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Hausarbeit (Hauptseminar), 2007
47 Seiten, Note: 1,7
List of Figures
2. Customer Relationship Management
2.2. CRM perspectives
2.3. A strategic framework for CRM
2.3.1. The need for an integrated strategic framework
3. Private Broadcasting companies
3.2. The multi-channel concept of private radio
3.3. The Concept of Radio Marketing
3.3.2. Customer Retention & Target Group Satisfaction
4. A strategic framework for customer retention in private broadcasting companies
4.1. Strategy development process
4.1.1. Business strategy
4.1.2. Strategies for client retention
4.2. Value Creation Process
4.2.1. Value Listener Receives
4.2.2. Value Advertiser receives
4.2.3. Value Radio Station Receives
4.3. The Multi-Channel integration process
4.3.3. Integrated channel management
4.4. Information Management process
4.5. Performance Assessment process
4.5.1. Customer retention measurement
4.5.2. Performance Monitoring
A. CRM Hierarchy (Ryals, 2001, p. 1 - 25)
B. Different CRM Perspectives
C. Funcitonal chain of CRM
D. A Conceptual Framework for CRM Strategy
E. Expert interview: E-Mail Response from Prof. Adrian Payne
F. The developing- process of the ’’strategic framework for CRM”
G. A Conceptual Framework for Customer Retention in Private Broadcasting Companies
H. Ergebnisse der zweiten Podcastumfrage
I. The Offline and Online Channels of Private Radio Broadcasting Companies
1. Relationship Marketing, CRM and Customer Management - a hierarchy
2. Different Perspectives of CRM (Schögel/Schmidt, 2002, eCRM, p. 35)
3. Functional chain of CRM (Bruhn, 2003, p. 45)
4. A conceptual framework for CRM strategy (Payne, Frow, 2005, p. 167)
5. A Conceptual Framework for Customer Retention in Private Broadcasting Companies, own graphic
illustration not visible in this excerpt
”Like the dotcom organizations that went bust at the end of the last century, CRM (Customer Relationship Management) is making a powerful and dramatic comeback. Today, the most exciting growth areas of the commerce are being found in the electronic arena. The same is true of CRM.” As Schultz (in Payne, 2005, p. XIII) points out, the importance of CRM has steadily increased in the last decades. More and more companies realize the value a customer relationship management can deliver in a long-term perspective. Especially in the service market, the relationship between customer and company is substantial for doing successful business. This could be said for the private radio broadcasting companies, too. As they are part of the service market, their success also depends essentially on relations. To attract their listeners, they must do more than simply delivering radio programs. Added values beside the program help to characterize the radio brand and to attract the target group. Traditional channels as well as the upcoming possibilities of communication over Internet offer new ways to interact and retain with customers. The radio broadcaster's challenge is to identify the right channel for its customers. This justifies the need for a structured way of implementing customer retention in private broadcasting companies. We are convinced that this could be done through use of the strategic framework. So in the following paper, we examine the question: ”How far can a strategic framework for CRM be used as a holistic approach to achieve customer retention in private broadcasting companies?” Therefore, it is necessary to examine both the strategic framework and the private broadcasting radio companies in detail. Afterwards, the framework has to be adjusted to the features of the private broadcasting companies.
Chapter 2 gives an overview of CRM in general and of what CRM means from different perspectives. Furthermore, the strategic framework for CRM from Payne is described more specifically, especially its requirements and its structure.
In Chapter 3, the special characteristics of private broadcasting radio companies are described. Special attention is paid to the role of service marketing for radio broadcasters and to the multichannel concept to contact customers interactively.
Chapter 4 illustrates the changes we have made to fit the strategic framework for the radio market. Every process, including new and current tasks, is executed explicitly.
The summary in Chapter 5 explains how suitable the strategic framework is for the task of customer retention in private broadcasting companies.
Customer Relationship Management (CRM) is more and more set up at a priority for corporate agendas. CRM is a management approach that seeks to create, develop and enhance relationships with carefully targeted customers in order to maximize customer value, corporate profitability and finally shareholder value. CRM is primarily concerned with utilizing information technology to implement relationship marketing strategies. (c.p. [Payne, 2006], p. 2).
