IMMACULATE CONCEPTION POLYTECHNIC

SENIOR HIGH SCHOOL

Marian Road, Poblacion, Sta. Maria, Bulacan

UNIT 2: BUILDING CUSTOMER LOYALTY THROUGH CUSTOMER SERVICE

Content Standard: The value of customer relations and customer service

Performance Standard: The learners shall be able to…

• develop a program for customer service

Learning Competencies: The learners shall be able to

• define “relationship marketing”

• explain the value of customers.

• identify and describe “relationship development strategies”

• illustrate successful customer service strategy in the Philippine business enterprise

 IMMACULATE CONCEPTION POLYTECHNIC
SENIOR HIGH SCHOOL
Marian Road, Poblacion, Sta. Maria, Bulacan

LESSON 3: RELATIONSHIP MARKETING

OBJECTIVES:

• Define Relationship Marketing

• Enumerate the levels of relationship marketing

• Explain the value of customers

• Discuss the different types of customers

• Identify and describe relationship development strategies

• Illustrate the successful customer service strategy in the Philippine business enterprise.

• Define the meaning of service

• Identify the characteristics of service

• Discuss the components of service marketing

Nature and Concept

• One of the ways for companies to remain competitive is to provides superior customer service.

This in essence is relationship marketing; a company build customer loyalty by making customer

satisfaction its top priority

Relationship Marketing Defined

• Is the process of building and maintaining profitable customer relationship by delivering superior

customer value and satisfaction, thus ensuring brand loyalty?

• A key factor in relationship marketing is customer loyalty (also known as brand loyalty)

Customer loyalty tends to persist despite the actions of the company or changes in the

environment.
 IMMACULATE CONCEPTION POLYTECHNIC
SENIOR HIGH SCHOOL
Marian Road, Poblacion, Sta. Maria, Bulacan

Levels of Relationship Marketing

• Customer loyalty is founded on excellent customer services. The five levels pf relationship

marketing define the levels of interaction between the customer and the company. It is also guide

in improving customer satisfaction

1. Basic Marketing – this is also called “direct sales” and is the most basic level of interaction

between the company and the customer. In basic marketing, a salesperson takes charge of selling

the products or services to customer

2. Reactive Marketing – the transaction moves to a higher level because the salesperson tells the

customer that he or she can be contacted to answer any inquiry about the product or service

3. Accountable Marketing – In this level, the salesperson voluntarily contacts the customer to

ensure that the product is in perfect condition and asks if it met the latter’s expectations.

4. Proactive Marketing – The company works closely with a group of regular customers who

provide constructive feedback for the improvement of the product or services.

5. Partnership Marketing - In the final level, the company has already built a loyal group of

customers who can help in improving its performance and offerings.

 IMMACULATE CONCEPTION POLYTECHNIC
SENIOR HIGH SCHOOL
Marian Road, Poblacion, Sta. Maria, Bulacan

Building Customer Value

• Customer Value is defined as the satisfaction derived from what a customer may experience or

expect to experience by choosing a particular action relative to the cost of that action.

• The action can be a purchase, a visit, an order, or a sign up.

• The cost refers to anything that can be given up receiving the desired product or service, which

can be in the form of money, time, knowledge, data, or others

Levels of Customer Value

• The levels of customer value indicate what the customers expect and do not expect from their

purchase decisions.

1. Basic and expected levels – These levels include the basic requirements of conducting a

business. For instance, restaurants are expected to have a spacious dining area and clean tables

and utensils. If these requirements are not met by the business, it cannot provide high quality

customer value

2. Desired customer Value – This involves what the customers want from the purchase or service

experiences. This is the first opportunity for a business to get ahead of the competition. For

example, a retail shop can provide friendly and helpful staff who can assist the customer in

making the right decision

3. Unanticipated Customer value – It pertains to an unexpected purchase or service experience

that may go beyond what the customer desire. For example, in a gasoline station, the gasoline boy

cleans the car windows after filling up the customer’s gasoline tank without an extra charge.
 IMMACULATE CONCEPTION POLYTECHNIC
SENIOR HIGH SCHOOL
Marian Road, Poblacion, Sta. Maria, Bulacan

Types of Customer
• There are four types of customers based on projected customer retention and loyalty to the brand.
1. Strangers – are customers whose needs do not fit the company’s offerings. The company does
not need to invest and exert effort to win them.
2. Butterflies – as the name implies, are not loyal to a specific brand because they keep on looking
for the best deals which may lead to patronizing other brands. The company can enjoy profits
from these customers only for a short period.
3. True friends – have needs that match the company’s offerings. They make repeat purchases and
patronize the brand so long as it satisfies their needs.
4. Freeloaders – are loyal but not profitable because of the limited fir between their needs and the
company’s offerings. For example, a few customers of a salon patronize its service regularly but
do not generate enough profits to sustain the maintenance costs, it can earn only if it raises the
prices of its services.
Relationship Development Strategies
• Recent research has shown that loyal customers prove to be more profitable than ordinary
customers. This is the reason why companies are challenged to maintain customer loyalty.
• Companies should practice the following relationship development strategies to retain loyal
customers:
1. Communicate with customers frequently and effectively – It is important to always get in
touch with customers through e-mail and social networking sites to sustain brand recall.
2. Offer customer rewards – customer loyalty program, which include special discount, perks, and
freebies, may work week for various types of products and services.
3. Conduct special events and provide sponsorship – companies can hold or sponsor parties,
concerts, contest, and the like to boost interaction among loyal customers and company
representatives
4. Enhance customer service – some companies outsource their customer services to third party
organizations to cater to complaints and inquiries, promote their latest offering, and provide
technical support.
 IMMACULATE CONCEPTION POLYTECHNIC
SENIOR HIGH SCHOOL
Marian Road, Poblacion, Sta. Maria, Bulacan
5. Utilize languages to reach a wider customer base - marketers can create promotional materials
in different languages to cater to specific region.

