Module 2:

Customer Relationship: Customer Service

This module includes the definition of relationship marketing, customer value,

relationship development strategies and successful customer service strategy in the
Philippine business enterprise.

At the end of this module, you will be able to:

a. Define relationship marketing;

b. Explain the value of customers;
c. Identify and describe relationship development strategies; and
d. Illustrate successful customer service strategy in the Philippine business enterprise.

Lesson 1: Relationship Marketing

What you already know?

Today, most organizations turn to view customers as equal partners in the buying and
selling transaction. Through encouraging customers to enter a long-term relationship with
repeat purchases or buy multiple brands at the same time from the firms, marketers are
able to get an apparent understanding of customer needs.
Kick-Start
Take a minute to ask your parents if they
have one of this discount cards or ―suki‖
cards. Prepare a set of questions that will
enable you to know their personal reasons
motivation for availing the card. Conduct a
short/informal interview using your guide
question. Take note of their answers and
share their response in class.

Most likely they will answer that they want to take advantage of the points earned in
every purchased made, thus ensuring to bring the card every time they go out for
shopping or would most likely buy items in stores where they have the card to avail the
points. This is an example of Customer Relationship Management (CRM) strategy the
companies are utilizing right now to build loyalty and keep track of the transactions of
their customers.

1
 D I SC USS I ON

RELATIONSHIP MARKETING DEFINED

Relationship Marketing includes activities aimed at developing and managing
trusting and long-term relationship with larger customers. In relationship marketing,
customer profile, buying patterns, and history of contacts are maintained in a sales
database and an account executive is assigned to one or more major customers to fulfill
their needs and maintain the relationship.
Relationship Marketing is a strategy designed to foster customer loyalty,
interaction and long-term engagement. This customer relationship management (CRM)
strategy focuses more on long-term customer retention than acquiring large numbers of
new potentially single-transaction customers.
Relationship Marketing is designed to develop strong connections with customers
by providing them with information directly suited to their needs and interests and by
promoting open communication. This approach often results in increased word-of-mouth
activity, repeat business and willingness on the customer‘s part to provide information to
the organization.
Relationship marketing is contrast with transactional marketing is an approach
that focuses on increasing the number of individual sales. Traditional transaction
marketing (TM) tended to ignore relationships and relationship building. The company
was viewed as an independent agency always maneuvering to secure the best terms. The
company was ready to switch from one supplier or distributor to another if there was an
immediate advantage. The company assumed that it would normally keep its current
customers, and it spent most of its energy to acquire new customers. The company
neglected the interdependence among its main stakeholders and their roles in affecting
the company‘s success. Most organizations combine elements of both relationship and
transaction marketing strategies.
Relationship marketing (RM) marks a significant paradigm shift in marketing, a
movement from thinking solely in terms of mutual interdependence and cooperation. It
recognizes the importance of various parties such as suppliers, employees, distributors,
dealers, retailers that are cooperating to deliver the best value to the target customers.
Here are the main characteristics of relationship marketing:
1. It focuses on the long-term rather than the short-term.
2. It focuses on partners and customers rather than on the company‘s products.
3. It puts more emphasis on customer retention and growth than on customer
acquisition.
4. It relies on cross-functional teams rather on departmental-level work.
5. It relies more on listening and learning than on talking.

2
 6. Relationship marketing calls for new practices within the 4Ps.
a. Product
- More products are customized to the customers preferences
- New products are developed and designed cooperatively with suppliers
and distributors.

b. Price
- The company will set a price based on the relationship with the customer
and the bundle of features and services ordered by the customer.
- In business-to-business marketing, there is more negotiation because
products are often designed for each customer.

c. Place
- RM favors more direct marketing to the customer, thus reducing the roles
of middlemen.
- RM favors offering alternatives to customers to choose the way they want
to order, pay for, receive, install and even repair the product.

d. Promotion
- RM favors more individual communication and dialogue with customers.
- RM favors more integrated marketing communication to deliver the same
promise and image to the customer.
- RM sets up extranets with large customers to facilitate information
exchange, joint planning, ordering, and payments.

The shift toward relationship marketing does not mean that companies abandon
transaction marketing altogether. Most companies need to operate with a mixture of the
transactional and relational marketing approaches. Companies selling in large consumer
markets practice a greater percentage of TM while companies with a smaller number of
customers practice a higher percentage of Relationship Marketing.

K NO WL E DG E S EL F- C HE CK 1 .1
Why is it important to focus on customer retention and growth
than on customer acquisition?

BENEFITS OF RELATIONSHIP MARKETING

Retaining customers for the long-term offers many benefits. The aim is for the
company to obtain lifetime customers. In the world of business and management, the cost
of retaining a customer is at least eight times lesser as compared to acquiring a new one.

3
Thus, this marketing capitalizes on the same fact and is beneficial to the company in
several ways.
1. Understanding customer characteristics – Relationship marketing helps the
company understand its customer better. The company can segregate its
customers into groups based on their characteristics like purchasing power,
frequency and volume of sales transactions. It also helps the company get
valuable feedback from its customers and understand their needs and
expectations. This subsequently helps in value addition to products and services
based on these demands and leads to happier customers as they get involved into
the value creation process.

2. Delivery and meeting expectations – If the company knows what its customers‘
needs are, it will help reduce wastages due to trial and error methods. When
required product features and specifications are known, it is easier to make
modifications that will please customers and increase sales turnover. It also helps
reduce costs incurred from the research and development process.

3. Repeat business – people would not be interested in getting involved in any

business transaction with a seller who appears rude or indifferent to their needs.
People buying wouldn‘t feel any special need to resist switching sellers if they are
not given an incentive to stay bounded. Here, relationship marketing steps in and
provides a positive reinforcement for them to make a repeat purchase.

