Course Title

Instructor

Managing Customer Experience and Relationships: A Strategic Framework

Chapter 1
Evolution of Relationships with Customers and Strategic Customer Experiences

Managing Customer Relationships: A Strategic Framework, Third Edition, Don Peppers and Martha
1 Rogers
 Introduction
From the Industrial Age to the Information Age, the
customer-enterprise relationship has changed
Industrial Age businesses structured around:
Competitive advantage from product innovation
Assembly-line technology: mass production and mass
distribution
Mass media and branding

Managing Customer Relationships: A Strategic Framework, Third Edition, Don Peppers and Martha
2 Rogers
 Introduction
Information (Interactive) Age businesses structured
around:
Customer information as competitive advantage
Interactive technologies
Two-way brands or branded relationship

Managing Customer Relationships: A Strategic Framework, Third Edition, Don Peppers and Martha
3 Rogers
 Roots of Customer Relationship
Management
If customers are key to competitive advantage, the
main task of the enterprise becomes growing the value
of the customer base.
To grow the value of the customer base, the enterprise
must get, keep, and grow customers.
This kind of customer relationship management is an
enterprise-wide strategy, not merely the
implementation of the right technology or a quick add-
on to one department.

Managing Customer Relationships: A Strategic Framework, Third Edition, Don Peppers and Martha
4 Rogers
 Roots of Customer Relationship
Management
Definition of customer relationship management:

Customer relationship management is an enterprise-

wide approach to understanding and influencing
customer behavior through meaningful analysis and
communications to improve customer acquisition,
customer retention, and customer profitability.

Managing Customer Relationships: A Strategic Framework, Third Edition, Don Peppers and Martha
5 Rogers
 Roots of Customer Relationship
Management
The role of technology:
Although many believe CRM is a synonym for software,
customer strategy involves analytical as well as
operational processes.
Technological advancements in interactivity, such as the
Internet, mobile technologies, and social media, have
driven the growth capacity of CRM, but such technology
is a means of managing customer relationships, not the
end in itself.

6 Managing Customer Relationships: A Strategic Framework, Third Edition, Don Peppers and Martha Rogers
 Traditional Marketing Redux
The Four Ps of traditional marketing focus on the
“get” portion of “get, keep, and grow” customers.

Product
Place
Price
Promotion

Managing Customer Relationships: A Strategic Framework, Third Edition, Don Peppers and Martha
7 Rogers
 Market Share vs. Share-of-Customer
Strategies
Market Share
Products and brands as source of
company value
Sells one product at a time at a time to
as many customers as possible
Differentiates products from
competitors
Sells to customers
Finds a constant stream of new
customers
Makes sure each product is profitable,
even at expense of customer confidence
Uses mass media to build brand and
announce products
Managing Customer Relationships: A Strategic Framework, Third Edition, Don Peppers and Martha
8 Rogers
Share of Customer
Customers by definition only source of
revenue
Sells as many products as possible to one
customer at a time
Differentiates customers from each other
Collaborates with customers
Finds a constant stream of new business
from established customers
Makes sure each customer is profitable,
even if loses money on occasional product
or transaction
Uses interactive communication to
determine needs and communicate
individually
 Learning Relationship: Definition

A Learning Relationship is one where the customer

teaches an enterprise about his or her preferences and
the enterprise tailors its response to those preferences,
such that it becomes more worthwhile for the customer
to remain loyal than to switch to a competitor for any
price.

9 Managing Customer Relationships: A Strategic Framework, Third Edition, Don Peppers and Martha Rogers
 Benefits of Learning Relationship
Customer loyalty
The customer learns more about his or her preferences
The enterprise learns more about its own strengths and
weaknesses

Managing Customer Relationships: A Strategic Framework, Third Edition, Don Peppers and Martha
10 Rogers
 The Technology Revolution and the
Customer Revolution
Increased enterprises’ ability to connect with
customers one-to-one
Increased customers’ expectations to be treated as an
individual

Managing Customer Relationships: A Strategic Framework, Third Edition, Don Peppers and Martha
11 Rogers
 Where Is a Firm on the Customer Strategy
Map?
Quadrant
Quadrant IV
III 1to1Learni
Database ng
Marketing Relationshi
Interacting ps

Quadrant I Quadrant II
Mass Niche
Marketing Marketing

Tailoring

Managing Customer Relationships: A Strategic Framework, Third Edition, Don Peppers and Martha
12 Rogers
 Customer Retention and Enterprise
Profitability
Reichheld and Sasser (1990) found that a customer’s
profitability increased with length of retention, based
on four factors:
1. Increased purchases
2. Reduced operating costs
3. Referrals to other customers
4. Price premium (conversely, new customers usually
pay lower introductory prices)
Additional benefit of retention: acquiring new
customers is costly

Managing Customer Relationships: A Strategic Framework, Third Edition, Don Peppers and Martha
13 Rogers
 Becoming a Customer-Strategy Enterprise
Becoming a customer-strategy enterprise requires a
unified view of the customer across the five principal
business functions:
1. Financial
2. Production, logistics, and service delivery
3. Marketing communications, customer service, and
interaction
4. Sales distribution and channel management
5. Organizational management strategy

Managing Customer Relationships: A Strategic Framework, Third Edition, Don Peppers and Martha
14 Rogers