Deck 10: Developing and Maintaining Long-Term Customer Relationships

Question 1

Visit 1to1 Media (www.1to1media.com) to learn more about customer relationship management. You can register for free access to useful tools, articles, discussions, and webinars about CRM and its use in a number of different industries.

Answer 1

Note that the exercise doesn't really ask a question about this site, merely points to its existence. The page offers a number of webinars, white pages, training videos, awards programs, a marketing blog, and a free newsletter. Accounts on this site are free.

Question 2

One of the common uses of customer relationship management (CRM) in consumer markets is to rank customers on profitability or lifetime value measures. Highly profitable customers get special attention, while unprofitable customers get poor service or are often "fired." What are the ethical and social issues involved in these practices? Could CRM be misused? How and why?

Answer 2

Recall that 80% of a company's profits come from only 20% of its customers. Thus, it's easy for that company to absorb the loss of a customer who rarely buys any of its products. Of course, no customer likes to be thought of as a variable in a formula, so the company's dismissiveness of lower-tier customers could be seen as ethically questionable, even abusive. It's unkind and elitist behavior, which can generate offended feedback and negative reviews on social media Ideally, the company comes to realize that even a customer who buys a single product from the company deserves professional treatment and for that product to meet his or her reasonable expectations.

Question 3

Think about all of the organizations with which you maintain an ongoing relationship (banks, doctors, schools, accountants, mechanics, etc.). Would you consider yourself to be unprofitable for any of these organizations? Why? How might each of these organizations fire you as a customer? What would you do if they did?

Answer 3

Many students maintain free checking accounts, often with very little money in them. The only way a bank makes any extra money from those students is if they bounce checks. In other words, if a student keeps a solvent, free checking account and never goes to the bank for a loan or any other ancillary services, the bank has a minimal financial interest in that customer. A bank could certainly "fire" such a student by simply suspending their account a few times, thus annoying the customer into withdrawing his or her funds. There is little the student could do under such circumstances other than walk away. Luckily, banks almost never dismiss even lower-tier customers, because the general perception of a bank hinges on the respectability and reliability of its checking account services-even when those services have been provided free.

Question 4

Given the commoditized nature of many markets today, does customer relationship management- and its associated focus on quality, value, and satisfaction-make sense? If price is the only true means of differentiation in a commoditized market, why should a firm care about quality? Explain.

Question 5

D. Power and Associates (www.jdpower.com) is a well-known research company specializing in the measurement of product quality and customer satisfaction. Explore their website to look at their customer satisfaction ratings for a number of industries. What role will third-party firms like J.D. Power play in the future given the increasing use of internal customer satisfaction metrics?

Question 6

Of the two types of customer expectations, adequate performance expectations fluctuate the most. Describe situations that might cause adequate expectations to increase, thereby narrowing the width of the zone of tolerance. What might a firm do in these situations to achieve its satisfaction targets?