYING CAUSES OF DEFECTION AND KEY SERVICE ISSUES STEP 3 : CORRECTIVE ACTION TO IMPROVE RETENTION
- 9. CONTINUE Step 1: Measuring customer retention: To improve customer loyalty and profitability. Involves 2 tasks which are measuring customer retention rates and analysing profitablity by segment. Organisations need to anaylse a number of dimensions in detail which include measuring customer retention rates over time, by market segment and in terms of the product or service offered.
- 10. CONTINUE Step 2: Identifying causes of defection and key service issues Identifying the reasons why consumers leave the company. Companies need to identify celarly and understand the root causes of customer defection before they begin to implement a successful customer retention programme. Highly experienced market researchers are often required to undertake this task.
- 11. CONTINUE Step 3: Corrective action to improve retention Plans to improve retention become highly specific to the organisation concerned and any action taken will be particular to the given context. Some key elements include: marshalling top management commitment; ensuring employees are satisfied and dedicated to building long term customer relationships; utilising best practice techniques to improve performance; and developing a plan to implement a customer retention strategy. Many organisationa are reviewing their customer service strategies to find ways to boost retention rates as means of improving their business performance.