By SportsKenya

1) Developing Relationships in
a) Consumer Markets
b) Business Markets
2) Quality and Value the keys to
developing customer relationships
3) Customer satisfaction and retention
4) Customer satisfaction metrics



Quote
Definitions
What are Business Relationships?
According to businessdictionary.com its an
association between individuals or companies
entered into for commercial purposes and
sometimes formalized with legal contracts or
agreements.

Freedictionary.com a formal contractual
relationship established to provide for regular
banking or brokerage or business sources.
Types of Business Relationships:
David Nour in his book Relationship Economics
classifies them as;
1. Personal relationships/ Discretionary may
not be relevant to the respective individuals
or organisations profession;
2. Functional relationships those with a
customer or client;
3. Strategic relationships extend beyond the
horizon of ones business


Importance of Business Rships
1. Business Strategy and Leadership - Thus leadership
should create appropriate an environment and
support those engaged in execution.

2. Risk Management- the more risk they can manage
the greater their competitive advantage. Risk maybe
financial, performance, safety and external events
whether natural or social and political.

3. Value creation - the value chain seeks to engage all
parties to assess and address these impacts to
mutual benefit. Relationships are important to
identify and translate them into value




Importance of Business Rships
5. Knowledge management - The more we trust the more
we share and the greater the potential to benefit.
Knowledge maybe power but if not shared it has very
limited value. Understand what you can and what should
not be shared and make this visible.

6. Outsourcing- The desire to exploit the potential of
non-core activities through outsourcing must be
tempered with a robust process that embraces the need
to consider the importance of relationships involved.

7. Supply chain vulnerability - 50-80% of operational cost
is channelled through the supply chain. There is the cost
reduction and rationalisation of the supply base and the
rush to exploit benefits of low cost markets.


Importance of Business Rships
7. Mergers and acquisitions- quickest not easiest way to
grow a company. Risky considering the investment and
rationalisation cost. A KPMG report -85% of mergers &
acquisitions across the world are failures
8. Partnerships, Alliances, Consortiums and Joint
Ventures - the more robust ,relationships the greater
potential to growth of business and benefit from
delivering value
9. International relationships - those who operate in
global markets are aware of challenges thrown up by
cultural differences, national, regional or frequently
corporate
10. People, Behaviours and Trust - managed, targeted,
measured, incentivised and rewarded has influence on
how they interface with others either internally or
externally

Developing Relationships in
Consumer Markets
It considers the customer needs, wants and
expectations developing long-term relationships.
Previously, consumer markets were assumed to be
purely transactional based with minimal emphasis
on building relationships with customers
There was more focus on the short term.
Marketing is not just about manufacturing and
selling products; its more concerned with building
and preserving long-lasting relationships with
customers.
A hybrid of both transactional as well as relational
emphasizes the importance of mutually beneficial
relationships with consumers that can serve the
interests of both parties.
Importance of Building Long-lasting
Relationships with Customers:
Profitability consumer markets are very
competitive and with increased sales comes
profits
Goodwill results in word-of-mouth promotions
and lower costs associated with attracting new
customers.
Brand loyalty favoured treatment thus brand
loyal customer.
Product differentiation and competitive
advantage include consumers in the planning
process and gives the chance for company to
tailor their products accordingly. Ask for
suggestions from customers


Relationship Stages:
1) Awareness
2) Initial Purchase
3) Repeat Customer
4) Client
5) Community
6) Advocacy





Developing Relationships in Business
Markets
It involves moving buyers through increasing
levels of relationship intensity.
It is based more on creating structural bonds.
It is more involving and complex than CRM in
consumer markets
Types of Business Markets include;
Producer markets/ Commercial markets
Reseller markets
Government markets
Institutional markets




The changes in business relationships are
captured as follows;
Change in Buyers and Sellers Roles - Shift
from competitive negotiation to collaboration;
Increase in Sole Sourcing - Creates
solutions at lower costs
Increase in Team-Based Buying Decisions -
Better decisions come from diverse expertise
Increase in Productivity through Better
Integration- Reduces inefficiency and
hard/soft costs; increases profitability





Quality and Value Keys to Developing
Customer Relationships
Quality is a relative term
that refers to the degree of
superiority of a firms
goods or services
The Core Product
Satisfies the basic
customer need
Core product in
services (people,
processes, and physical
evidence)
Supplemental Products
Goods or services that
add value to the core
product

Value is the subjective
evaluation of benefits
versus costs to determine
the worth of a firms
product offering relative
to other product offerings
Perceived Value =
Customer Benefits/
Customer Costs


Value can be used to guide marketing strategy.
It balances the five types of utility.
It includes the concept of quality, but is broader in
scope.
It takes into account every marketing program
element.
It can be used to explicitly consider customer
perceptions.

Keys to improving Quality:
Understand customers expectations
Translate expectations into quality standards
Uphold quality standards
Dont overpromise


Customer Satisfaction: The Key to
Customer Retention
Range of customer expectations
Ideal expectations
Normative expectations
Experience-based expectations
Minimum tolerable expectations
Customer expectations can vary based on the
situation
Expectations increase during highly involving or
important purchase situations.
Expectations decrease when customers are more
tolerant of poor performance, when they have few
alternatives, or when performance is beyond the
control of the firm.



Customer Satisfaction Measurement
1. Lifetime Value of a Customer (LTV) -is a prediction of
the net profit attributed to the entire future relationship with a
customer
2. Average Order Value (AOV) - describes how to
calculate average order value of an e-commerce website and
how it is useful in predicting revenue
3. Customer Acquisition/Retention Costs - percentage at
which a company reports growth in costs. It takes into account
existing customers and newly acquired customers.
4. Customer Conversion Rate
5. Customer Retention Rate - percentage of customers that a
company is able to retain over an extended period of time-
typically over one year.
6. Customer Attrition Rate - divide the number of customer
lost by the total number of customers at the start of the period
7. Customer Recovery Rate -
8. Referrals
9. Social Communication