4. Prevents negative transition – Trust and loyalty go hand in hand and it is super
beneficial for all business. It will help prevent customers from turning
competitors. Enhancing and maintaining relationship with existing customers will
prevent the tendency of customers to switch to other products/services for a better
offer.

5. Word-of-mouth marketing – A happy customer will always promote business

by telling ten other people about the amazing services or performance received
from a company. They will be excited to recommend the business to other people
around them so they can try it too. Also, research suggests that people are more
motivated to try product/service based on reviews from an existing customer they
know than they will be from persuasion from advertisement. Hence, this
marketing is an effective strategy beyond expensive advertising campaigns that
create product awareness but not to promise a remarkable rise in sales.

6. Increasing customer base – It is no secret that a happy customer will bring in

new ones. In fact, a satisfied customer is 100% more likely to recommend a

4
 product to a prospective customer. Apart from customer referrals, there are
several other ways to increase customer satisfaction by employing methods of
utilizing social networking websites, blogs, informal surveys, benefits on loyalty
cards, timely response to complaints and requests as a constant reminder of its
presence around customers through consistent communication. A company‘s
value equity and retention equity is improved by enhancing customer satisfaction.
This type of marketing benefits, especially, in creation of new customers apart
from maintaining existing ones.

7. Reduced marketing costs – Benefits also include lesser marketing costs and
more value creation. This can be explained by stating the following statistics:
Every 5% increase in customer retention can increase a company‘s annual profits
from at least 25% to as much as 125%, while simultaneously leading to a
reduction of 10% in marketing costs. An existing customer will spend 33% more
than a new customer to buy company‘s product. Most business spends as much as
80% of their budget for marketing expenditure to make new customers.

8. Minimization of customer price sensitivity – a happy customer will be willing

to pay more for a product if there is a guaranteed satisfaction of products and after
sales services attached to the price. Hence, a company will gain repeat business
from its existing customers in the long term even if there is a rise in prices at
which it sells its products and services. However, quotation for a premium price
must come with benefits of value addition. Customer loyalty and satisfaction are
proven major contributors to profit maximization.

9. Identification with the company – The benefits is reaped both by the company
and customers. It helps customers identify more with the company. Staying in
touch with customers makes them feel like they are important to the company. It
will keep customers makes them feel like they are important to the company. It
will keep customers coming in and build brand equity for company in the long
run. Also, familiarity with the company and the fact that it understand its
customer‘s need better due to time period of its association as compared to that
with new company, plays as de-motivators for customers to make a switch.

10. Product market expansion – This one is tricky and most companies fail to
recognize this benefit. The company‘s employees must be ready to deliver beyond
the company‘s boundaries on customer demand. Customers play an important role
in value generation process. They are the ultimate consumers of products, thus
they can help identify potential profitable fields for expansion and diversification.
A company that is willing to venture outside its set boundaries, can constantly
grows with the support of its customers through this marketing.

5
 K NO WL E DG E S EL F- C HE CK 1 .2
Among the benefits mentioned above, what do you think is the most
essential benefits of relationship marketing, defend you answer.

ACTIVITY 4
Direction: Read the article below and answer the following questions under it.

Startup Social Media: Why Relationship Marketing is Essential for

Growing your User Base
By Katie Leimkultler

Source: http://technori.com/2013/02/3118-startup-social-media-why-relationship-marketing-is-
essential-for-growing-your-user-base/

You've finally turned your great idea into an actual startup, and now it's time to
get the word out there about it. Grab your Twitter handle and Facebook page, because
social media will be your best friend while marketing your startup. Here are four things
to think about as you build up your startup's social media presence:
1. Create awareness - A big challenge startups face is proving to investors the impact
and influence of their products or services; this is where social media comes in.
Social media serves as a set of tools to promote your new business and generate interest
from the public. The next step is understanding where your core audience is
located, whether that's Facebook, Linkedln, Twitter, Pinterest, or a number of other
social networks. Developing a solid social media strategy early on (and for cheap)
can be challenging, but having an actual plan in place with measurable goals will
also help you see where you are succeeding and where you need to improve.

2. Spread the word faster - Just a few short years ago, social media didn't exist and
now it's the primary way people receive news and share it. You can reach a
much wider audience with your message, and faster than ever before. Don't miss
out on the opportunity to create a strong social media platform for your
business. This includes sharing great content, joining in on topical conversations,
and constantly engaging with your fans and followers. Looking for a quick way to
connect with possible fans? Join a Twitter Chat, a fast-paced conversation at a certain
time with specific topics.

3. Cultivate relationships - The days of traditional marketing, such as running ads,

commercials, and other one-way forms of promotion are rapidly fading because the
rise of relationship marketing is taking a front seat. Relationship marketing
means reaching out to your customer base and keeping them engaged not
only with your products and services, but through your online content and
community. Most people believe that they can create a huge network of
Facebook or Twitter followers overnight, but the truth is it takes time. Cultivating
relationships with fans, early adopters, companies, promoters, and key influencers

6
 in your industry is the first step in generating buzz about your new startup, and this
needs to happen on daily basis. And this isn't just about tweeting out links when
you have a new blog post up; more than that, it's all about engagement. This
means promoting other startups, new products, and interesting articles that would
be relevant to your followers. A huge part of relationship marketing is listening
and monitoring your social media channels and responding accordingly. What are
you customers saying? What do they want? There is no better way to get
someone to test a beta version of your product than with a quick tweet to a
member of your core audience. Not only will they offer invaluable feedback, but
they will be flattered that you chose them. It's a great way to get fans and
followers involved early on.