To get a better idea of CRM, Payne separated the common expressions of CRM into Relationship Marketing and Customer Management based on interviews with senior executives.
As a result, ’’Relationship Marketing” was associated by the respondents with high-level strategic thinking about relationships with all key stakeholders. When describing ’customer relationship management”, managers used phrases reflecting the development of marketing strategies over the customer lifetime, such as understanding the customer base in total, understanding needs, attitudes, lifestage, profitability and lifetime value. By contrast, ’customer management” was seen by the majority of respondents as being more concerned with the tactical implementation of CRM, in particular using specific tools such as campaign management or call center activities. As a consequence they developed a hierarchy shown in Appendix A.
In the academic community exists a wide range of views about what CRM means. The definitions and descriptions of CRM, used by different authors, vary considerably, signifying a variety of CRM viewpoints. On the one hand, it is regarded as an IT solution, concerned with getting and expanding the right customer base (Cripps and Kutner define CRM as ’data-driven marketing” ([Kuttner/Crips, 1997], p. 52-54)). On the other hand, it can be regarded as much more; it involves a profound synthesis of strategic vision, a corporate understanding of the nature of customer value within a multi-channel environment and the utilization of the appropriate information management. In other words Glazer explains that, ’CRM attempts to provide a strategic bridge between information technology and marketing strategies aimed at building long-term relationships and profitability. This requires ’’information-intensive strategies” ([Glazer, 1997], p. 65-81).’
Following the authors of the general ’’strategic framework of CRM” we will define CRM as a comprehensive view in strategic terms as followed: ”CRM is a strategic approach concerned with creating improved shareholder value through the development of appropriate relationships with key customers and customer segments. CRM unites the potential of IT and relationship marketing strategies to deliver profitable, long-term relationships. Importantly, CRM provides enhanced opportunities to use data and information both to understand customers and imple- ment relationship marketing strategies better. This requires a cross-functional integration of people, operations, processes and marketing capabilities that is enabled through information, technology and applications” ([Payne, 2005], p. 22 - 23).
Based on these definitions, we can identify three relevant perspectives of CRM: the strategic perspective, the process perspective and the ICT’s (information and communication technologies) perspective, as shown in Figure B and described below.
The strategic perspective can be described as the transition from product orientation to active management of customer relationships. The strategic alignment of a CRM based company has the objective to exploit and exhaust customer potentials by leading to specific customer services that are based on the customer's individual value for the organization (c.p. [Schmidt/Schogl, 2002], p. 35).
The strategic perspective can be divided in three phases. The first one is called customer acquisition, which has the objective to transform potential buyers into regular customers. This includes all activities to convince potential clients to buy the company’s product for the first time. In general, regular customers are loyal to an organization and are reluctant to switch to a competitor. Hence, they are more tolerant in view of minor problems concerning their customer relationships than new customers. Regular customers contribute to an organization's positive reputation by spreading a positive image ([Schumacher/Meyer, 2004], p. 92). The second one is called customer retention, which, in contrast, has the objective to increase customer satisfaction and leads to augmented customer retention. Due the rising saturation of seller markets, repeated transactions with the same customers may contribute a large portion to an organization’s total revenue. Customer satisfaction and customer retention are considered to be key components of economic success. Appendix C shows the functional chain of CRM, which displays the connection between CRM activities and profitable customer relationships for both organizations and their customers ([Bruhn, 2003], p. 45-57). The third phase is labeled as customer recovery which has the objective to recover lost customers. Being in a relationship with a customer, the company has to pay attention to dangerous situations in which the customer rethink the relation and also take in consideration to cancel it (c.p. [Stauss/Seidel, 1998], p. 134). Especially when products or services are faulty, the probability of canceling the relation increases (c.p. in [Bruhn/Georgi, 1998], p. 98-108). In this case, the objective of CRM in is to return the customer to a satisfaction and retention-level. The Process perspective aims to realize CRM strategies in an integrated holistic manner. In order to achieve this, organizations have to offer customized services across all customer touch points, with such service offerings being coherent and consistent at any point in time. This involves the synchronization of front- and back-office processes. The
ICT’s perspective stands for automating all customer management processes and all customer relationship processes that connect customers across a variety of touch points to the marketing, sales, and customer service departments of an organization. In this sense, CRM-Systems can be divided into the following three elements. Analytical CRM refers to developing customer understanding through data analysis for the purpose of more effective CRM. It comprises the data collection, data analysis and decision supporting activities that are associated with customer relationships (c.p. [Schumacher/Meyer, 2004], p. 29). In operational CRM it is assumed that optimal business processes in the front-office (that is, processes related to marketing, sales and customer service) will optimize management of customer relationships. Nowadays optimal business processes can be achieved only by means of ICT's, that are hardware and software products that support customer contacts such as campaign management systems, call-center support systems and sales force automation systems (c.p. [Schumacher/Meyer, 2004], p. 29). Collaborative CRM refers to all activities and tools suitable for controlling and coordinating all customer touch points that are used to organize communication between an organization and its customers. It is crucial to manage all communication activities in a multi- channel environment to avoid overlapping communication activities.
