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Accountancy Business and
Management (ABM)
PRINCIPLES OF MARKETING
Quarter 3 – Week 3 Module
Relationship Marketing and
Customer Value – Part 1

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ABM 11 – PRINCIPLES OF MARKETING
Alternative Delivery Mode
Quarter 3 – Week 3 Module: Relationship Marketing and Customer Value – Part 1
First Edition, 2020

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 What I Need to Know
This module was designed and written with you in mind. It is here to help you master
the Relationship Marketing and Customer Value. The scope of this module permits it
to be used in many different learning situations. The language used recognizes the
diverse vocabulary level of students. The lessons are arranged to follow the standard
sequence of the course. But the order in which you read them can be changed to
correspond with the textbook you are now using.

Content Standard
The value of customer relations and customer service.

Performance Standard
Develop a program for customer service.

Most Essential Learning Competencies

Define “relationship marketing,” and explain the value of customers.

After going through this module, students are expected to:

1. Have a clear definition of Relationship Marketing
2. Levels of Relationship Marketing
3. Understanding the Customers

What I Know
Activity 1.
Before you proceed, let us try to test what you know about the lesson. Write TRUE if the
statement is correct and FALSE if wrong:

1. Relationship marketing is about forming long-term relationships with customers and

tries to foster customer loyalty by providing exemplary products and services.

2. Relationship marketing is a form of marketing developed from direct response

marketing campaigns that emphasizes customer retention and satisfaction rather
than sales transactions.

3. By implementing relationship marketing strategies, you roused the loyalty of your

customers and demonstrate that you view them as a relationship, not a transaction.

4. When customers are dissatisfied, they’re more likely to refer your business.

5. The better you understand potential and existing customers and can solve their pain
points, the more likely they'll stick around.

6. Seventy-two percent of consumers think that having to repeat themselves — first to

sales, then to support, etc. — is a sign of great customer service.

7. It takes time and money to develop, produce, distribute, and promote products.

8. Customers often spend time comparing products and services before they make
decisions.

9. Marketing relationship is the provision of service to customers before, during, and

after a purchase.

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10. A target market is a clearly defined segment of the market to which a business wants
to appeal.

11. Consumers have many needs; they typically have unlimited amounts of money
available to satisfy those needs.

Lesson
Relationship Marketing and
3 Customer Value – Part 1

What’s In
Activity 2.
What is the difference between a dissatisfied customer and an angry customer? Have
you ever experienced a poor customer service? How exactly did you feel about the
situation and how did the company resolve it to make up for their mistakes?

Dissatisfied Customer Angry Customer

VS

A dissatisfied customer is one An angry customer feels betrayed by the

who feels a business did not company, believing the company violated
provide a product or service as the norms or ethics of a customer-
expected. company relationship.

What’s New

Confidence Creation → More than Customer Service

When credit card fraud strikes, the timing is never good. And the anguish is real. In this
case, American Express responded quickly—and on the card member’s terms 100%.

Shep Hyken got a call from American Express informing him about multiple charges
made overseas. Turns out, his card number had been stolen. The support team member
told Shep the account would be closed right away, and the charges would be reversed.
But she didn’t stop there.

When Shep said he would be in another city that evening—and not at home to receive
the new card the next day—the agent asked if she could route the new card to Shep’s
hotel for a 10:30 a.m. delivery.

Shep’s take on the encounter? “This is more than customer service. This is confidence
creation.”

Stories like these showcase the inherent value of great service. It brings people
together and creates lasting emotional bonds. For the customer-centric company,

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surprising customers with genuine acts of kindness and support isn’t a cynical ploy;
it’s simply a matter of bringing brand values to life.

There are a million ways brands can make a loyal customer’s day. But what about
surprising and delighting the angry customer?