4. Crisis control - Social media has changed the way people interact with
companies and the days of solving customer's problems behind close doors are
long gone. What makes most companies with extraordinary social media presence
stand out is how they continually interact online, as well as the way they respond
and address customer complaints. A great example of a social media crisis that
could have been avoided was when United passenger Dave Carroll's guitar broke
when baggage handlers tossed it carelessly onto the baggage cart. Carroll
repeatedly contacted United customer service for a year to no avail. United refused
to pay or replace the guitar. So, Dave did what any aspiring musician would do—he
made a YouTube video called "United Breaks Guitars." The video went viral and now
has been viewed over 12 million times. And just how did United react? They didn't.
Responses on Twitter were barely recognizable apologies, and the company's stock
plummeted. They had no crisis strategy in place and didn't react quickly enough
to solve the problem. But unlike United, Taylor Guitars took a proactive social
media approach by not only giving Carroll a free replacement guitar, but also by
creating a video on tips for traveling with a guitar.

In the startup phase, it's absolutely essential to keep generating buzz about your
company and finding the people who'll be your biggest supporters. Developing and
implementing a social media strategy is the key to connecting and building those
relationships.

Questions:
1. Do you believe that using social media could help in connecting and building
relationships with customers? Defend your answer.
2. How do social media support relationship marketing for a business? Discuss.
3. Where else aside from social media can you market a product/ service? Mention
them and explain briefly.

7
 Lesson 2: Customer Value

What you already know?

Customers now have an overwhelming abundance of choice. They are accustomed to
competition, and the fragmentation of the market because of the choices this provides.
They have high expectations and little loyalty to spare if they are not met. Today it is a
buyers‘ market.
This means that companies must try even harder to create and communicate value in
everything they do. To do that, they have to understand what value really is, and more
importantly, what is not.
Kick-Start
Identify how each of the following
consumers perceives value, based on
their statements listed below. You
should note that the perception of
value varies across most of these
consumers.
For each consumer statement, in this
activity, identify how each of the
following consumers perceives value.
(For example, value = low price, or
value = good service, and so on. Share
your observation in class.
Consumer Statements
“I drive a BMW. Why? Because I always want the best, that’s important to me. I usually
buy high quality products.”
“I also drive a BMW, but I don’t really care about the car – I just want to show my
family, friends and neighbours how well I’m doing in life.”
“I like going to McDonald’s – it’s such great value – sure, the food isn’t that great, but
you get a lot for your money.”
“I’m happy to pay PhP5, 000.00 for a pair of shoes – because they last for years. I really
can’t understand people who buy a PhP300.00 pair of shoes every six months.”
“I always buy my families clothes from either Target or Walmart (discount stores). Look,
a shirt’s a shirt – why pay more that you have to!”

8
“I won’t shop at those stores; they are much cluttered and too busy. I prefer to shop at
specialist clothing stores. They are quieter, they are much nicer to be in, and you can
take your time and comfortably try on clothes.”
“I still shop at the local butchers, rather than going to the big supermarkets. Sure, it’s a
bit more expensive, but the butchers are always friendly, you can have a laugh, and they
even tell you how to cook the meat if you’re not sure about it.”
“I switched my loan from one of the big banks to a credit union. It’s going to cost me a
little bit more, but I know that I can trust them, I’m not sure about the banks anymore.”
Customer value varies among all customers and entirely dependent on consumer
perspective moreover it encompasses the total experience of the customer regarding the
organization, its products and services, purchase and post-purchase services and customer
support, as well as the overall impact of the interaction between consumer and product,
the benefits conferred and how these affect well-being and are perceived by influential
others.

D I SC USS I ON

CUSTOMER VALUE DEFINED

People make buying decisions every day. In every decision, a consumer

asks the same question about the worth they will receive and the worth they will give
up in order to get a certain product. The gain the consumer received for the benefit is
weighed against the cost the consumer receives for the benefit. The value the
individual consumer places on a product or service becomes the customer value for
that offering.
Customer value is a relationship between benefits and the costs including money,
stress and time to sacrifice that is necessary to get the benefits or simply stated in a
mathematical equation: Benefits – Cost = Customer Value.
Customer value is not simply about high quality. It is not also about pricing alone.
Customer value products and services that are of quality they expect and that are sold
at prices they are able and willing to pay.
In essence, customer value entails extraordinary delivery of four value-points or
components known also as SQIP:
1. Service – the intangible value offered to customers
2. Quality – customer‘s perception of how well a company‘s products and services
meet expectations.
3. Image – customer‘s reception of the company or business they interact with

9
 4. Price – the price a company can command for its products and services and its
customers are able and willing to pay.

Each of these four components contributes to customer‘s perception of value or

definition of value and affects their levels of dissatisfaction or satisfaction with a product,
service, or business. Thus in order to design and deliver superior customer value, each of
these components must be treated with equal attention and importance. Service, quality,
image and price are what constitute customer value in terms of conferred benefits,
meeting customers‘ needs, wants, and expectations, and hence affecting and determining
customer satisfaction, company performance, market share, competitive advantage,
profits, revenue, market position, brand loyalty, and ultimately company success and
survival. Basically, everything that a company does ultimately funnels into customer
value and this translates into the bottom line that it is so important to measuring and
defining business success in the globally competitive economy of the 21 st century.
The prices of the products and services depend highly on the service quality, the
quality of products and services being offered, the image of the company and the benefits
that the products and services bring to consumers. Organizations must remember that
consumers are limitless and delighted in their need and desire for value for their money.
Consumers want to experience the joy of every hard-earned peso they spend on products
and services and companies must understand that this is a basic idea in their approach to
meeting customer needs and wants.
This customer value is weighed against the customer values assigned for similar
products and services that provide a similar benefit. Consumers will typically purchase
the item with highest customer value among all offerings in the marketplace.
Every consumer has a unique set of needs and resources, so no two consumers
will place the same customer value on the same product or service. The highest-quality
product or service does not always provide the highest customer value, since the benefit
of each item is measure against the cost. Some consumers are willing to pay high price
for a quality product or high level of service, but others will make the decision that the
same benefits ―are not worth the price‖.

