Page 89 - DMGT510_SERVICES_MARKETING

Services Marketing

Notes

Task Find out about various customer retention programmes undertaken by
various service firms in India and comment on their outcome.

The service firm tends to lose all the future stream of revenues from its banks of loyal customers
(who are a profitable segment) if such hitherto loyal customers switch to a competitor. There has
been research in the field, which has identified strong relationships between loyalty (retention)
and increase in customer net present value. An increase of 5 percent in retention rate by a service
firm increases the net lifetime profits from the customer.
Self Assessment

Fill in the blanks:
4. Customer satisfaction is linked to
5. Employee productivity is linked to
6. Customer retention is than customer acquisition.

5.3 Components of CRM

CRM consists of three discrete components:
Customer,

Relationship, and

Management.

CRM tries to achieve a ‘single integrated view of customers’ and a ‘customer-centric approach’
by judiciously blending these three factors.

Customer

The customer is the only source of the company’s present profit and future growth. However, a
good customer, who provides more profit with less resource, is always scarce because customers
are knowledgeable and the competition is fierce. Sometimes it is difficult to distinguish who is
the real customer because the buying decision is frequently a collaborative activity among
participants of the decision-making process. Information technologies can provide the abilities
to distinguish and manage customers. CRM can be thought of as a marketing approach that is
based on customer information.

Relationship

The relationship between a company and its customers involves continuous bi-directional
communication and interaction. The relationship can be short-term or long-term, continuous or
discrete, and repeating or one-time. Relationship can be attitudinal or behavioural. Even though
customers have a positive attitude towards the company and its products, their buying behaviour
is highly situational.

Example: The buying pattern for airline tickets depends on whether a person buys the
ticket for their family vacation or a business trip.

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