The absence of a strategic framework for CRM from which success can be defined is one reason for the disappointing results of many CRM initiatives. For a long time, marketing strategies have been developed within functionally based marketing departments. As a result, the developed marketing strategies often did not take their organization wide implications into account. The problem is that they were functionally focused not market focused. Rarely do they consider the interrelationship of different shareholders. To succeed in managing the multiple stakeholders effectively, marketing must be cross-functional. David Packard, one founder of Hewlett-Packard said that 'marketing is too important to be left to the marketing department' ([Christopher/Payne/Ballantyne, 2002], p. 6).
Because CRM is a cross-functional activity and large companies seeks to focus on potentially millions of individual customer relationships simultaneously, it can be unwieldy to implement and impossible without a purposeful and systematic framework (c.p. [Sowter, 2000], p. 11). After an intensive review of literature, we found that only a few CRM frameworks exist. [Sue/Morin, 2001], developed a strategic framework for CRM based on initiatives, expected results, and contributions, but it is not process based. Winter developed a ’basic model, which contains a set of 7 basic components: a database of customer activity; analysis of the database, given the analyses, decisions about which customer to target; tools for targeting the customer; how to build relationships with the targeted customers; privacy issues; and metrics for measuring the success of the CRM program.’ ([Sue/Morin, 2001], p. 6). The main disadvantage of this model is that it is not a cross-functional based conceptualization (c.p. [Winer, 2001], p. 4). Another Framework was developed by the German company EDS Business solutions. It is process-based but it has a too - specific - IT-approach. In addition, it is not cross-functional based.
In 2005, Payne and Frow developed a holistic approach for a strategic framework of CRM (Appendix D). Their framework is based on a cross-functional, process-orientated approach that positions CRM at a strategic level. They identified five key cross-functional CRM processes: a Strategic Development Process, a Value Creation Process, a Multichannel Integration Process, an Information Management Process and a Performance Assessment Process. They developed a new conceptual framework based on these processes and explore the role and function of each element in the framework. In the following work we will adopt the framework of Payne to the special needs of private broadcasting companies because it is a holistic approach that offers an open cross-functional and process- orientated view (c.p. [Payne/Frow, 2005], p. 167-176).
The framework has the following requirements, set by implementing company and responsables. It should be approached with an open mind, applied with an element of flexibility and modified where appropriate, as no two organizations will share the same circumstances. Furthermore, it has to be applied iteratively in light of experiences. The successful implementation of the framework requires visible top-level backing and the full commitment of the workforce and other partners throughout the supply chain (for a more detailed description of the requirements see expert interview with Payne, 2007, Appendix E) and also further information on the development process of the framework in Appendix F.
In the following, we are going to explain the several processes of the ’Strategic Framework for CRM’, moving from the left to the right.
Process 1: Strategic Development Process The company needs to consider CRM in the context of overall Business Strategy. The strategy development process demands a dual focus on the organization’s business strategy and its customer strategy; how well the two interrelate will fundamentally affect the success of the CRM strategy. The business strategy must be considered first do determine how the customer strategy should be developed and how it should evolve over time. The business strategy process can be understood as a review of a company’s vision, especially as it relates to CRM.
