Republic of the Philippines

Department of Education
DIVISION OF CALAPAN CITY

PRINCIPLES OF MARKETING
GRADE 12/Week 3 & 4
CONTENT STANDARD: The learners demonstrate an understanding of the value of customer relations and customer
service.
PERFORMANCE STANDARD: The learners shall be able to develop a program for customer service.
MOST ESSENTIAL LEARNING COMPETENCIES: Define “relationship marketing” ; explain the value of customers.
ABM_PM11-Ic-d-5 / ABM_PM11-Ic-d-6
SPECIFIC OBJECTIVES: At the end of the lesson, you are expected to;
>define “Relationship Marketing”
>identify and describe “relationship development strategies”
>explain the value of customers

Ask yourself…
1.Have you ever experienced good customer service from a certain establishment? Recall your experiences.
2.Why do you think good customer service is important for an establishment to progress? Analyze your answer.
3.Is it important to maintain customer service quality?

Let’s Get Started…

Relationship Marketing (RM) is the facet of customer relationship management (CRM) that focuses on
customer loyalty and long-term customer engagement rather than shorter term goals. Relationship Marketing
was first defined as a form of marketing developed from direct response marketing campaigns which
emphasizes customer retention and satisfaction, rather than a focus on sales transaction. Relationship
Marketing is important because it helps you not get new customers, but keep them once you have them. Why?
Because you’re building a better experience for them as they engage with your business.

Some of the more popular customer service practices in the Philippines.

Customer Service Practice Practicing Organization(s)

Free delivery Most restaurant and fast food chain
Automated in-home ordering system Some supermarket and drugstore
Free gift wrapping/ plastic book jacket Some department store and book stores
Merchandise/ document pick up Selected courier services
Free parking Some resorts, malls, hotels
Free-alteration on garments Selected apparel retailers
Free appliance installation Most appliances stores
Scheduled floral bouquet delivery Some flower shops
Help desk, 24hour customer hotline Most utility firms and telecommunication firms
Complimentary refreshments, waiting lounge Most car dealership
Drive- through Most fast food outlets
 Know more…

Customer Driven Marketing

A customer is a person or organization that transacts with a business person or business organization to buy goods or
services for monetary or other valuable considerations. Acquiring and keeping customers is the end goal of businesses
because customers create demand. Through customers’ purchases, organizations are able to cover manufacturing costs,
operating expenses, and generate profits. Because customers have varying needs and preferences over time, organizations
must be able to offer products and services at the time when customers need them. Marketers cannot force the customers to
buy any product or services that the company offers. Instead, consumer needs and wants must be understood and anticipated,
as well as be satisfied adequately and exceedingly. Companies must predict customer needs.
Customer Service
Customer Service is the process of ensuring customer satisfaction with a product or service. Customer service can
take on many forms- salesperson assistance, product delivery, technical advice, help desks, or other means. It involves
activities designed to enhance customer satisfaction, or the perception that a product has met or exceeded expectations. Good
customer service can lead customers to perceive the value offered as superior over its competitors. This is because a
customer not only buys a product or pays for a service, but also the entire purchase or shopping experience.
Managing Customer Service Quality
Maintaining high levels of customer service quality may be challenging due to variability of services. In order to
ensure the consistency of customer service quality, organizations conduct rigid customer service training and assess
periodically how well services are delivered. This assessment can result in the identification of customer service problems,
areas for improvement, and current level s of customer satisfaction. Companies can best manage customer service quality
by: 1. Establishing service objectives with specific and measurable targets; 2. Committing sufficient organizational resources
towards the achievement of these target;3. Collecting customer feedback on service quality regularly;4. Reviewing target
accomplishment; 4. Reviewing target accomplishment; 5. Identifying customer service weaknesses and connecting them.
Organizations must constantly bear in mind that it is better to exceed customer service expectations than to simply fulfill or
underachieve them.

Customer Relationship Management (CRM)

Customer Relationship Management (CRM) is a process of managing an organization’s interactions with current
and future customers. The rationale for CRM is the recognition that companies can sustain long-term profitability by
attracting and maintaining their most valuable customers. But how can these customers be identified? This can be done
through the use of consumer databases. Initially, marketing companies create and maintain customer databases that record
and keep the following information: customers names, birthdates, contact numbers, and physical and email address.
Customer database information is also used in customer segmentation and profiling. Through databases, businesses can have
a precise identification of their customer base.
Customer Lifetime Value
Customer Lifetime Value (CLV) is the forecasted sales or profits that a company can derive from the entire span of
its future relationship with a particular customer. A customer lifetime value can be based upon the potential value and
profitability of his/her relationship with the company.
The CLV perspective has several distinct implications: * It considers a longer-term perspective of a company’s
relationship with customers in contrast to a short-term view of “take the customer’s money and run.” * it calculates and

CLV can be measured using the formula:

CLV=(PV)(RP)(RT)
Where: PV is the average peso value of a sale to a particular customer or customer group
RP is the repeat purchases in a year
RT is the retention time in months or years
CLV is the customer lifetime value
compares costs of acquiring new customers and keeping the old ones. * it highlights the importance of market segmentation,
with the recognition that some customer group are more profitable than others.