KNO WLEDGE SELF -CH ECK 2.1

How will companies ensure the extraordinary delivery of the four value-points
or components of customer value?

DELIVERING CUSTOMER VALUE

Customers are the lifeblood of all business. They are the source of current profits
and the foundation of the future growth. There are three ways a company can establish
customer value to its customer base:

10
 1. Provide consumer with the best cost – Companies can choose to focus their
efforts on providing a reliable product at a reasonable price. The low price helps
to increase the value of their offering to their consumers even if it is weighed
against a low benefit. For instance, a person might place a high customer value in
a meal at McDonald‘s restaurant because he knows he will receive a consistent,
satisfactory meal at a low price.

2. Provide the consumer with the best product – Companies that offer top quality
products increase the customer value of their offerings to their consumers by
providing a high benefit which exceeds the high cost. Lexus, for instance, makes a
luxury car that many consumers consider to be top quality. Lexus, along with
other luxury car manufacturers, is able to charge a premium price for their cars,
since they consistently produce cars of high quality in the minds of their
consumers.

3. Provide the consumers with best service – Companies that provide a high level
of service to their consumer increase the customer value of their services by
providing a high benefit which exceeds the cost for many consumers. Consumers
who buy from these companies are willing to pay more to be treated with
exceptional service. The retailer Nordstorm, for instance, has legendary customer
service that unmatched in the retail industry. Nordstorm employees are provided
great lengths in order to keep existing customer happy and forge relationships
with new customers. The company gives employees the autonomy to make their
own decisions instead of having to send questions up to ubiquitous corporate
flagpole.

IMPORTANCE OF CUSTOMER VALUE

The strategic and overall importance of customer value can be summarized in ten
salient points made by Professor Art Weinstein in his book, Superior Customer Value:
Strategies for Winning and Retaining Customers (Third Edition, 2012):
1. Designing and providing superior customer value are the keys to successful
business strategy in the 21st century.
2. Value reigns supreme in today‘s marketplace and market-space.
3. Customers will not pay more than a product is worth and will reward excellence
4. A customer-centric culture provides focus and direction for the organization,
ensuring the exceptional value will be offered to customers.
5. Designing and delivering superior customer value propels organizations to market
leadership positions in today‘s highly competitive global markets – absolute
advantage.
6. Providing outstanding customer value has become a mandate for management.

11
 7. In choice-filled arenas, the balance of powers has shifted from companies to
value-seeking customers.
8. Managing customer value is even more critical to organizations in the new service
and information-based economy.
9. Firms not providing adequate value to customers will struggle or disappear –
customer value is a key ingredient in building competitive advantage.
10. Today‘s customer are quite smart and sophisticated and are looking for companies
that:
a. create maximum value for them based on their needs and wants, and
b. demonstrate that they value their business.

CREATING MORE CUSTOMER VALUE

With great importance of customer value in marketing, companies must think
about ways to improve customer value to grow their business. Here are steps a company
can pursue:
1. Understand what drives value to customers – Talk to them, survey them, and
watch their actions and reactions. In short, capture data to understand what is
important to customers and what opportunities the company has to help them.

2. Understand value proposition – The value customers receive is equal to the

benefits of a product or service minus its costs. What value does the company
product or service create for them? What does it cost them – in terms of price plus
any ancillary costs of ownership or usage (like how much of their time they have
to devote to buying or using the product or service?)

3. Identify the customer and segments where the company can create more value
relative to competitors – Different customers will have varying perceptions of
value relative to competitors, based on geographic proximity, for instance, or a
product attribute that one segment may find particularly attractive.

4. Create a win-win price – Set a price that makes it clear that customers are
receiving value but also maximizes the ‗take‖ of the company. Satisfied
customers that perceive a lot of value in the company‘s offering are usually
willing to pay more, while unsatisfied customer will leave, even at low price.
Using ―cost-plus‖ pricing (pricing at some fixed multiple product costs) often
results in giving away margin unnecessary to some customers while losing
incremental profits from others.

5. Focus investments on the most valuable customers – Disproportionately allocate

sales force, marketing pesos, and R&D investments toward the customers and

12
 segments that the company can best serve and will provide the greatest value in
return. Also, allocate growth capital toward new products and solutions that serve
best customer or can attract more customers that are similar to those best
customers.

KNO WLEDGE SELF -CH ECK 2. 2

Discuss how companies can establish customer value to its customer base.

ACTIVITY 5
Direction: Read the article below and answer the following questions under it.

Nordstrom Customer Service Tales not Just Legend

By Christian Conte

Source: http://www.bizjournals.com/jacksonville/blog/retail_radar/2012/09/nordstrom-tales-of-
legendary-customer.html

Nordstrom Inc.'s customer service is considered legendary, and there are plenty of
tales to back that up.
During my research of the company I heard a story about a member of the
housekeeping staff at a store in Connecticut who discovered a customer's bags, along
with her receipt and a flight itinerary, in the parking lot.
Noticing that the customer had likely left directly from the store to catch her flight
at John F. Kennedy International Airport in New York, he looked up her phone number
in the company's system and tried to call her several times as he drove to the airport with
her bags.
When she didn't answer her phone after he got to the airport, the employee had
the airport page her to let her know he had her bags.
Erik Nordstrom, president of stores at Nordstrom, recounted that tale during the
company's most recent annual meeting in July.
One of the most well-known Nordstrom customer service stories, however, is
about a man who went -into the Nordstrom in Anchorage, Alaska, to return a set of tires.
Nordstrom, an upscale retailer that sells mostly apparel, shoes and accessories, does not
sell tires. The customer bought the tires at the store that occupied the same space prior to
Nordstrom moving in.
Still, after some discussion, the Nordstrom store manager decided to allow the
customer to return the tires there.