The industry and competitive environment should be reviewed and it has to be ensured that everyone in the organization is pulling in the same strategic direction. The other half of the strategy is to decide which customer the business most wants to attract and to keep (Customer Strategy). This involves decisions about whether a macro, micro or one-to-one segmentation approach is appropriate. ’’Exploiting e-commerce opportunities and the fundamental economic characteristics of the Internet can enable a much deeper level of segmentation than is affordable in most other channels” (c.p. [Peppers/Rogers, 1999], p. 151-160)
Process 2: Value Creation Process The Value Creation Process is concerned with transforming the outputs of the strategy development process into programs that both extract and deliver value. The process consists of three key elements: determining what value the company can provide to its customers, determining the value of the organization receives from its customers and managing this value exchange with the objective to maximize the lifetime value of desirable customer segments (c.p. [Payne, 2002], p. 5-6).
The Value the Customer Receives from the company is the total package of benefits derived from the product or the added values such as service and support. The goal of all business is to create a value proposition for customers which is superior and more profitable than those of competitors. To determine if the value proposition is likely to result in a higher customer benefit, it is necessary to quantify the relative importance that customers place upon the various attributes of a product. Analytical tools such as conjoint analysis can be used to identify customers that share common preferences in terms of product attributes.
The Value the Company Receives from the customer is a value creation. ’From this perspective, customer value is the outcome of the coproduction of value, the deployment of improved acquisition and retention strategies and the utilization of effective channel management.” ([Payne, 2005], p. 172).
The activity of keeping existing customers and acquiring potential customers is has to become a business priority. To decide the amount of emphasis that should be placed on customer acquisition and customer retention, it is necessary to understand acquisition and retention economics at segment on an individual basis.” The key metric used to evaluate customers profit potential is Customer Lifetime Value (CLV), which is defined as the net present value of the future profit flow over a customer's lifetime.” ([Payne/Frow, 1999], p. 170)
Process 3: The Multi-channel Integration Process The Multi-Channel Integration Process involves decisions about the most appropriate combination of channels. How does one ensure that customer experiences are highly positive interactions within different channels or create a ’single unified view’ ? By identifying which benefits the customer seeks, the company can evaluate channel suitability and determine which channel option would deliver maximum benefits at the lowest costs. In an iterative process, the authors categorized the different channel options into six categories, divided in physical and virtual contact as shown in Appendix D. These include sales force, including field account management, service and personal representation; outlets, including retail branches, stores, depots and kiosks; telephony, including traditional telephone, telex and call center contact; direct marketing, including direct e-mail, radio and traditional television; e-commerce, including e-mail, the Internet and interactive digital television; m-commerce, including mobile telephony, short message service and text messaging and wireless application protocol.
The objective of these processes is to integrate the activities in those different channels to produce the most positive customer experience and to create the maximum value, no matter which channel is being used ([Payne/Frow, 2005], p. 172).
’Managing integrated channels relies on the ability to uphold the same high standard across multiple different channels’ ([Payne, 2002], p. 9). The main objective is to establish a set of standards for each channel. Afterwards, the organization can work to integrate the channels with the goal to be able to gather and deploy customer knowledge from the different channels as well as other sources.
Process 4: Information management process The information management process is concerned with the collection and collaboration of customer information from all customer contact points. The company should utilize this information to construct customer profiles which can be used to enhance the quality of the customer experience. The key material elements of the information management process are the data repository and analytical tools, IT systems and front and back office applications.
The data repository provides a powerful corporate memory of customers. It consists of databases and a data warehouse as a collection of related databases that are brought together so that the maximum value can be extracted from them. A data warehouse is used to manage the data conversation process in order to minimize data duplication and to resolve any inconsistencies between databases. In addition, through an effective use of analytical tools such as data mining and and market segmentation analysis, the data warehouse can identify the most promising customers. IT systems refer to the computer hardware and the related software and middleware used within the organization. ’’Front-office applications are the technologies used to support all those activities that involve direct interface with customers including sales force automation and call-centre management. In contrast back- office applications support internal administra- tion activities and suplier relationships, involving human resources, procurement, warehouse management logistics software and some other financial processes.” ([Payne, 2002], p. 9-11) The information management process is playing an increasingly important role in CRM through analysis and the use of enormous volumes of complex customer data. This kind of analysis provides the basis for the performance assessment process.
