Chapter 14  
Customer Relationships

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 Chapter  Overview 

Chapter 14 is devoted to customer relationships. Customer Relationships result from two directions: a product or service that has sufficient value to bring customers back again and again and a customer that provides a sufficient revenue stream to be profitable for a business.  The customer and the business must need each other for a relationship to emerge.  The strength of that relationship is measured by loyalty.  As customer loyalty increases, profitability increases also, providing motivation for building more customer loyalty.  Loyalty goes beyond mere satisfaction. It is a deeply held commitment to re-buy in spite of efforts  by competitors to motivate the customer to switch.  Customers move through four phases of loyalty, the most advanced of which are based on experiences they've had with the business, not on information about the business.  The experiential basis for advanced phases of customer loyalty make it important to develop processes in all aspects of business that create the level of customer delight that engenders loyalty.

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Chapter 14 Support

Esources 
Esource   14.1  Online services designed for consumer complaints and complements have emerged as an input for disatisfied consumers. Planetfeedback.com and NetComplaints.com are two examples. Planetfeedback has information most useful to businesses interested in buzz, while NetComplaints.com tends to focus more on complaints. Visit Planetfeedback.com and examine its services to customers and companies. 
Esource 14.2  It should be not surprise that with more businesses implementing CRM systems, more businesses will build those systems. Interact is a system provider for several CRM- related products, from contact management , to relationship management, to automated sales management. 
Esource 14.3  Lands' End has developed a reputation of being extremely easy to do business with. Their no-nonsense, easy-to-understand Principles of Doing Business demonstrate how a commitment to building customer relationships translates into business practice.

Supplementary Readings 
Supplementary Reading 14.1 There are plusses and minuses to consider in all business decisions. In How to Build Customer Loyalty in an Internet World (CIO Magazine, Jan. 1, 2002), both sides get a look. Not surprisingly, CRM can be used in ways that don't increase customer loyalty at all.
Supplementary 
Reading 14.2		 Why Service Stinks (Business Week, October 18, 2000) looks at what can sometimes be the back side of CRM: what happens to the customers who aren't profitable.
Supplementary 
Reading 14.3		 But Wait, You Promised .... (Fast Company, Issue 45) provides an interesting discussion of customer satisfaction in new economy.

Links to Operations On Site Companies
Operations On Site 14.1 Intrawest, owns and manages a variety of property, from real estate to resorts and golf courses. 
Operations On Site 14.2 Gap emphasizes "easy to do business with" attributes at its website.
Operations On Site 14.3 Speedpass continues to expand its convenient and quick payment process.
Operations On Site 14.4 If you like alternative music, it doesn't get any better than 97X-WOXY radio. Explore the site, check out the playlist, and listen in.

 

 

OM Exploration

Check it out: Internet Reference Sites for Chapter 14
Customer Relationship Management has grown to the point of there being many CRM resource sites available online. Below are a select few of those that offer information on customer relationship management.
CRM Daily The CRM Forum
CRM Guru CRM Commuinity
CRM Magazine  

OM in Action 
OM in Action 14 .1 Positive word of mouth or "buzz" is generated by loyal customers who become advocates of a product or service.  Buzz has also taken on a more general meaning that refers to any "talk" about virtually anything. Yahoo's Buzz Index attempts to measure the amount of buzz generated by tabulating searches for particular topics.  Occasionally, products and businesses appear on this index.  
a. For a business that makes this list, positive word of mouth being measured? 
b. What actually is being measured by Yahoo's Buzz Index?
OM in Action 14.2 Amdocs describes itself as a "provider of information solutions to the leaders of the communications and IP industry." 
a. What services and products does Amdocs actually provide?
b. Investigate the CRM services and products offered by Amdocs. What capabilities do they have? How are these capabilities helpful in improving customer relationships? 
OM in Action 14 .3 Visit the American Customer Satisfaction Index website. Explore the "Scores by Company" index.
a. Select a company you do business with and examine how its scores have changed in recent years. How has it performed.
b. Compare your company to others in its industry. How does it perform relative to its competitors?

Online Business Tours 
Online Business Tour 14.1 The use of online business tours has created an opportunity for potential customers to find out how a product is made.  For some industries, printing and musical instruments for example, on line tours are quite common. In other industries, tours are virtually nonexistant. Yamaha, a producer of band and orchestra instruments, provides a tour for many of their products. 
a. Visit the Yamaha factory tour page and select an instrument tour.
b. Assuming that new customers are basing their purchase decision on information they receive from the company, what information is provided by the tour that couldn't be provided in a typical brochure or from a music store employee?
c. For the musician, what information related to aspects of value, is enhanced by an online tour? 

Letters from the Top 
Letter from the Top 
14 .1		 In his 2000 letter to shareholders, Target Corporation CEO Bob Ulrich describes several means of increasing profitability, from increasing store density to enhancing brand image.  Several of his ideas, however, are directly focused on enhancing customer relationships.  
a.  What techniques is used by Target to enhance customer loyalty?
b.  Do you think these techniques will work? Why or why not?
Letter from the Top 
14 .2		 As we know, strong customer loyalty comes from experiences, not information.  Few companies have been able to develop the customer loyalty of Harley-Davidson.  Likewise, few companies  that actually sell a product have been able to market it as an "experience" as well as Harley-Davidson, either. Go to the Harley-Davidson Investor Page.  Click to download the "2000 Annual Report" and read the "Chairman's Letter".
a.  From the letter, do you think "The Harley Experience" is as important as the Harley product? 
b. Do you get the feeling that the Harley-Davidson Company understands just how important that experience is? Why?

Putting It All Together:  A Virtual Case Study
Putting It all Together 14.1:  Lowes has been engaged in an ongoing competitive battle with Home Depot.  In the 2001 Annual report letter to shareholders (page 5), the importance of customer relationships is stressed. In Lowe’s is Sprucing Up its House, Business Week, June 3, 2002, actions being taken by Lowe's are described.  
a. How do the actions being taken by Lowe's support the desire to improve customer relationships?
b. Lowe's website  is also designed to increase loyalty to Lowe's. What features and services offered by the website will increase customer loyalty? How?

Additional Reading
Additional 
Reading 14.1