Relationship

Management
Nilesh Joglekar
 What is a Relationship?
A relationship consists of episodes between
dyadic parties over time
 What is a Relationship?
Episodes are time-bound and nameable
Examples of episodes
Placing an order
Raising a query
Playing a round of gol
What is a relationship?
Two key features of well developed relationships
Trust is focussed

Trust is shown in the other partys ..

Benevolence Honesty Competence.

A belief that one party A belief that the other
will act in the interests A belief that the other party has the necessary
of the other. party will be credible. expertise.
Relational consequences of
commitment
Commitment arises from
Relational consequences of
commitment
Commitment motivates partners to co-
operate in order to preserve relationship
investments.
Relational consequences of
commitment
Commitment means partners pass over short-
term alternatives in favour of more stable, long-
term benefits associated with current partners.
Relational consequences of
commitment
Where customers have choice, they make
commitments only to trustworthy vendors,
because commitment entails vulnerability, leaving
them open to opportunism.
 Companies want relationships with
customers

Why?
Because companies that
manage their customer base
in order to identify, satisfy
and retain profitable
customers enjoy better
business results
Companies want relationships with
customers

Reduced customer churn create

Reduced
Longer marketing
A larger
average costs to
customer
customer replace
base
tenure defected
customers

Better
understand More cross-
ing of selling
customer opportuniti
requiremen es
ts
 When do companies not want
relationships?
When they fear loss of control. Relationships
are bi-lateral arrangements, which involve
giving up unilateral control over resources.
When do companies not want
relationships?

When they do not want to commit

resources. Relationships require the
commitment of resources such as people,
time and money.
 When do companies not want
relationships?
When opportunity
costs are high. If
resources are
committed to one
customer, they
cannot be used for
another
 Relationships
For Profits
With Products
Or Between People- Is it possible to have relationships in a
business setting
Can relationships be measured and Monitored? ---- How will
you measure and reward a parent child Relationship.
Can Everything be explained with numbers- Is it near reliable
or Fool Proof (Qualitative and Quantitative)
Are Human beings Rational or Emotional Beings? Are we
super computers or beyond
Putting Relationship Back into CRM

Customer relationship management has evolved into

customer profitability management, a one dimensional,
company-centric practice based on economics and costs
that provides little insight into why and in what ways
people form relationships with companies and brands.
Putting Relationship Back into CRM

Some Mistakes That companies make

Companies seem to forget that their relationships are not
just with consumers but with people: people who live rich
and complicated lives.
Companies are not cognizant of the requirements of
diverse types of relationships beyond the loyalty ideal.
Companies dont recognize that relationships are two-sided
and that these relationships evolve with each interaction.
 CRM needs meaning not information

Having information involves disintegrating and reducing

complex ideas into small, manageable bites.
But finding meaning involves assembling information bites
into larger, more abstract wholes.
Ironically, information and meaning tend to work at cross-
purposes: For meaning, context is everything; with
information, context is noise.
 Purpose of data collection
Companies need more robust data to assemble a more complete story of
peoples needs and expectations, and how the brand helps them live
their lives.
Marriott Internationals Ritz-Carlton operates a system called Mystique,
which collects staff observations about guests everything from the
kinds of fruit left on room-service plates to a guests oncoming cold
True understanding involves more than just developing insights that are
specific to purchase and consumption. It also means developing
empathy for the individuals broader emotional life and understanding
how an experience feels from the customers perspective.
 BEST CUSTOMER TRAP
Best customers are a natural consequence of CRM programs that see
platinum customers as the Holy Grail.
They are created when companies reward good customers with discounts,
shower them with attention and special treatment and permit them to break
rules. Over time, as their demands and expectations increase, they often
become more costly to serve, and, taken to the extreme, they become a
profit drain.
There are a lot more bad customer relationships than there are bad
customers.

Rules for relationship

Companies must codify, by relationship type, which

rules are fixed and unbreakable, and which ones may be
nice to have but are less vital to the overall health of
the relationship.
Rules can have significant financial implications; its
important to know which rules increase costs, which
rules increase revenues
Understanding
Customer Experience

Christopher Meyer and Andre Schwager

Understanding
Customer Experience
The term customer corridor to portray the series of
touch points that a customer experiences.
CRM captures what a company knows about a particular
customerhis or her history of service requests, product
returns, and inquiries, among other things
Customer experience data capture customers
subjective thoughts about a particular company.
 The Right Way to Manage
Unprofitable
Customers
Four common reasons why businesses terminate
relationships:
Declining profitability of specific customers,
Lower productivity of employees as they deal with unprofitable
customers,
Changes in the capacity to serve large volumes of customers, and
Shifts in a companys business strategy.