Process 5: Performance Assessment Process The performance assessment process ensures that CRM is delivered to an appropriate and acceptable standard in the light of the organization’s strategy. This process includes two components: shareholder results which provide a macro view of the overall relationships that drive performance and performance monitoring which provides a more detailed mirco view of metrics and key performance indicators.
The shareholder results consist of four key drivers which have to be related to the business and customer strategy set out earlier. They are: building employee value, building customer value, building shareholder value and reducing costs. Employee value as a competency determinant involves, organization, culture and leadership for success. Thus the people is absolutely critical in making CRM work. Employee value needs to be considered from two perspectives - the value employees deliver to the organization and the value the organization delivers to employees. Further, a motivated employee can add value to the customer. Customer value is concerned with both the value the organization receives from the customer and the value the customer receives from the organization. Shareholder value is created by achieving a favorable rate of return on capital invested by the shareholder. Cost reduction can be considered as a good source of increase in profits and shareholder results.
In a lot of companies, metrics and indicators to realize performance monitoring are not nearly as advanced as they should be. In particular, more detailed standards and key performance indicators are needed to plan and practice CRM activities effectively. Metrics and key performance indicators (KPIs) for CRM must adequately reflect the performance standards across the major CRM processes, and also, the linkages between these metrics and KPIs must be reinforced to secure improved results through improved CRM management.
Broadcasting companies can be divided in public, private and community companies. A lot of countries have public broadcasters, which get funding from the government to broadcast television shows and radio programs. Examples of public broadcasters are the BBC in Britain, NHK in Japan, and the CBC in Canada. Public broadcasting companies show the following properties: Common welfare orientation, non-profit character and Public Property. A second type is private broadcasting companies. These are companies which broadcast television and radio programs. To make profits, private broadcasting companies sell advertisement spaces. On the other hand, private radio stations are characterized by the following properties: orientation towards the market, private profit obtaining intention and private media property. In the following one we will pay attention to private broadcasting radio companies.
As in the last years more and more private broadcasting companies have tried to conquer market shares, the competition has become stronger and stronger, so it gets more and more difficult for the stations to reach their fundamental goal: the satisfaction of their customers. To be more specific, the satisfaction of the advertiser's and the listener's preferences. Whereas the advertiser is focused on maximizing the number of relevant contacts he can get when paying for an advertising space in the radio program, the listener's major interest is the consumption of information and entertainment. A retention of these groups is primarily achievable through a customer-oriented program configuration. Additional potentials for customer retention can also be found in services beside the main value-program, which use further communication channels to add extra values, the 'added values'. All those services can be grouped by two main streams, the offline channel and the online channel. The following paragraphs will point out the essential properties of those channels for the private broadcasting radio stations.
Offline channels are all channels which create values or contribute to communications without the Internet, aside from the program (off-air) itself. They are differentiated by program format and target groups. Offline channels include hotline, merchandising, event, social sponsoring and self-advertisement. A detailed description of the input and output of the channels can be found in Appendix I
Online Channels Besides the offline channels, a radio broadcasting station can be present in a variety of online channels to enhance communications and create added values. In the following, we describe the online channels specifically livestream, podcast, e-mail, web site, weblog, MyRadio, forum and chat. A detailed description of the input and output of the channels can be found in Appendix I
Radio marketing is an intersection of several different parts of marketing theory. First of all it is a kind of service marketing. Regarding the properties of radio programs, it is obvious that radio broadcasting is - foremost - a kind of service. A service whose actual program is seen as main value, whereas further services (like events and informational services) are seen as added values (c.p. [Schaaman, 1998], p. 2). Another important part of radio marketing is the customer retention and customer satisfaction. More and more it is used to communicate interactively with customers. As radio broadcasters are acting on two markets, this has to be ensured as well on the listener as on the advertiser market.
