This chapter begins by introducing the key concepts of relationship marketing and
e-CRM. We then review, in more detail how e-CRM can be implemented using tech-
niques such as permission marketing, personalisation and e-mail. E-CRM operates
within the context of multi-channel marketing. Since this concept has been covered as a
major concept within Chapter 4 we mainly focus on online relationship marketing con-
cepts in this chapter.
Relationship marketingis best understood within the context of the historical develop-
ment of marketing. The Industrial Revolution, the large-scale production of more widely
distributed, standardised products changed the nature of marketing. Whereas marketing
had previously been largely by word of mouth and based on personal relationships, it
became an impersonal mass-marketingmonologue. During the twentieth century, dif-
ferentiation of products and services became more important, and this highlighted the
need for feedback from customers about the type of product features required. Sharma
and Sheth (2004) have stressed the importance of this trend from mass marketing to
what is now widely known as ‘one-to-one’ or ‘customer-centric marketing’ (although
many would regard the latter as a tautology since the modern marketing concept places
the customer at the heart of marketing activity). These authors give the example of the
Dell model where each PC is manufactured and distributed ‘on demand‘ according to
the need for a specific customer. This is an example of what they refer to as ‘reverse mar-
keting’ with the change in emphasis on marketing execution from product supply to
customer need. Another aspect of this transformation is that online, web marketers can
track the past behaviours of customers in order to customise communications to encour-
age future purchases. This approach, which is another aspect of reverse marketing and
also a key concept with e-CRM, can be characterised as ‘sense and respond communica-
tions’. The classic example of this is the personalisation facilities provided by Amazon
where personal recommendations are provided.
Benefits of relationship marketing
Relationship marketing is aimed at increasing customer loyalty or retention within a
current customer base which is highly desirable for the following reasons:
Effectively no acquisition costs (which are usually far higher than ‘maintenance’
costs);
Less need to offer incentives such as discounts, or to give vouchers to maintain
custom (although these may be desirable);
Less price-sensitive (loyal customers are happy with the value they are getting);
Loyal customers will recommend the company to others (‘referrals’);
Individual revenue growth occurs as trust increases.
Rigby et al. (2000) have summarised a study by Mainspring and Bain & Company
which evaluated the spending patterns and loyalty of consumers in online retail categories
of clothing, groceries and consumer electronics. Their work shows that e-tailers could not
CHAPTER 6· RELATIONSHIP MARKETING USING THE INTERNET
Key concepts of relationship marketing
Relationship
marketing
‘Consistent application
of up to date knowledge
of individual customers
to product and service
design which is
communicated
interactively in order to
develop a continuous
and long term
relationship which is
mutually beneficial’
(Cram, 1994).
Mass marketing
One-to-many
communication
between a company and
potential customers,
with limited tailoring of
the message.
Customer-centric
marketing
The approach to
Internet marketing
function is based on
customer behaviour
within the target
audience and then
seeks to fulfil the needs
and wants of each
individual customer.
Sense and respond
communications
Delivering timely,
relevant
communications to
customers as part of a
contact strategy based
on assessment of their
position in the
customer lifecycle and
monitoring specific
interactions with a
company’s web site,
e-mails and staff.