Chapter-9

Tsm Mktng 2024 ranp
CHAPTER 9
RELATIONSHIP MARKETING
Objectives:
1. Define what relationship marketing is and its value to tourism enterprise
2. Differentiate between traditional and relationship marketing.
3. Discuss how to retain and build customer loyalty
4. Explain the role of internal marketing in the building of relationships
5. Identify what hinders relationship marketing
Introduction
Relationship marketing is defined as attracting, maintaining, and enhancing customer
relationships. The American marketing association reinforced the importance of relationship marketing in
its revised definition of marketing to include building relationships.
Traditional marketing also called as transactional marketing ideas centered on the acquisition of
new customers and focus on transactions exchanges with anonymous customers. However, marketers
have soon realized that securing the loyalty of its existing customers and maximizing their lifetime value
have become integral to success.
Relationship marketing defined
Relationship marketing involves creating, maintaining, and enhancing long term relationships
with individual customers as well as other stakeholders for mutual benefits.
Its function is to attract, maintain, and enhance customer relationships. The goal is not only to
encourage guests to return to get them to tell their friends and relatives how good the products or services
is.
It's a popular Filipino term for regular clients is Suki what is “Suki” mentality? If there is a regular
stall in the market you buy your vegetables from, the “tindera” I would call you “suki.” On the seller's end,
he normally gives you a good price since he knows you are a regular customer. On your end, you normally
do not converse or look at others stalls anymore, trusting that this stall offers the best price and provides
good quality products.
Applying the “suki” concept some industries like establishing loyalty and building relationships
with your customers. When the buyer seller relationship depends, trust and commitment are established.
The seller commits to providing quality service at a reasonable price while the buyer trust and quality
service and reasonable prices are provided in turn. The service provider becomes top of mind as far as the
buyer is concerned.
Levels of relationships
Five levels of relationships as discussed by Kutler at all (2010)
1. Basic - sells a product and does not follow up after the sale
2. Reactive- sells a product and encourages customer to call if he has concerns or questions but will
not make the first move to ask.
3. Accountable-represent the thief gets in touch during and after the event to solicit customer
feedback
4. Proactive-salesperson phone's customer from time to time to update on product innovations in
the prospect of future sales
5. Partnership-company works continuously with a customer to discover ways to deliver better value
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Dimensions Of Relationship Marketing
Customer Retention
To retain customers, the following elements must be understood by the tourism market:
1. The value of customer satisfaction. Customer satisfaction measures how much customer
expectations are met. Customers purchase products and services with a level of expectations in
mind.
2. The cost of lost customers. Companies should know that when a customer defects, the company
loses the customer's lifetime value.
3. The importance of resolving customer complaints. This is a critical component of customer
retention. Unresolved customer complaints may result in negative word of mouth and loss of
Future Sales.
Customer Loyalty
Customer loyalty is the likelihood that the customer are to return and are willing to perform
activities with the organization. Customers spend more money while within the company premises and
tell management when things go wrong instead of just walking away.
Some satisfied customers do not become loyal for the following reasons:
1. They never returned to the same area
2. Customers like to experience different service providers when they return to the area
3. Customers are price sensitive and will shop for the best deal
Is a loyalty program the same as frequency program?

1. Frequency does not build loyalty. It is loyalty that builds frequency. Customers can stay focused
on the deal and not on the product.
2. Loyalty program is a strategy undertaken by a firm to manage the three components of the loyalty
circle (how the service works, value creation, and communication) to create an emotional bond
with customers so that they give the firm a majority of the business, provide positive word of
mouth, act in partnership with the firm I'd spend more with the firm that and and loyal guest
would.
3. Frequency program is defined as any program that rewards guests with points, miles, stamps or
punches that enables them to redeem such reward for free or discounted merchandise.
4. With frequency programs, sales may increase as they would with price discounts. Repeat
purchase may also increase but the focus is all the rewards and not on product superiority or
brand relevance.
Referrals from satisfied customers

Positive word of mouth will be most likely generated by satisfied and loyal customers. These
amounts to high level of positive reinforcement on the purchase decisions of prospective customers. With
the advent of social media, electronic word of mouth creates a wider range of positive reviews. With the
intelligibility of the tourism product, there is a heavy reliance on the experience of others. What other
people say about a product or destination matters a lot in the pre purchase stage of would-be customers.
There is less risk involved in the purchase of a product since other people have already tried it and were
satisfied. Hence, word of mouth is one of the most sought-after information by prospective customers
when evaluating alternatives.
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Complaint management system