Service marketing is considered as the planning, organization, execution and control of all activities, which focus the product range to customer benefits in a service company ([Bruhn, 2003]). As radio broadcasters are suppliers of services, their marketing orientation has to be regarded under the service marketing paradigm. Compared with real goods, services are a different kind of products in several ways; they are intangible, they require special human or machine abilities (i.e. know-how or automated processes) to be executed. So they depend on external factors (they have to be brought directly at the customer or his property). One of the central tasks of service marketing is the permanent control of service quality. Therefore, a service quality measurement is needed and has to be implemented (see Section 4.5.1).
For the creation of a radio broadcaster, it is also necessary to develop a listener-, advertiser- and employee-oriented corporate culture, which is based on shared values and behavioral norms as well as shared ways of thinking and shared behaviors. Especially in case of deeply individualized and deeply interactive services, a cultural coordination of listeners, advertisers and employees is essential. Following this guideline, radio broadcasters often broaden their activities to contact points other than just the radio program itself. Behind all services, it is important to establish one radio-brand, which ought to be what listeners notice every time they get in contact with the broadcaster's services. Once established, this enables the building of listener retention through listener loyalty. Listeners, who are willing to come back frequently, are substantial for longterm retentions. In addition, a well defined radio-brand can be used to differentiate one's own program from the competitors' program clearly.
Today's media landscape is shaped by an increasing supply of media and by an ongoing increase of media experiences. On top of that, listeners ability and willingness to switch from one channel to another has increased. Under these circumstances, the satisfaction of listeners is one of the key success factors for a private broadcaster. Based on consequent and steady feedback-driven listener orientation, a long-term customer relationship can be established. Taking care of the listener's feedback means the broadcaster is able to Figure out the listener's needs from his perspective. Once long-term relationships with listeners is set up, it can be used to establish long-term relationships with advertisers. the more (frequent) listeners the broadcaster can offer the advertisers, the stronger is it’s position in the negotiations with them. Satisfied listeners can boost the increase of the broadcaster’s customer base in several ways. The word-of-mouth recommendation has to be mentioned as the most important one. When it comes to services like radio programs, people tend to trust a friend’s recommendation more than advertisements or recommendations in the media. As satisfied listeners spread out their satisfaction to their friends and colleagues, they increase the broadcaster’s reach and - in addition - it’s potential for acquiring new listeners through satisfied listeners. With satisfied customers, the creation of a relationship system between customers and the broadcaster is made much easier (c.p. [Schütze, 1992], p. 1).
Private broadcasting companies are challenged twice in terms of customer retention, because they have to be aware of both customer retention approaches: the business-to-consumer approach for the listener market and the business-to-business processes for the advertiser market.
All listener retention actions have to be part of the strategic listener retention approach. As a strategic component, the listener retention approach has to be deduced from the company’s goals. So, the listener retention approach includes the conception, planning, execution and control of all activities from a radio broadcaster, which aim to generate long-lasting positive behavior patterns of listeners.
The relationship between the listeners and the broadcasting company can be classified as a typical business-to consumer-relation (B2C). Hence, the fitting of the instruments of customer retention for business-to-consumer B2C have to be evaluated for the radio sector. When looking at institutions, contracts, technologies, peoples and services as the B2C instruments ([Plinke, 1997], p. 52), it is obvious that contracts are hardly feasible in a market with free-of- charge-consumption. Institutions seem to be imperfect instruments, too. In general, the main instruments for binding listeners are offering special services, the use of innovative technologies and having a customer-oriented team of employees able to speak the ’listener’s language’.
The current listener retention status can be drawn from the existing listen and recommendation behavior as well as from the future listen and recommendation intentions. To be listener-oriented means to respond to the listener when it comes to program configuration and deliver him the expected quality. For this, an excellent knowledge of what listeners like to listen to is needed. In addition, a consistent check of all feed-back channels delivers valuable information about that topic. This Information enables the implementation of the needs of potential listeners into the broadcaster’s process of finding a listener-oriented strategy. This means the broadcaster has to get a feeling for current or upcoming trends in his audience. Once he is able to know in which direction listeners attitudes will change in the future, he can react and change his program as it happens, and not thereafter ([Schütze, 1992], p. 130-153).