What is It

Relationship Marketing Defined

Relationship marketing is a long-term strategy focused on the customer relationship,

not on a single transaction. It focuses on ensuring customer satisfaction for the long
run rather than simply for a quick sale. There are numerous definitions of relationship
marketing. Some of those most commonly used are the definitions offered by particularly
influential authors:
[Marketing is] the process of identifying and establishing, maintaining, enhancing and
when necessary terminating relationships with customers and other stakeholders, at a
profit, so that the objectives of all parties involved are met, where this is done by a
mutual giving and fulfilment of promises. (Gr¨onroos, 1997, p. 407)
Relationship marketing is about understanding, creating, and managing exchange
relationships between economic partners; manufacturers, service providers, various
channel members, and final consumers. (M¨oller and Wilson, 1995, p. 1)
All marketing efforts directed towards establishing, developing and maintaining
successful relational exchanges. (Morgan and Hunt, 1994, p. 23)
Regardless of this diversity in the definitions offered above, the following basic issues
are generally agreed upon.

• Relationship marketing refers to commercial relationships between economic

partners, service providers and customers at various levels of the marketing
channel and the broader business environment.
• This recognition results in a focus on the creation, maintenance and termination
of these commercial relationships in order that parties to the relationship achieve
their objectives (mutual benefit).
• Profit remains an underlying business concern and relational objectives are
achieved through the fulfilment of promises.
• Trust is essential to this process of relationship development and centers upon
the keeping of promises.

Levels of Relationship Marketing

Customer relationship marketing is supported by customer relationship management.

Think of customer relationship marketing as a strategy and customer relationship
management as an action. According to Techopedia, customer relationship
marketing is “a business process in which client relationships, customer loyalty, and
brand value are built through marketing strategies and activities.”

Relationship marketing can be divided into four stages

• Establish the initial relationship. This stage is also called “exploratory,” better
known as the first step in the customer acquisition process. It includes initial

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 activities and conversations to determine if a customer and company are a good fit
for each other’s needs. Consider it the first impression whether that's on social media
or at an event.
• Get to know each other. The “basic” stage takes the customer relationship a step
further. A company attempts to prove to potential customers that they understand
their needs, sharing helpful resources and communicating the value of their
product/service perhaps via an email marketing campaign or other inbound
marketing effort.
• Develop a deeper relationship. A potential customer shouldn’t stay in the “basic”
stage too long. Multiple departments need to become involved in this, the
“collaborated” stage, and work together to nurture the customer relationship.
• Become committed partners. The “interconnected” stage means that your
company has forged a connection with your customer that’s hard to break.
Departments are working together to create a seamless experience. Customers
completely trust your company and are incentivized to stick around for the long-
term.

Benefits of customer relationship marketing

• Build strong relationships with current and potential customers. By
implementing relationship marketing strategies, you roused the loyalty of your
customers and demonstrate that you view them as a relationship, not a
transaction.
• Improve customer retention. The better you understand potential and existing
customers and can solve their pain points, the more likely they'll stick around.
• Increase the chance of quality referrals. When customers are happy, they’re
more likely to refer your business. And according to research, referral leads
convert 30% better than leads generated from other marketing channels.

With these benefits in mind, experiment with different relationship marketing strategies.

RELATIONSHIP MARKETING STRATEGY

Customer relationship marketing is all about getting to know your customers and using
this knowledge to continually strengthen the relationship.

Here are four customer relationship marketing strategies.

1. Personalize interactions through knowledge about customer value/needs
View customer data (e.g., budget, decision-makers, customer value, conversations,
etc.) Segment customers by this information and personalize their experiences.

For example, maybe you segment customers by revenue. You then create a VIP
package for your most profitable customers that includes exclusive resources and
one-on-one consulting.

2. Focus on customer-centric metrics

Metrics such as Customer Lifetime Value and Net Promoter Score ensure that the
customer relationship is the central focus across departments. You can easily review
key performance indicators (KPI), including charts and graphs for visual reference.

3. Use content marketing to meet customer needs

Content marketing is an effective way to take customer needs and turn them into
helpful content for any part of the sales funnel.

Create case studies, eBooks, walkthrough guides, and videos based on what
customers are asking for and leverage yourself as an influencer and a value-provider.

Ensure that customers’ conversations are all on one platform (your CRM) and see
what resources customers need from sales and support.

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4. Monitor customer conversations across departments for consistent customer
messaging
Seventy-two percent of consumers think that having to repeat themselves — first to
sales, then to support, etc. — is a sign of poor customer service. Integrate support
tickets so no conversation falls through the cracks.

