Marketing Strategy and Competitive Positioning pdf ebook

CHAPTER 13 COMPETING THROUGH SUPERIOR SERVICE AND CUSTOMER RELATIONSHIPS
and CRM supports a customer-responsive strategy. The logic is that CRM expertise gains 
competitive advantage for a company when it:
● 
delivers superior customer value by personalising the interaction between the customer 
and the company;
● 
demonstrates the company’s trustworthiness and reliability to the customer;
● 
tightens connections with the customer;
● 
achieves the coordination of complex organisational capabilities around the customer 
(Day, 2000).
Nonetheless, there have been many criticisms of the operation of CRM systems in prac-
tice, and questions raised about their real impact. Call centres are frequently disliked by 
customers. The recent case of a call centre in the UK making 6 million cold calls in a single 
day – selling debt consolidation and legal claims against financial institutions – illustrates 
the source of some consumer annoyance (Davies et al., 2015).
Moreover, the reputational damage from crude culling of apparently less-valuable cus-
tomers may be substantial. Barclays Bank has attracted negative publicity and lost cus-
tomers by shifting customers from one account to another because they did not meet an 
income threshold – effectively suggesting they were too poor to merit a paid-for account 
(Black, 2015). Similarly, private banks such as Deutsche Bank Private Wealth Management 
have been ‘managing out’ lower-margin customers, even those with portfolios worth hun-
dreds of thousands of pounds – they are rich, just not rich enough (Cumbo, 2012). Similar 
approaches have led to good payers on credit cards having their cards withdrawn because 
the card operator makes low margins from such customers (Ashton and Watts, 2008). The 
gain from tactical customer culling should be weighed carefully against the threat to the 
company’s reputation, image and competitive position, and its ability to deliver its market-
ing strategy.
Generally, the successful implementation of CRM is linked to the following factors:
● 
a front office that integrates sales, marketing and service functions across all media (call 
centres, people, retail outlets, value chain members, Internet);
● 
a data warehouse that stores customer information and the appropriate analytical tools 
with which to analyse those data and learn about customer behaviour;
● 
business rules developed from the data analysis to ensure the front office benefits from 
the firm’s learning about its customers;
● 
measures of performance that enable customer relationships to continually improve;
● 
integration into the firm’s operational support (or ‘back office’ systems), ensuring the 
front office’s promises are delivered (Knox et al., 2003).
However, research by consultants Bain & Co. suggests that there are four significant 
pitfalls to avoid in CRM initiatives:
1 
Implementing CRM before creating a customer strategy – success relies on making astute 
strategic customer and positioning choices, and this outweighs the importance of the 
computer systems, software, call centres and other technologies.
2 
Putting CRM in place before changing the organisation to match – CRM affects more 
than customer-facing processes; it also impacts internal structures and systems that may 
have to change.
3 
Assuming that more CRM technology is necessarily better, rather than matching the 
technology to the customer strategy.
4 
Investing in building relationships with disinterested customers, instead of those who 
value the business (Rigby et al., 2002).
From the perspective of marketing strategy and competitive positioning, it is important 
to consider the CRM interface as a key element of the capability of a company to manage 
customer relationships effectively. CRM capabilities and investments need to be examined 
when formulating and implementing effective customer strategies.

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E-SERVICE QUALITY
13.7 
E-service quality
*
The rapid and pervasive growth in online trading by both consumers and businesses under-
lines the need to include online service and relational issues in executive thinking. This is 
relevant in both the pure-play or Internet-only operations (such as Amazon.com ) and for 
companies combining ‘bricks and mortar’ and online channels in their value chains (for 
example, Tesco stores and Tesco Direct). 
13.7.1 Online versus offline 
In fact, Internet retailing is a multi-billion-pound industry that continues to experience 
double-digit growth rates. Intense competition and increasingly demanding customers make 
the delivery of high-quality services vital for success in this marketplace. 
There has been wide-ranging research into online services quality. The first wave of early 
research focused on simple measures such as website usage statistics. From this, researchers 
moved on to look specifically at the website as the key aspect of online service. In the past 
several years, focus has shifted again to consider measuring the online service experience as a 
whole. There remains little consensus on the exact dimensions of online service quality, with 
many studies providing different results (see, for instance, Parasuraman et al ., 2005 or Wolfin-
barger and Gilly, 2003 ). However, it is possible to identify several broad themes in online 
research. First, the core delivery of products and services is the foundation of quality service 
in any context, be it online or offline. This said, two major differences emerge in comparing 
online to offline service: the company–customer interface becomes technologically mediated, 
and the role of trust is accentuated as the service provider is more separated from the customer.