CHAPTER 5
Relationship Marketing using Digital
Platform
Introduction
Building long-term relationships with customers is essential for any sustainable
business and this applies equally to online elements of a business.
Failure to build relationships largely caused the failures of many dot-coms following huge
expenditure on customer acquisition.
Over the last decade, relationship marketing, direct marketing and database marketing have
combined to create a powerful new marketing paradigm.
Introduction
This paradigm is referred to as customer relationship management (CRM)
This approach is use to develop relationships with particular customer segments or groups.
This involve a company in developing long-term relationship with each customer in order to
better understand customers’ needs.
Introduction
The interactive nature of web combined with e-mail communications provides an ideal
environment in which to develop customer relationship.
This online approach is known as e-CRM
What is e-CRM?
e-CRM involves creating
strategies and plans for how
digital data can support CRM
What is e-CRM?
• Marketing activities that are within the scope of e-CRM include:
Website and online Managing customer
Managing customer
social presences for contact option
profile information Data mining
customer through email and
and
development social networks
Mass customisation Providing online Managing online
facilities customer service service quality
facilities
The Challenge of customer engagement
Challenge
What is customer engagement?
• To maximize customer value
• Repeated interactions that through using customer
strengthen the emotional, interactions to lead to more
psychological or physical profitable relationship.
investment a customer has
Benefits of using e-CRM to support customer
engagement
Increased depth and
Targeting more cost Mass customisation of breadth of information
effectively the marketing messages and improve nature of
relationship
Deeper customer
understanding and more
Delivering loyalty
relevant Lower cost
programmes
communications can be
delivered
Marketing applications of e-CRM
• e-CRM system support the following marketing applications:
Sales force
automation
Customer service
Analysis
management
Customer
Managing the
communications
sales process
management
CRM technologies and data
Database technology is at the heart of delivering these CRM applications.
Often the database is accessible through an intranet website by employees or extranet by
customers.
Email is used to manage many of the inbound, outbound and internal communications managed
by the CRM system.
CRM technologies and data
3 main types of customer data held as tables in customer database for CRM are:
Personal and Communications
Transaction data
profile data data
Customer Lifecycle Management
•The stages each customer will pass
through in a long term relationship through
What is customer acquisition, retention and extension.
lifecycle?
• Select, acquire, retain and extend
Classic customer
lifecycle
Customer Lifecycle Management
Customer Lifecycle Management
Customer selection Customer acquisition
• Defining the types of customers that • Marketing activities to form
a company will market to. relationships with new customers
• Segment the customers by value. • Service quality and selecting the
right channels for different
customers are important at this
stage.
Customer Lifecycle Management
Customer retention Customer extension
• Marketing activities taken by an • Increasing in depth or range of
organization to keep its existing products that a customer purchases
customers from the a company.
• i.e. to encourage them to buy again • Often referred to as customer
development.
Customer extension techniques
Re-sell
Referrals Cross-sell
Reactivation Up-sell
Permission marketing
Permission marketing refers to customers agree (opt-in) to be
involve in an organisation’s marketing activities, usually as a
result of an incentive.
Permission marketing is about seeking customers’ permission
before engaging them in a relationship and providing
something in exchange.
From e-commerce perspectives, a customer agreeing to engage
in a relationship when they check a box on a web to indicate
that they are agree.
Permission marketing
Opt-in Opt-out
Refers to Customers agree to Refers to customer has to
receive further communication consciously request not to
from a company. receive further information.
Effective process for permission-based online
1. Attract new and 2a. Prompt and 2b. Capture customer
existing customers to incentivize visitors to information to
online presence action maintain relationship
• Search, social • Provide incentives • Capture
media marketing like lead generation information is
and direct mail are offers and sales commonly
used to drive generation offers. achieved through
visitors to a • On Facebook, an online form
website. companies used which customer
gated pages where must complete to
visitors must ‘Like’ receive the offer.
the brand before • Apart from that,
they can gain other information
incentives. include customer
profilinf.
Effective process for permission-based online
3. Maintain dialogue 4. Maintain dialogue
using online using offline
communication communication
• Use digital method • Communicate with
to communicate with customers through
customers. direct mail or phone
• E.g. email, disply contact.
specific information • With direct mail
on the website when campaign the aim
the customer logs in. may be to drive
traffic to the website
in a web response
campaign.
Personalisation and mass customisation
Not all individuals respond favorably to data capture approach or personalised communication
due to fears over security of personal data.
So, to derive maximum benefits from the use of personal information, advertisers should
consider giving individuals more control over how their information is used.
Advertisers can manage this through personalisation and mass customisation on a website to
tailor information content email through customer preferences center.
Personalisation and mass customisation
Personalisation
• Refers to customisation of information requested by a site customer at an
individual level.
Mass customisation
• Tailored content to a group or individuals with similar interests. E.g. Amazon sent
similar email to customers who had an interest in a particular topic such as e-
commerce.
Personalisation and mass customisation
Other methods of profiling customers include
collaborative filtering.
With collaborative profiling, customers are openly asked to
indicate what their interests are by checking box.
A database then compares the customers’ preferences with
those of other customers in its database and makes
recommendations accordingly.
E.g. Amazon website shows that customers who bought book X
also bought books Y and Z.