For example, you can connect Sales Department with Customer Service support.
If an issue or upsell opportunity comes up, support reps can easily forward
customer tickets to the right sales rep. Sales reps can also see what support reps
are telling customers and if their messaging aligns.

And these strategies only touch the surface of customer relationship marketing
strategies. Email marketing, social media management, and reward programs are
other excellent strategies.

Understanding the Customers

Consumers have many choices of products and services they can purchase to meet their
needs. Today, consumers are well informed and experienced in gathering information.
They often spend time comparing products and services before they make decisions.
Even if a hurried decision is made, if the buyer is dissatisfied with the purchase or finds
a better choice later, the buyer will likely return the original product for a refund.
Bringing a new product to the marketplace is expensive. It takes time and money to
develop, produce, distribute, and promote products. When a new product enters the
market, it must compete with many products that other companies offer. These
companies have also invested a great deal and do not want their products to fail. The
competition among the products is very intense.
Identifying Customer Needs
Successful companies are usually those that meet customer needs. Think of your
favorite businesses or the products you purchase regularly. They are usually not the
only choices you have, but they meet your needs in specific ways better than the other
choices. The reasons may be higher quality, convenience, better price, or a unique image.
Satisfying exchanges occur when you spend your money for products and services that
meet your need, and the business is able to make a profit on the sale of its products.
Meeting customer needs is not easy. (1) First many customers are not sure of their
needs or may have conflicting needs. Second, while consumers have many needs, they
typically have limited amounts of money available to satisfy those needs. (2) Second,
while consumers have many needs, they typically have limited amounts of money
available to satisfy those needs. They may not have enough money to buy a specific
product even though they believe it is the one that best meets their needs. (3) Finally
the needs of individuals and groups of consumers can be quite different. Their
perceptions of the products or services that will meet their needs are also quite different.
Businesses tend to deal with customer needs in one of two ways. Some businesses do
not view the specific needs of consumers as important. They believe either that
consumers do not understand their own needs or that businesses can influence
consumer needs with well-designed products and effective prices and promotion. In
other words, if they can effectively produce and market products, consumers will buy
their products. These businesses feel that most consumers are similar in terms of their
needs and purchase behavior.
Other businesses believe that an understanding of consumer needs is an important part
of their business activities. They study such needs and try to understand how
consumers evaluate products and services to make decisions about what to purchase.
The businesses recognize that consumer needs can be quite different, so they try to

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identify groups of consumers who have similar characteristics and needs. They feel that
they can do a better job of satisfying consumers if they can develop products and
services that respond to what the consumer wants and expects.
Satisfying Customer Needs
The business that is concerned about consumer needs believes in the marketing
concept. Its activities begin with a focus on the customer and a belief that if it can
satisfy customer needs better than its competitors, it will have the best chance for
success. The business studies markets to identify groups of consumers with unsatisfied
needs on which to focus its efforts. Through extensive marketing research, the business
gathers and analyze consumer information. It categorizes customers according to
similar characteristics, needs, and purchasing behavior. Groups of similar consumers
within a larger market are known as market segments. We will be discussing market
segments in the future lessons.
After distinct market segments have been identified, the business analyzes each of them.
It tries to determine which market segments can be served most effectively and which
have the strongest needs, the most resources, and the least competition. It tries to
identify other characteristics that can provide the business with opportunities for
success. Studying and prioritizing market segments to locate the best potential based
on demand and competition is known as market opportunity analysis.
Once segments have been identified and prioritized, the business selects those segments
on which it will focus its efforts. The segments selected become the business’ target
market. A target market is a clearly defined segment of the market to which a business
wants to appeal. The business can then use the information it has collected from the
research to make production and marketing decisions specifically focused on that target
market

What’s More

American Express Tackles Credit Card Fraud with Finesse

https://www.youtube.com/watch?v=gYZJplgQ1RU

This is a 3.39-minute video by Shep Hyken, Customer Service Expert, Speaker

and Author

American Express Customer Service turns a moment of misery into a moment of

magic

What I Have Learned

Activity 3.