Customer Service in the Philippine Business Enterprise

• The success of our grown companies lies not just on their offerings but also on their customer
services. Local business now utilizes customer service tools that fir our customer- oriented culture
and extensive technology usage.
• Most companies provide a customer hotline that customer can call for inquiries, concerns and
technical support. For example, customer can call PLDT to ask for assistance regarding their
faulty internet connection. The customer service representative (CSR) can either provide a step-
by-step guide on how to trouble shoot the problem or schedule a visit from a company technician,
depending on the issue at hand.
1. Email and SMS – also helps businesses communicate with their clientele more easily as
most consumers regularly check their inboxes.
2. Social networking sites- aside from their primary function of connecting people, have
become a channel for netizens to ask for customer support. Globe telecom promptly responds
to inquiries and complaints on Facebook and Twitter and redirects the customer to the site’s
private messaging system for further assistance.
3. Live chat support – facilitates a real-time correspondence between the customer and the
company representatives.
 IMMACULATE CONCEPTION POLYTECHNIC
SENIOR HIGH SCHOOL
Marian Road, Poblacion, Sta. Maria, Bulacan

Serviced Defined

• A service is an act that is provided by a party that creates value and provides benefits to the other

party. Organizations that offer services include restaurants, hotels, airlines, banks, schools,

hospitals, telecom companies, among others.

Difference between Goods and Services

Given below are the fundamental differences between physical goods and services:

Goods Services

A physical commodity A process or activity

Tangible Intangible

Homogenous Heterogeneous

Production and distribution are separation from Production, distribution and consumption are

their consumption simultaneous processes

Can be stored Cannot be stored

Transfer of ownership is possible Transfer of ownership is not possible

 IMMACULATE CONCEPTION POLYTECHNIC
SENIOR HIGH SCHOOL
Marian Road, Poblacion, Sta. Maria, Bulacan

Characteristics of Service

1. Intangibility – a service does not have a physical appearance that can be seen, touched and

describe quantitatively.

2. Inseparability – a service involves simultaneous production and consumption, so there is

outright feedback. A haircut is done by the hairstylist and at the same time, done to the

customer.

3. Perishability - a service that cannot be stored or returned.

4. Homogeneous – The service in itself is the same but the way it is provided may differ from

time to time.

Components of service marketing

1. Product and its Elements – There are services that only supplement the main product. The goal

of the marketer is to create a bundle of supplementary services that increases the value of the

main product. For example, a high-quality appliance with superior quality has a higher value if it

comes with free delivery and extended warranty.

2. Time and Place – The channel of distribution is crucial in-service delivery. The service should

be rendered on time and in an appropriate venue or location. For example, fast food restaurants do

not take long in preparing and serving meals as they expected to deliver a speedy service. Also,

these restaurants must be located somewhere accessible and with high foot traffic

3. Process – This is the method of service delivery. Marketers should be able to make the process of

availing and receiving the service convenient for the customers. For example, banks are now

offering online and mobile banking services for clients who want to avoid the long lines in their

branches

4. Quality Service or Productivity – The kind of quality of service provided to a customer cannot

be separated from how the service is rendered. The quality of a service is seen in how a service
 IMMACULATE CONCEPTION POLYTECHNIC
SENIOR HIGH SCHOOL
Marian Road, Poblacion, Sta. Maria, Bulacan
satisfies and meets the needs, wants and expectations of the customer. For example, a courier

designs a wedding gown.

5. PEOPLE OR SERVICE PROVIDERS – The ultimate proof of service quality manifest in the

people who provides the service to the customer. They must be skilled, knowledgeable, friendly,

accommodating, and customer – oriented. For example, the quality of a dining establishment does

not depend on the food or the place alone, the server’s skills and attitude towards the diners are

also taken into account.

6. PROMOTION – Companies must use various means to inform the public about the services and

reach a wider customer base. This may be through word – of – mouth and advertisements.

7. PHYSICAL EVIDENCE – While a service is inherently tangible, there should still be visible

cues that will indicate its quality. For example, a hotel with elegant furnishings and a beautiful

landscape creates an impression of quality service.

8. PRICE – the price of the service depend on its perceived quality. For example, two salons in the

same neighborhood with the same services may have different price points because of many

factors. The first salon may have more sophisticated ambiance and a group of well-known

professional hairstylists so they can charge more; the other one may be an establishment with

simple interiors and self-taught hairdressers, so customers pay less for their services.