One of the most challenging tasks of a service industry in handling complaints. The variability of the
tourism products sets the precondition of an avoidable differences in the delivery of the services. While
cannot expect to deliver tourism products and services perfectly every time. Will always raise me the
possibility that things could go wrong. What should be the perspective when things do not go as planned
and customers begin to complain?
1. Always bear in mind the first rule in customer service: the customer will be always right, but they
must be always satisfied”
2. If one thinks he is not, then rule #2 is” go back to rule #1”
3. Feedback is an important tool in knowing what our market wants. Complaints are negative
feedback from customers. Consider complaints as a gift.
In the practice of relationship marketing, consumer feedback in the form of complaints should be
encouraged. Customers should know how they would file complaints. Dissatisfied customers who
complain can more easily be converted into repeat and loyal customers than those who just walk away
with no intention of coming back.
INTERNAL MARKETING
In relationship marketing, quality should be the concern of everyone in the organization. Quality
cannot be established by just the front lines or guests contact employees; it should also be embraced by
non-guest contact employees. The QB old relations with course with organizations employees it is... Is the
more imperative for management to device ways by which there will be very low employee turnover and
very high employee morale.
The principle of internal marketing is to market hospitality jobs to employees just as they market
hotels and or restaurants to our customers. Some international hotels seek out the top graduates of
universities and offered them attractive employment packages to beef up their rosters of employees.
Companies with low employee morale will tend to provide the minimum service requirements.
They are not willing to go the extra mile. When employees are happy and motivated, these attitudes
reflect on how they perform on their jobs.
Defining Constructs of Relationship Marketing

Relationship involves commitment and trust. Trust is the belief that an individual or exchange
partner can be relied on to keep his when prompted fears trust is an antecedent to loyalty because the
customer trusts the organization to keep its word. Increase feelings of trust will lead to commitment, and
commitment to loyalty. Commitment is belief that an ongoing relationship is so important that the
partners are willing to work at maintaining it and are willing to make short term sacrifices to realize long
term benefits. Opportunistic behavior will cause a lack of trust.
The top 10 defining constructs of general relationship marketing our trust, satisfaction or
experience, loyalty, commitment, service quality, communication, empathy or customer orientation,
relationship quality or value or generation, reciprocity, and culture.
Benefits of building-relationships with customers

Building a relationship with customers should be strategic focus of tourism establishments. Some
of the benefits of relationship marketing include continued patronage of customers, reduce marketing
cost, decreased price sensitivity or loyal customers, availability of feedback, ability to create a database
asset, strength and brand loyalty, and partnership activities with customers. Loyal customers are also able
to provide you with the much-needed customer feedback, both positive and negative. They are the ones
Tsm Mktng 2024 ranp
who would tell when your product or services quality is deteriorating. They are also the ones who would
recommend your product and services to others.
A customer's lifetime value is the net profit received from the wing business with a given customer
during that time he continues to buy from you. These lifetime value can be huge especially when referrals
are considered.
Resistance to relationship marketing

Some tourism marketers have expressed resistance to the shift to relationship marketing mainly due
to the following reasons:
1. Novelty seeking behavior of tourist
2. Challenge to work closely with customers
3. Irrelevance of relationship marketing
Reasons people fail to build customer relationships

Here are some things that organisations most often unknowingly do that hinders the building of
relationships with customers:
1. Ignore inquiries
2. Ignore customer emails
3. Do not return calls within a reasonable amount of time
4. Failed to get to know the customers
5. Fail to satisfy the customers
6. Fail to deliver what was promised
7. Do not act on complaints
8. Find fault in the service delivery by pointing fingers at everyone else except oneself.
Activity
Watch video commercials of different ASEAN countries on YouTube. Compare the Philippines “it's
more fun in the Philippines” video with that of other ASEAN countries. What is our competitive
advantage?

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Chapter-9

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Tsm Mktng 2024 ranp

Dimensions Of Relationship Marketing

Is a loyalty program the same as frequency program?

Referrals from satisfied customers

Complaint management system

Defining Constructs of Relationship Marketing

Benefits of building-relationships with customers

Resistance to relationship marketing

Reasons people fail to build customer relationships

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