13
 One of the people who told me the tires story said he really wasn't sure it was
true, but thought it illustrates the great lengths that Nordstrom employees are willing to
go to keep existing customers happy and forge relationships with new customers.
Nordstrom spokesman Colin Johnson said both stories are true, and are
examples of how the company gives employees the autonomy to make their own
decisions instead of having to send questions up the ubiquitous corporate flagpole.

Forester Research Inc. Principal Analyst Kate Leggett said the company's
legendary customer service efforts are much more than tales - they really boil down
to a great business strategy.
"They really treat it as a way to influence the top line," Leggett said of the
company. "It helps with the repurchase rates and recommendations."
Questions:
1. In these stories about Nordstrom Inc., what- could be the benefits for the
company that the staff have in mind? Discuss.

2. How will you relate customer value out of these stories mentioned? Explain.

3. If you are the staff who returned the baggage to the customer in the airport or
the store manager who allows a customer to return the tire that is not even sold in
the store, will you apply the same principle of customer value? Why? Why not?
Defend your answer.

14
 Lesson 3: Customer Relationship Development Strategies

What you already know?

When it comes to increasing profits, it‘s tempting to concentrate on making new
sales or pursuing bigger accounts. But attention to existing customers, no matter how
small they are, is essential to keeping business thriving. The secret to repeat business is
following up in a way that has a positive effect on the customer.
Kick-Start

Search for Philippine base companies who

are practicing Customer Relationship
Management (CRM) and prepare a power
point presentation that includes images and
descriptions of the CRM strategies that
they are doing. Share your work in class.

D I SC USS I ON

BENEFITS OF DEVELOPING CUSTOMER RELATIONSHIP

Customer relationship is a marketing approach that focuses on creating an on-
going and long-term relationship with customers. It is geared toward building a nurturing
strong customer connections and affiliations, rather than pushing sales or purchases.
Building a strong customer relationship is not a rocket science. All a company
needs to do is to take into consideration the little things that matters. Creating long lasting
relationships helps to ensure long-lasting customers and repeat sales.
Customers want to know that they are valued and appreciated as an individual.
Showing existing customers that value and appreciation encourages them to refer their
colleagues, friends, and others to the business. So armed with customer relationship
strategies, a company can build a strong customer relationship and out-perform the
giants.

15
Some of the benefits in developing and implementing customer relationship strategies are
the following:
1. Consistent customer experience – Organizations that are aligned across all touch
points seamlessly share information and work together to ensure customer‘s needs
are addressed with minimum effort. This is particularly important when consumer
is experiencing challenges with the product or service. Quickly resolving issues
builds trusts and it can improve customer satisfaction.

2. Customer feedback – When the organization‘s culture facilitates open

communication and cooperation, consumer concerns, complaints and
compliments can quickly be addressed. By paying careful attention to positive and
negative trends, organizations can use this feedback to make appropriate
adjustments to product or service offerings, ensuring customer satisfaction.

3. Customer profitability – Relevant communications and offers motivate

consumers to use the full complement of product and service offerings. Because
consumers understand the benefits of the offerings, they are typically more
compliant and they remain customers for longer period of time.

4. Customer advocates – Consumers who are pleases and enjoy a consistent

experience increasingly share this information with each other. Increasingly
consumers are turning to each other for suggestions and recommendations. Make
it easy for customers to share their experience, but first make sure they have a
consistently good experience.

5. Innovation – Organizations like Starbucks through MyStarbucksIdea.com invite

their customers to provide ideas. Consumers are allowed to share, vote and
discuss each other‘s‘ idea. Most important, they are kept appraised of the status of
ideas. There are other ways organizations can invite consumers to share ideas and
insights.

STRATEGIES IN DEVELOPING CUSTOMER RELATIONSHIP

Customers are known to be indecisive but they are all looking for something in
common, ―value at a fair price‖. Customers are looking for solutions to their problem and
how do companies know their problems when they have no relationship with them.
Customers value relationship a lot, they are always looking for someone to discuss their
problems with and this is where the company comes in.
1. Make every customer interaction count - The first strategy to build a strong
customer relationship is to make every customer interaction count. Don't take
a single customer for granted. Each and every interaction with a customer is

16
 a gift and should be valued. An interaction can be achieved by se tting up a
focus group made up of loyal customers. A focus group can be a vital tool to
getting into the mind of customers and knowing their needs.

2. Follow-through on commitments and claims about products or services - A

business must make a specific promise to the customer and deliver on that
promise if it intends to win the heart of the customer. False claims however
should be avoided at all cost as it can harm the company's credibility.

3. Develop employees - Customers appreciate service from well-trained and friendly

customer service staff. Take the time consistently to develop the customer service
team and there will be a direct chain reaction that affects customers.

4. Offer benefits and product value that responds to the customer's desires -
Another positive step to building a strong customer relationship is to offer value
to the customer. Go all out to let customers know that the company is a stickler
for quality.

5. Treat customers as individuals who are respected and valued - All businesses
know how hard it is to find one good customer. Companies must also know that it
cost more to find a new customer than to take care of existing ones.

6. Listen to customers - Even complaints can be a gift if handled properly and

quickly. Be available and accessible when customers have questions, concerns, or
comments. Humans always look for someone to talk to or share their problems
with. If companies can listen more to their customers, they will end up knotting
the bond between the customer and their business.

