Discuss the grounds for, and appropriateness of, a customer relationship marketing and management strategy in the context of Eric’s business.
Eric’s case is an interesting one and is probably indicative of many in the same position as he. His business and marketplace have some of the characteristics that make it suitable for relationship marketing, and some that do not. To illustrate, a relationship marketing program is likely to be appropriate in situations where:
- Service is likely to be regularly required – the petrol refilling service is likely to be regularly required, but the auto maintenance less so
- Competition is intense – this is true for Eric and his Caltex station
- Time, effort and cost associated with attracting new customers is high – again, this is likely to be mixed. Petrol customers view petrol as a commodity and are mostly price sensitive and often buy on impulse or convenience.
- Word-of-mouth referrals and recommendations are important – for petrol purchases this is not the case, but for auto repair or maintenance, it is very important
- Customer/service provider relationship is a highly personal one – self service petrol pumps has most likely reduced the level of contact Eric has with most of his customers
- Individual customer needs and preferences can be relatively easily discerned and catered for – petrol customers can be segmented, but the group overall is relatively homogenous.
- Risks and switching costs for a customer in changing service providers are high – this is not the case for petrol customers. There are little if any risks or switching costs associated with patronizing alternative petrol stations.
- Social bonds with customers can be established and maintained – again, the self-service nature of petrol purchase restricts social bonds being formed.
To summarize, relationship marketing is not suitable for every service. In Eric’s case, designing an effective relationship marketing program for petrol customers will be more difficult than designing one for his auto service and repair business.
Recommendations for Eric
There are several strategies Eric should consider attacking his problem. The first is to define what the problem really is. Declining clientele is not the problem, rather it is the symptom. Eric should focus on what benefits (value) his customers derive from his service and increase those benefits.
For example, petrol customers may value low prices, fast pumps, pay at the pump facilities, convenience store facilities, a variety of petrol grades, easy access and exit, and air and water facilities.
Auto maintenance customers would value trust in the mechanic, being recognized, efficient and effective service, and being treated specially by Eric.