Relationship Marketing of Services

Group Members: Susan Connell Louise Considine Justin Farrell Jacinta Smith

Introduction

Intense rivalry led to shift from transactional to relational marketing relationship marketing is to identify and establish, maintain, and enhance relationships with customers and other stakeholders, at a profit, so that the objectives of all parties are met (Grnroos, 1990, p. 10).

Differences between TM and RM

Implications:
Time perspective: Price elasticity: Dominating quality dimension:
Measurement of customer satisfaction: Customer information system: Interdependent between marketing operations and personal: The role of Internal Marketing:

Transactional
Short term focus Sensitive to price Quality of output (technical quality) Monitoring market share (indirect approach) Ad hoc customer surveys Interface or no or limited strategic importance No or limited importance to success

Relationship
Long term focus Less sensitive to price
Quality of interactions (functional quality)

Managing customer base (direct approach) Real-time customer feed back systems
Interface of substantial strategic importance to success

Substantial strategic importance to success

Organisational Benefits

Consumer Advantages

Cheaper to keep existing customers than to attract new clients Reduced costs 80:20 rule Not all customers have equal value Lifetime value of customers

Overcomes risk &

ambiguity of complex services

Confidence
benefits

Social rewards

Goals of Relationship Marketing

..build and maintain a base of committed customers who are profitable for the organization (Zeithaml and Bitner, 2003,p.158). Acquisition, retention & enhancement Relationship marketing ladder of loyalty

RM Ladder of Loyalty

Relationship of partner Actively recommends you Supports you passively Repeat business, but passive or negative attitude Carried out one transaction Potential customer

Appropriateness of RM

Does the customer want a relationship? Is the customer segment profitable enough to justify the expense? Will forming a relationship with a customer or customer segment adversely affect the company, its employees or other customers?

Customer Profitability Segments

Used to segment customers based on estimated profitability to the company

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SM

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Implementation

A review of the relationship marketing literature suggests a lack of knowledge and action surrounding the issue of implementation of relationship marketing strategies. This lack of action can be attributed to: The failure to recognise the synergy and interdependency between relationship marketing and niche marketing. The lack of use of relationship marketing. The lack of top management commitment to change the company to successfully implement relationship marketing strategies.

1. 2. 3.

Approaches to Implementation
Berry (1983): 1. develop a core service around which to build a customer relationship. 2. customise the relationship to the individual customer. 3. augment the core service with extra benefits. 4. price services to encourage customer loyalty. 5. market to employees so that they, in turn,will perform well for customers. Shani and Chalasani (1992): 1. Pursue a niche marketing strategy to identify a gap in the market. 2. Build up a customer database. 3. Focus on relationship marketing activities.

Approaches to Implementation contd..

Voss and Voss (1997): suggest, successful implementation of a relationship marketing program requires a complement of marketing strategies that satisfy and motivate customers through the four phases of relationship development (p. 290). (awareness, exploration, expansion and commitment) Dodge and Fullerton (1997): 1. choose the right customers i.e. the profitable ones. 2. find ways to deliver superior value to these customers. 3. personalisation of the relationship Successful when the marketer and the customer abandon their adversarial role behavior in favor of some form of partnership or alliance (Dodge and Fullerton 1997, p. 5).

The reasons why relationship marketing fails

Nelson and Kirkby (2001) believe there are seven key reasons:
1. 2. 3. 4. 5. 6. 7.

Data is ignored Politics rule The IS organisation and business users cannot work together There is no plan Relationship marketing is implemented for the company and not the customer A flawed process is automated No attention is paid to skill sets

To Conclude

Emerged due to awareness of the importance of relationships in services and of increasing consumer expectations. Relationship marketing is reforming the way service firms are conducting business. In order to remain competitive companies must embrace the philosophy of relationship marketing. Relationship marketing is beneficial to both organisations and customers. It is essential for a company to segment its customers on the basis of their profitability, as resources should be allocated on this basis. There is no universal remedy for implementing relationship marketing strategies successfully.