7. Build a strong brand identity - Make it easy for customers to identify ones
business or products in the midst of the crowd. Create a winning slogan, tagged
with a catchy logo and a unique theme. Most important, make a specific promise
and deliver on that promise.

8. Surround customers with valuable information by using emails, website

content, social media, and other methods of outreach but do not be invasive -
Keep them informed on the latest trend, price or development. Companies must
also make it easy for customers to reach them; if possible, be their next door
neighbour. For best results, it's important to communicate frequently and vary the
types of messages being sent. Instead of a constant barrage of promotions,
sprinkle in helpful newsletters or softer-sell messages. The exact frequency
depends on the industry and even seasonality, but for many types of businesses,

17
 it's possible to combine e-mail, direct mail, phone contact and face-to-face
communication to keep prospects moving through the sales cycle without burning
out on any message.

9. The business must have a website - If the company has none, then it's time to get
one. If it has it should consider making its website user-friendly and easy to
navigate for new and existing customers. The World Wide Web is making it
easier for businesses to build a strong customer relationship with their
customers. Every business should take advantage of it.

10. Reward loyal customers — This is a point that can never be over emphasized.
Most businesses go after new customers while forgetting that the existing
customers need to be taken care of. Introducing a loyalty program is a very
effective relationship marketing strategy. Customer loyalty or reward programs
work well for many types of businesses, from retail to cruise and travel. The most
effective programs offer graduated rewards, so the more customers spend, the
more they earn. This rewards the best, most profitable clients or customers and
cuts down on low-value price switcher-customers who switch from program to
program to get entry-level rewards. Whenever possible, offer in-kind rewards that
remind customers of one's company and its products or services.

11. Nothing strengthens a bond more than appreciation — Thanking customers for
sticking to the company's brand will go a long way to make them know they are
important. A simple "thank you" package might be all the business needs to
connect personally with existing customers.

12. Create a blog about the business where discussion is more casual and inviting
— Blogging is a trend that has come to stay. Almost all businesses today maintain
a blog. A blog is a powerful communication tool that can help a company stays in
touch with its customers. A blog improves customer relationship process and can
be a tool to obtaining instantaneous feedback from customers.

KNO WLEDGE SELF -CH ECK 3.1

How important is listening to customers in the success of relationship marketing

strategies?

18
CUSTOMER SERVICE STRATEGY DEFINED
Customer service is the act of taking care of the customer's needs by providing
and delivering professional, helpful, high quality service and assistance before, during,
and after the customer's requirements are met.
A customer service strategy consists of the following elements:
1. A vision for customer service - Communicating the customer service vision is an
important first step in service strategy. Employees need to understand their role in
meeting the needs of customers and how their work contributes to the vision. It is
easy to recognize businesses that are strong in service and those that aren't.
Service training is the key to a great customer service experience.

2. Assessing customer needs - It is important to find out what the customer needs
and expects. There are several approaches to soliciting customer feedback. It can
be done by using customer comment cards, satisfaction surveys or focus groups.
Each method can be used to acquire feedback that can then be used to develop a
plan that strives to exceed customer expectations. Customer expectations change
at a rapid pace and many organizations fall short when they think they know what
the customer wants without asking them. Unfortunately, some businesses waste a
lot of time and money developing products and services that don't meet customer
expectations. Successful organizations have learned to find out what the customer
wants and to develop products and services that meet those expectations. It is also
important to remember that customer expectations are a moving target and what a
customer wants today could be very different tomorrow.

3. Hiring for service - Successful organizations have figured out how to hire
service-oriented employees. This is done by screening potential candidates that
have a natural tendency for service. Technical skills can be taught but personality
and attitude cannot. Therefore, not every employee should be interacting with
customers.

4. Organizational goals for customer service - Customer satisfaction should be

measured against identified customer needs. There should be measurable
customer satisfaction goals, and employees should be aware of those goals so they
can help the organization achieve its service objective.

5. Customer service training - Every business should develop customized employee

training that expresses the organization's approach to service. This should be
practical teaching that demonstrates how the employee is expected to respond in
all service interactions. This would include how to answer the telephone, respond
to complaints, fulfil a customer need or provide a basic service recovery. Much of
19
 this can be spelled out with defined customer service standards that dictate basic
employee behavior.

6. Employee accountability - Employees should be held accountable for the

organization's customer satisfaction goals. Achieving these goals should be a
cultural norm that is incorporated into the performance management process. It is
imperative that all employees understand the part they play and the responsibility
they have for helping to achieve the organization's overall customer satisfaction
goals.

7. Rewarding good service - Strong service behaviors are reinforced through a

defined reward and recognition system. This ensures that employees receive
positive feedback when they exhibit the desired customer service behaviors.

Any successful organization understands the importance of a strong service culture.

This is accomplished by creating systems and processes that help to identify who the
customers are and what the customers want, and developing strategies to achieve those
expectations.

KNO WLEDGE SELF -CH ECK 3.2

In your own words, discuss the elements of customer service strategy.