Relationship Marketing Understanding Great Customer

Customers Service
Relationship Knowing Great customer
marketing is important for its ability and understanding service means
to stay in close contact with customer needs is at the following best practices
customers. By understanding how center of every successful like valuing customers'

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 customers use a brand's products business, whether it sells time, having a pleasant
and services and observing directly to individuals or attitude, and providing
additional unmet needs, brands can other businesses. Once knowledgeable and
create new features and offerings to you have this knowledge, resourceful resources,
meet those needs, further you can use it to persuade but that you also take
strengthening the relationship. potential and things a step further to
searchcustomerexperience.techtarget existing customers that exceed rather than just
.com buying from you is in their meet expectations.
best interests.
- www.helpscout.com
www.infoentrepreneurs.or
g

What Can I Do

Activity 4.
Based on our featured story in “What’s New,” what can you say about the first-hand
experience of Shep Hyken on how American Express extended an extra mile in managing
and resolving his situation? What exactly does Shep Hyken mean, when he says, “This
is more than customer service. This is confidence creation.”

Assessment
Activity 5.
MULTIPLE CHOICE: Read the statement carefully and choose the correct answer:
1. Which of the following is NOT a definition of Relationship Marketing?
a. Focus on the creation, maintenance and termination of these commercial
relationships in order that parties to the relationship achieve their objectives
(mutual benefit).
b. Trust is essential to this process of relationship development and centers
upon the keeping of promises.
c. Profit remains an underlying business concern and relational objectives are
achieved through the fulfilment of promises.
d. It is the process of decision making, planning, and controlling the marketing
aspects of a company in terms of the marketing concept, somewhere within
the marketing system.

2. This stage includes initial activities and conversations to determine if a customer and
company are a good fit for each other’s needs.
a. Become committed partners c. Get to know each other
b. Establish the initial relationship d. Develop a deeper relationship

3. Which of the following statements is FALSE:

a. Businesses believe that an understanding of consumer needs is an important
part of their business activities.
b. Businesses recognize that consumer needs can be quite different, so they try
to identify groups of consumers who have similar characteristics and needs.
c. Businesses believe consumers understand their own needs that businesses
cannot influence consumer needs with well-designed products and effective
prices and promotion.
d. Satisfying exchanges occur when you spend your money for products and
services that meet your need, and the business is able to make a profit on the
sale of its products.

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4. Studying and prioritizing market segments to locate the best potential based on
demand and competition is known as:
a. Target Market c. Marketing
b. Relationship Marketing d. Market Opportunity Analysis

5. It is a clearly defined segment of the market to which a business wants to appeal.

a. Relationship Marketing c. Relationship Marketing
b. Customer Service d. Target Market
6. The following statements are correct EXCEPT:
a. The business studies markets to identify groups of consumers with satisfied
needs on which to focus its efforts.
b. Business activities begin with a focus on the customer and a belief that if it
can satisfy customer needs better than its competitors.
c. Through extensive marketing research, the business gathers and analyze
consumer information
d. Business tries to identify other characteristics that can provide the business
with opportunities for success.
7. This stage means that your company has forged a connection with your customer
that’s hard to break.
a. Become committed partners c. Develop a deeper relationship
b. Establish the initial relationship d. Get to know each other
8. The following are ways to satisfy customer’s needs:
a. Customers need to be recognized
b. Customers need to be equally respected
c. Customer needs empathy and understanding
d. All of the above
9. The following statements are TRUE of a dissatisfied customer EXCEPT:
a. Refuses to respond to calls or emails
b. Compares you against competitors
c. They follow your social media channels closely
d. Neglects discounts and special offers
10. Which of the following statements is FALSE of a satisfied customer:
a. A satisfied customer keep coming back for more
b. A satisfied customer convince their friends to buy your product
c. A satisfied customer show appreciation.
d. A satisfied customers' language may be accusatory.

Additional Activities
Activity 6.
Knowing what you know by now …

1. Discuss why is marketing relationship is ultimately important to every business and

organization?
2. Conduct research to identify potential customers and their needs.

References
Adams, Liz. (2018). Ten of the best customer service stories we’ve seen in 2018.
https://stellaconnect.com/2018/12/11/10-of-the-best customer-service-
stories-weve-seen-in-2018-2/
Bean, Josh. (2019). What is customer relationship marketing?
https://www.zendesk.com/blog/tags/sales/