For example, an athlete who spends P2,000.00 for every visit to a spa and goes to the spa twice a month for an
expected time period of five years would have a CLV computed as:

Let PV = P 2,000.00
RP = 24 (twice a month for 1 year)
RT = 5
CLV = ?

CLV= (PV) (RV) (RT)

= (2000.00) (24) (5)
= P240,000.00

The athlete’s Customer Lifetime Value is P240,000.00

By knowing the value or worth of its customers, a company can focus its resources in attracting and keeping the
“right” type of customers. This focus will improve CRM efforts and will position the company for innovation and growth.

Successful Customer Relationship Management Strategies

The following are effective guidelines in the implementation of customer Relationship Management.

1.Adopt the right mindset towards customer service- investment in customers service will not strain, but will instead
improve a company’s finances overtime. Customer service is the provision of service to the customer before, during, and
after purchase. It may be in the form of innovation, pricing scheme, extra services, customer feedback mechanism, or staff
training that aims to promote customer satisfaction.
2. Purchase or develop CRM software- CRM often involves the use of technology to organize, automate, and synchronize
sales and marketing with customer service and technical support. A CRM software should have service-oriented features
based on customer needs. It should provide solutions to easy and complicated problems, address customer requirements, and
facilitate communication between the company and its present and future clients.
3. Estimate customer acquisition and retention costs – using CLV, the total cost for acquiring or retaining a customer can
be calculated and determined.
4. Develop and implement a customer service training program – the customers are the lifeblood of any business. This
makes the - customer service critically important. Customers expect to get what they pay for. Satisfaction is key. A
customer Service Skills program can help the employees establish a customer-driven behavior. Implementing a training
program that commits the entire organization to Customer Relationship Management can make every functional department
understand their vital role and develop significant CRM skills such as listening skills, conflict resolution, customer needs
anticipation and empathy among others.
5.Empower salespersons to make decisions – the salespeople is the one responsible for sealing the deal with a customers.
A salesperson should be empowered to make instantaneous decision while with a customer or potential customer.
6.Establish communication lines between your customer and customer contact staff – communication is essential for the
CRM strategies. Make sure to require the sales contact personnel to introduce themselves to customers. Oftentimes, a
customer who has a concern or inquiry would prefer talking to a salesperson who has already gained his trust.
7. Shop your competition – Keep track of what competitors are doing in the area of customer service. Adopt their good
practices to stay ahead of the game.
8. Keep innovating customer service – try to discover how the organization can make the experience of customer better.
Keep customer service costs in check by occasionally doing cost-benefit analysis or the approach of estimating the strengths
and weaknesses of alternatives to satisfy transactions for a business.
9. Promote genuine customer service with passion- Customer contact personnel must internalize that the customer is the
actual source of their livelihood.
TRY THIS…

Activity 2.1 – Customer Lifetime Value

Directions: You will compute the CLV for the following situation. Follow the guide provided below.

1.Mrs. Abad spends P4,000.00 for every visit to a supermarket twice a month for an expected time period of five years.

2.Mr. Alfonso spends P1,500.00 for every visit to a fast food chain with his wife and 2 children once a month for an expected
time period of one year.

3.a senior high student spends P300.00 for every visit in a bookstore once every 3 months for an expected time of 9 months.

4.An Overseas Filipino Worker from Dubai spends P3,000.00 for every package she sends to the Philippines via courier
service once a year for an expected time period of three years.

PV = ___________________
RP = ___________________
RT = ___________________
Computation:

CLV = _________

Activity 2.2
EXERCISE QUESTIONS
Answer this…

1.Why does it seem that only high-end retailers practice superior customer service? Is it possible for low to
medium-end retailers to give superior customers service? Explain in writing.

2.Why is there a need to maintain relationships with customers? Does this apply to the neighborhood sari-sari
store? Explain

3.Why is there a need to empower salespeople to make decisions? Give a scenario in which a salesperson
made a decision that helped the business.

4.Narrate your recent shopping experience. Was it pleasant? Were you satisfied? Explain how customer
service played a role in your experience.

5.Is the market driven by customer needs and wants? Give examples of products or services that are offered
because of customer wants that have been transformed into customers need. What do you think were the
reasons why the customer wants became customer needs?

Activity 2.3

Wheel Chart

Directions: Using the graphic organizer below. You will cite importance of a good customer service. Write it in
each partition on the wheel.
 Importance of a
good customer
service

Prepared by:

ANGELO B. AHORRO
Teacher II

References:
Principles of Marketing by: Real C. So ; Oscar G. Torres ; Angeles A. De Guzman, DBA
Principles of Marketing by: AB Ilano
 PRINCIPLES OF MARKETING
WORKSHEET NO.
MELCs Assessment 2

Name of Learner: Date:

Grade Level/Section:
Directions: You will develop a Customer Service Skills Training Program for a certain business establishment of your choice.
Follow the format and study the examples provided below. You may refer to the lecture for the different Customer
Relationship Management strategies.