THE SUKI SYSTEM IN THE PHILIPPINES

The "suki" system is a system of patronage in which a customer regularly buys their
merchandise from a certain client. In the merchandising business, Filipinos often buy
from specific suppliers who will grant their customers reduced prices, good quality and
credit as well. These factors are the usual components of becoming a "suki." The
existence of trust and the development of friendship between the two parties is a crucial
aspect in the establishment of an economic exchange relationship. In some instances,
regular patrons of restaurants, small neighbourhood retail shops and tailoring shops
receive special treatment in return for their patronage.
Suki is basically a partner system of doing business in the Philippines, wherein a
customer buys certain products from a particular vendor, who in turn offers discounts and
other perks for such exclusivity. Filipinos use the word suki to refer to both buyers and
sellers, indicating their equal roles and obligations in an eponymous relationship.
In the Philippine suki system, however, the commitment between buyer and seller
goes even further. Though the relationship seems informal, it can be as binding as a
formal contract, complete with personal and social clauses. This contractual aspect of

20
suki may be traced to its original purpose as a kind of credit check between vendor and
customer. If the customer proves to be loyal and dependable, the vendor may feel
protected enough to broaden credit or defer payment. In turn, buyers with limited means
expect that their loyalty will result in the best prices and products to stretch each peso.
Developing and maintaining this level of trust is not taken lightly.
For that matter, establishing suki in the first place is no mean feat. Given its unwritten
and, for the most part, unspoken terms, initiating the relationship is a vague process that
is part mating dance and part intuition. Simply declaring oneself a suki is not enough, a
buyer or seller first needs to demonstrate his commitment. In order to establish suki
relationship with a local produce vendor, the buyer has to purchase items several times in
a row, making sure to greet the seller before shopping, asking for the seller's
recommendations, and complimenting any offerings. Becoming a suki can be done
without ever uttering the word.
Responsibility for maintaining this mutually beneficial relationship falls equally on
both sides. Sellers are expected to offer lower prices than those quoted to walk-by
shoppers or to add a little something extra or "dagdag".
Customers reciprocate with more than just their exclusive patronage but also through
referrals to friends and relatives. Such word of mouth advertising is indispensable to
small business operators who have limited marketing opportunities and are constantly
looking to add to their regular clientele, which represents a sizable chunk of business.
Trust and friendship are key elements in suki. A strong sense of trust that each party
is dealing fairly with the other means that bargaining, usually a common practice at the
Filipino street market is minimal, if not entirely eliminated. Even if a regular customer
doesn't buy on a particular day, stopping by the vendor's booth for a quick chat helps to
reinforce the personal connection.
While invoking the word suki wasn't necessary to establish an understanding with a
vendor, it does help to remind both parties of an existing relationship. A regular customer
who finds oneself crowded out of a popular stall may call out 'Suki!' to make sure he's not
ignored. Similarly, sellers may greet a passing client as suki, perhaps as a subtle
indication that he has not been buying recently. Although suki is first and foremost an
economic alliance, the need for a high level of trust means that personal connections
made are not easily dissolved.

CUSTOMER SERVICE STRATEGY IN THE PHILIPPINES

In the Philippines just like in other parts of the world, the "you-scratch-my-back-I'll-
scratch-yours" concept is a cornerstone of modern marketing, with large companies from
airlines and hotels to supermarkets and coffee shops offering reward programs in
exchange for customer loyalty.

21
 Loyalty and rewards programs is already been a proven method of increasing
business profits. Most of the Philippine businesses invest on this customer service
strategy.
1. Cebu Pacific - By continuing their
strategy of "unbundled fares" and cutting out
frills, like in-flight food service, the low-cost
carrier (LCC) is able to offer tickets at, a
lower price and appeal to the price-sensitive
Philippine market. Regular customers can be
members of GetGo, CEB's newest lifestyle
rewards program. They can earn GetGo
points when flying with Cebu Pacific. Their GetGo points can earn them free
flights. GetGo encourages members to Get Points and Go Places.

2. Starbucks - Starbucks, the goliath of coffee, has

made a name for itself with its customer service.
For good or bad, its strategy has helped the
company become recognized the world over. In
Starbucks Reward campaign, loyalty holders
need to earn stars. This can be achieved only by
buying their products with their loyalty cards.
More claimed rewards; higher level of rewards
can be received. Enjoying coffee to have more
of it is the essence of the program. Below are
three takeaways on how Starbucks' customer service strategy can be applied to
any brand:

a. Meet customers where they want to be met - Find the white space and where
audience is reaching out and put emphasis on that platform. Overall, Starbucks
has 35 million likes on its Facebook page, 8 million followers on Twitter and 4.8
million followers on Instagram. Starbucks is constantly reaching out to its
customers on these platforms for feedback and engaging in conversation.

b. Think mobile, mobile, mobile - It's not surprising that 18 percent of Starbucks
Card transactions come through its mobile app. Consumers spend more time
today connecting on their phone than on any other device. It's important to tailor
mobile experience to audience.

c. Focus on personalization - Starbucks recognizes that it's not just about the
product, it's also about the experience. Each Starbucks location has the same look
and feel, yet is personalized to the geographic area. Baristas serve coffee to
customers by name. And if it isn't exactly what has been ordered, they make sure
to correct it and ask how they can make the customer's experience better. Just
22
recently, Starbucks announced a deal with. Spotify where employees will make
personalized playlists for each store location.

3. Globe Telecom - Globe was

awarded Best Customer Experience
for its innovative customer service
program that harnesses the power of
social media. Globe launched a social
media strategy geared at significantly
changing the way the company
provides customer service through
social networking site Twitter in a manner that is engaging, meaningful, and
personal. This strategy created an avenue for honest and sincere communication,
enabling the brand to proactively build lasting relationships with customers
through their social networks.

Globe Blue is the newest tier in the Globe Rewards membership portfolio
that will reward mid-value customers with special perks and top-notch after-sales
service. In order to qualify for a Globe Blue membership, post-paid subscribers
should have a monthly service fee (MSF) or actual usage spend of at least P2,000
to P3,499 monthly. Members will also enjoy seasonal treats like free movies,
special offers from partner merchants for travel, dining, and other lifestyle
establishments throughout their membership year.

