CUSTOMER RELATIONSHIP:

CUSTOMER SERVICE
Chapter 2
Customer-Driven Marketing
 CUSTOMER: a person or organization that
transacts with businessperson or business
organization to buy goods or services for
monetary or other valuable consideration
 End goal of businesses: acquiring and

keeping customers
 Consumer needs and wants must be

understood and anticipated, as well as be

satisfied adequately and exceedingly.
 Companies must predict customer needs.
CUSTOMER SERVICE
 refers to the process of ensuring customer
satisfaction with a product or service
 Can take on many forms – salesperson

assistance, product delivery, technical advice,

help desks, or other means
 Good customer service can cause customers

to perceive the value offered superior over its

competitors.
CUSTOMER SERVICE PROGRAMS
 Different customer service programs are
provided by establishments.
 Examples:
◦ High-end salons offer their customers with free
refreshments. Customers can browse through the
latest issues of fashion magazines.
◦ Salespersons in Rustan’s Department Store give
customers “space” to check on the merchandise
leisurely. They maintain physical distance from the
shoppers, offering assistance only when required.
They personally bring the merchandise chosen by the
clients together with the payment to the cashier.
After which, he/she delivers the bagged merchandise,
receipt, and change to the customer.
 Salespersons of SM hover and shadow the
customer throughout his stay at the store.
They mention the product’s price and recite a
litany of product information.
Group Activity:
 Think of at least 5 different
business organizations and
identify their customer service
programs/practices.
Some of the more popular customer service
practices in the Philippines:
Customer Service Practice Organizations
Free delivery Most restaurants and food-chains
Automated in-home ordering Rustan’s Supermaket, Mercury Drug
system
Free gift-wrapping/plastic book Rustan’s Dept. Store, Fully Booked
jacket
Merchandise/document pick-up DHL & other courier services
Free parking Churches & religious org.
Valet parking Hotels & resorts
Reservations, installment plans Large department stores
Complimentary refreshments Car dealerships
Help desks, touch phone access, 24- Telecommunication and technical
hour customer hotline firms, most utility firms
Managing Customer Service Quality
 Because services are variable, maintaining
high levels of customer service quality may
be challenging. Thus, organizations need to
conduct rigid customer service training and
assess periodically how well services are
delivered.
 Companies can best manage customer
service quality by:
◦ Establishing service objectives with
specific and measurable targets
◦ Committing sufficient organizational
resources towards the achievement of
these targets
◦ Collecting customer feedback on service
quality regularly
◦ Reviewing target accomplishment
◦ Identifying customer service weaknesses
and connecting them
Managing Customer Service
Differentiation
 Customer-centered organizations can
differentiate their customer service through:
1. Development and training of competent customer
contact personnel
2. Designing and implementing a superior service
delivery environment and process
Examples:
a. The store’s layout can be configured to permit
shoppers to move around freely without bumping into a
fixture at every turn.
b. Provide comfortable lounge.
c. Merchandise display must be neat and orderly.
Customer Relationship Management
(CRM)
 is a process of managing an organization’s
interactions with current and future
customers
 Rationale: recognition that companies can

sustain long-term profitability by attracting

and maintaining their valuable customers
 Customers can be identified through the use

of consumer database. (e.g., shopper’s club

through membership cards)
Customer Lifetime Value
 is the forecasted sales or profits that a
company can derive from the entire span of
the future relationship with a particular
customer.
 It can be based upon the potential value and

profitability of their relationship with the

company.
The CLV perspective has several distinct
implications:
1. It considers a longer-term perspective of a
company’s relationship with customers in
contrast to a short-term view of “take the
customer’s money and run.”
2. It calculates and compares costs of acquiring new
customers and keeping old ones.
a. Acquisition cost – costs for getting new customers
b. Retention cost – costs for maintaining existing
customers
3. It highlights the importance of market
segmentation, with the recognition that some
customer groups are more profitable than others.
CLV can be measured using the formula:

Customer Lifetime Value

Average peso value of a sale to a particular customer/group

x Number of repeat purchases in a year

x Average retention time in months or years

= Customer Lifetime Value

Example:
Mr. Pingris, an athlete, spends PhP2,000 for every
visit to a spa and goes to the spa twice monthly for
an expected time period of five years.
Customer Lifetime Value

2,000 Ave. peso value of a sale to a particular customer

X 24 No. of repeat purchases in a year

X 5 Ave. retention time in months or years

= 240,000 Customer Lifetime Value

Successful Customer Relationship Management
Strategies:
1. Adopt the right mindset towards customer service.
2. Purchase or develop CRM software.
3. Quantify customer acquisition and retention costs.
4. Develop and implement a customer service training
program.
5. Establish communication lines between your
customer and customer contact staff.
6. Shop your competition.
7. Keep innovating customer service.
8. Promote genuine customer service with a passion.