Lynette Ryals

Cross-functional issues in the implementation of relationship marketing through customer relationship management

There is a major change in the way companies organise themselves as firms switch from product-based to customer-based structures. A key driver of this change is the advent of Customer Relationship Management which, underpinned by information systems convergence and the development of supporting software, promises to significantly improve the implementation of Relationship Marketing principles. In this paper we explore the three main issues that can enable (or hinder) the development of Customer Relationship Management in the service sector; the organisational issues of culture and communication, management metrics and cross-functional integration -- especially between marketing and information technology.

Making Customer Relationship Management Work: The Measurement and Profitable Management of Customer Relationships

Customer relationship management (CRM) is perceived to be failing, and there is an urgent need for some practical ways to address this issue. The research presented in this article demonstrates that the implementation of CRM activities delivers greater profits. Using calculations of the lifetime value of customers in two longitudinal case studies, the research finds that customer management strategies change as more is discovered about the value of the customer. These changes lead to better firm performance. The contribution of this article is to show that CRM works and that a relatively straightforward analysis of the value of the customer can make a real difference.

Customer relationship management in financial services: towards information-enabled relationship marketing

Relationship marketing is concerned with how organizations manage and improve their relationships with customers for long-term profitability. Customer relationship management (CRM), which is becoming a topic of increasing importance in marketing, is concerned with using information technology (IT) in implementing relationship marketing strategies. This paper reports on a study of the adoption and use of CRM in the financial services sector. In particular, the key elements of CRM are examined in these organizations and executives perceptions of the main IT components that enable responsive CRM are explored. CRM is classified into five stages of sophistication and a framework for CRM adoption is developed.

Supply Chain Strategy: Its Impact on Shareholder Value

In the last few years there has emerged a strongly held view that the ultimate purpose of the firm is to maximize shareholder value, that is the long run worth of the business to its owners. Many influences clearly impact upon shareholder value, but there is a growing recognition that the supply chain strategy employed by the firm can have a significant effect. This paper examines the concept of shareholder value and the related organizational framework of Value Based Management (VBM) and explores the connections with supply chain strategy.

The changing role of sales: viewing sales as a strategic, cross‐functional process

Purpose – Although there is substantial practitioner evidence for changes in the role and functioning of sales in the twenty‐first century, there is little academic research charting new directions for the sales function in a business‐to‐business context. This paper aims to report on four case studies that illustrate how sales is changing.Design/methodology/approach – The case studies involve large global companies who were changing their existing sales process to adapt to changing circumstances. The organizations comprised four global industries: construction, power solutions, building technology, and electronics and software.Findings – The results demonstrate that sales is changing in three interrelated aspects: from a function to a process; from an isolated activity to an integrated one; and is becoming strategic rather than operational.Originality/value – The results suggest that changes in the role of sales will affect sales processes and the way that the sales function liaises with other departments.

MAKING CUSTOMERS PAY: MEASURING AND MANAGING CUSTOMER RISK AND RETURNS

CRM (Customer Relationship Management) builds on the Relationship Marketing idea that lifetime relationships with customers are more profitable than short‐term transactional relationships. However, subsequent work on the profitability of customers has shown that some customers are very unprofitable. This leaves managers with a problem: how to focus their relationship management efforts to maximise shareholder value. A suggested theoretical approach is to view the customer base as an investment portfolio. This paper uses the portfolio management model of risk and return to explore the measurement of returns and of the risk of the customer. Some implications for CRM managers are outlined.

Managing Key Business-to-Business Relationships: What Marketing Can Learn From Supply Chain Management

Key account management (KAM) is a rapidly growing area of interest in business-to-business marketing. However, unnoticed by marketing, a quiet revolution has taken place in supply chain management (SCM), where the traditional emphasis on least-cost transactions has given way to a focus on long-term relationships with a few key suppliers. It is thus apparent that the two disciplines are converging. This article uses a cross-disciplinary approach to explore whether these developments from the field of SCM provide insights into key business-to-business relationships. A detailed case study of a long-term relationship between a business-to-business services provider and a key customer in the construction industry suggests there is a definable overlap. The supply chain model illuminates five important elements of KAM and offers a promising method for the evaluation of such relationships. As a result of the research, both supplier and customer companies implemented actions to improve and strengthen this important relationship.

Are your customers worth more than money

Abstract This paper suggests that relationship marketing, with its focus on customer retention and managing the customer relationship over its lifetime, entails understanding the twin aims of what value means for the customer and also the value of the customer to the retailer. The emphasis in this paper is the latter as it is often assumed to be non-problematic. Different methods of assessing the value of customers in terms of profitability are evaluated and their shortcomings discussed. The paper goes on to propose that economic value, reflecting risk, is a better measure of the value of the customer. However, even economic value has a shortcoming: calculations of the total value of the customer should include relationship benefits as well as economic value. Strategies to maximise relationship benefits are discussed.

Measuring risk‐adjusted customer lifetime value and its impact on relationship marketing strategies and shareholder value

Purpose – The calculations which underlie efforts to balance marketing spending on customer acquisition and customer retention are usually based on either single‐period customer profitability or forecasts of customer lifetime value (CLTV). This paper argues instead for risk‐adjusted CLTV, which is termed the economic value (EV) of a customer, as the means for marketing to assess both customer profitability and shareholder value gains.Design/methodology/approach – Reports on the empirical measurement of EV of customers through a collaborative case study analysis of business‐to‐business relationships in the financial service industry.Findings – One direct consequence of measuring this risk and the EV of key account customers was a customer portfolio review which led to changes in their relationship marketing strategies and improvements in shareholder value for the firm.Practical implications – Selective customer retention through lifetime value analysis and a risk‐adjustment process may be the means for dev...

New trends in innovation and customer relationship management: a challenge for market researchers

For decades, one of the key roles of market research has been to help companies forecast customer acceptance of innovation and of changes to the market mix (the 4 Ps). However, traditional market research is in danger of being left behind by new practices in Sales, Marketing and R & D. Reflecting an increasingly participative approach to customer relationships, these disciplines are moving towards customer involvement and co-creation of value rather than innovation mainly generated by head office and only then tested among customers (Roberts, Baker and Walker, 2005). Co-creation involves working participatively with customers to enhance the value customers get when buying and using goods and services. It enables firms to understand and respond to deeper and more valuable customer needs and reduces the inherent risks of innovation. Nor is this increasing trend towards co-creation limited to new product introduction. As companies invest in customer relationship management (CRM) programmes, they need to design new forms of relationships with those directly affected: their customers. As customers use internet-related technologies to manage their relationships with suppliers, co-creation will become a more important component of innovation and growth strategies. In this context, traditional market research approaches begin to look outdated. The authors illustrate how Action Research can provide tools and methods by which market researchers can assist and improve the co-creation process with a case study of a dot.com company. The implications for market researchers and research practices are identified.