4. Shoe Mart - SM is the

Philippines' leader in the retail
industry. For the last 50 years, it has
been committed in providing quality
products and services at reasonable
prices and to meet the ever-changing
needs of its customers in a responsible
and responsive manner. Its chain of Department Stores spans from Luzon, to
Visayas and Mindanao. Mr. Henry Sy, Sr.'s innovative approach to customer
service helped build a highly recognized brand which, in turn, enabled Shoemart
to grow and evolve into a full service department store; hence, changing its brand
name into the more simple and appropriate SM. Always aiming to make life better
for his customers, Mr. Sy expanded his merchandise to fulfill his commitment to
offer a one-stop shopping experience. SM's tagline, "We've Got It All For You"
has become a guiding principle for the level of service that SM lives up to until

23
 today and has helped transform it into a household name. Over the last 55 years,
SM has developed generations of loyal customers, many of whom still fondly call
the store Shoemart.

5. Bank of the Philippine Island - BPI has

continued the tradition of excellence and
customer service through its products and
services that makes the lives of both internal
and external customers easy. Products such
as Easy Saver Program, Ka-Negosyo and
BPI Globe Banko have extended banking services and expertise to the lower end
of the spectrum. BPI has been an advocate of financial literacy to support business
goals and strategy. Apart from these, literacy programs have also been started to
give better access to financial advice and solutions.

KNO WLEDGE SELF -CH ECK 3.3

What makes “suki” system beneficial to both customers and businesses?

ACTIVITY 6
Direction: Read the article below and answer the following questions under it.

The Rolling Stones-50 Years of CRM Satisfaction

By David Sims

Source: http://www.crmsearch.com/rolling-stones-satisfaction.php

Precious few organizations in any field of endeavor have succeeded like The
Rolling Stones. Sometimes termed "The World's Greatest Rock 'n' Roll Band," at least
ever since The Beatles broke up in 1970, they're celebrating their 50th anniversary this
week.

How does a band stay on top or even together for so long? The only comparable
rock act for longevity is The Beach Boys, also in a 50th anniversary year, but who was a
band in name only for large chunks of those 50 years.

The answer: By giving customers what Mick Jagger lamented not being able to
get himself -satisfaction.

In truth, the Stones are a case study in good, solid CRM best practices, and have
the customer loyalty to show for it. Consider their model.

24
 Maintain The Integrity Of Your Brand Identity. The Stones rank in the customer
loyalty stratosphere with Levi's, Apple, Harley-Davidson, Coca-Cola and Google because
their customers have faith in their brand identity, and can buy Stones albums and tickets
secure in the knowledge that they'll get what they're expecting.

The Stones have maintained their core sound over 50 years. Not to say all the
music the Stones have made sourids the same, it all has the same sound. They have
excelled in maintaining their brand identity of a driving hard blues rhythm guitar-based
sound coupled with Jagger's distinctive vocals, whether they're doing country, R&B,
dance or other styles: It's always going to sound like the Stones with little deviation.

Offer Customers Consistency. In the late 1960s and early 1970s the Stones just
might have been the greatest rock 'n' roll band in the world. Those days are long past, but
Stones albums still sell millions and concerts sell out because the Stones are consummate
professionals-they simply never give their customers an unlistenable album or a truly bad
concert. Some are better than others, naturally, but there's no embarrassing deck in the
Stones catalogue, and there is no other rock act of comparable duration who can make
that claim - certainly not fellow 50-year veterans Bob Dylan and The Beach Boys, who
each have cover-your-ears bad albums. A Stones record or show may be uninspired to
some, but it will nonetheless be a professional, acceptable product.

Correct Customer-Facing Mistakes ASAP. The one glaring Stones customer-

facing mistake, Their Satanic Majesties' Request, made in 1967 as an experiment in
psychedelia, was the first Stones album to be largely rejected by their customers. The
Stones listened. Their very next album, 1968's Beggar's Banquet, was a return to Stones
roots and by far the finest one they'd made to that point. Any CRM expert would
recognize it as a big apology to their customers for Satanic Majesties and a renewed
effort to focus on their core competency-blues rock.

Adopt New Technology For The Right Reasons, Not "Just Because." One of the
most consistently maddening mistakes companies make is buying CRM technology or
adopting what works for someone else just because it works well for someone else. This
approach never works. It doesn't for rock bands either.

Many rock bands will incorporate the latest musical fads into their music for no
better reason than the desire to "stay current," or cash in on a hot marketing trend. When
the Stones use new instruments or recording techniques it's in the service of giving their
customers the Stones' sound. The leftover psychedelia of using the London Bach Choir
on "You Can't Always Get What You Want" or the then-trendy sitar on "Paint It, Black"
still gave customers consistent Stones experiences. They didn't change their
organizational goals or processes to accommodate new technology and practices, they
used new elements to further their predetermined organizational goals to meet customer
expectations.

25
 Incidentally, this is the mistake The Beatles made with Indian music, particularly
"Within You, Without You": It just didn't sound like The Beatles, and George was told
not to bring his sitar to work.

Focus On Meeting Customer Expectations. Any band would much rather play
their new music in concert instead of old hits. Some acts -David Bowie, R.E.M.-like to
"challenge" customer expectations in concert. The Stones do not. Mick Jagger once
explained that the band gets together before a tour, decides what songs a customer needs
to hear to have a genuine Rolling Stones concert experience-"Jumping Jack Flash,"
"Brown Sugar," "Start Me Up," et al - and plays them to meet customers' expectations for
their interaction with the brand.

Questions:
1. Do you believe that a band like Rolling Stone band should establish its customer
relationship? Defend your answer.
2. How does a band link the Rolling Stone make use of customer relationship?
Discuss.
3. If you are a member of popular band like the Rolling Stone, what are the ways
that you will utilize to make your band lasts long? Explain.

References:
Serrano, AC. (2016). Principles of Marketing
https://www.greatideasforteachingmarketing.com/what-is-customer-value/

26