On the other hand, it is not enough to know whether a certain aspect in the program is useful for satisfying listeners or not; it is also necessary to differentiate between those creating main values and those creating added values. Do these aspects influence the listener in a cognitive or an affective way? The core values as well as the added values, generated by the program, decide whether a listener will be satisfied or not. The listener’s engagement is preceded by a set of experiences which is a product of the consumed core and added values.
Detecting the listener’s satisfaction can be done through qualitative or quantitative market research. Doing qualitative research for listener satisfaction could mean to organize group meetings with customers. Quantitative market research is useful for collecting data about the program reach per day, the average program resting time, the broadcast station’s awareness level, the widest reach the number of regular listeners or the listener fluctuation.
Apart from the listener market, the radio broadcaster acts on the advertiser market. For understanding the circumstances on the market for advertising in radio programs, it is useful to switch to the advertiser’s perspective to comprehend when retention is attractive for him. An advertiser will analyze one special Figure when deciding whether to buy time for advertising in a radio program or not: the number of potential contacts the radio station can offer him for a given budget. The higher the number of contacts, the more attractive is the booking of advertisement space in the station’s program. If a radio station can offer at least the minimum of required advertising contacts, it can start to build up a long-term relationship with advertisers. For those advertisers, spending frequently budgets at the radio station, a economic advertisement effectiveness study ought to be installed.
Beside the notable service quality and the expectations of the advertisers there are a few other remarkable indicators delivering information for customer retention. Especially the number of long-term customers and their contribution to the success of the business or the total amount of advertising capacity in a program are important remarks when it comes to service quality measurement. When looking at the advertising capacities, one has to take into consideration that the German law limits the maximum amount of advertising per hour. An analysis of the impact of long-term relations on the success of business can be done by using a relationship- lifetime-analysis (c.p. [Schütze, 1992], p. 212)
The observed quality of a radio program (or of other services) depends deeply on the quality of the interaction between suppliers and recipients (c.p. [Kotler/Bliemel, 1995], p. 717). Interaction implies a two-way influencing of relationships, i.e. both parts are producers and consumers in the communication process. Interacting with its listeners and advertisers offers a radio station the great chance of doing its own market research, because the actions initiated by the station cause reactions on customer’s side. These reactions can contain compliments as well as criticism. The latter would show that the radio broadcaster has to act, to correct his strategy and try to focus in on the customer’s wishes. This kind of integration of external factors was uncommon in days before the Internet and today’s infrastructure. It was not the awareness of integrating feed-back that was missing, it was simply the lack of technical possibilities as they are present today. In terms of quality of services, which are offered to the customers, one cannot ignore that both the service creator and the service receiver influence the resulting service quality. Also, both parties have to fulfill certain conditions to enable the creation of a relationship. Relationship marketing without interaction is not possible. The creation of a relationship requires a mutual engagement for keeping the relationship up. For its improvement, interaction is necessary, too. A successful interaction is given when both parties feel that they are equal or near equal partners. This occurs on the listener market as well as on the advertiser market ([Forgas, 1995]. p. 207). In the majority of cases, the radio station’s employees are the station’s contact point to the customer. Whatever they do, say or write, it will shape the image the customer gets from the radio station as no other aspect can. That brings up a challenge to the radio broadcaster: What should the employees be like? To answer this question, it is helpful to define the requirement profile from the customer’s point of view. What will he expect from the employee of the radio station he has had contacted? All in all, the dimension of interaction that can be offered and handled as well as its quality are relevant factors for the success of a private radio broadcasting company. This is a circumstance which should be taken into account when creating the strategic planing.
In the following we will adapt the ’’Strategic Framework for CRM” (section 2.3) to the special requirements of customer retention in private broadcasting companies (section 3). Therefore, it was necessary to change some parts of the original framework as shown in Appendix G. This section deals with the changes and adaptations in the five main parts, Strategy Development Process, Value Creation Process, Multichannel Integration Process, Performance Assessment Process and Information Management Process. The adapted framework can be found in Appendix G.
The strategy development process is the first of five processes to be considered in the CRM strategic framework. It defines the overall objectives and parameters for the organization’s CRM activities. The process involves determining the business strategy and the customer strategy. It has to be ensured that they interrelate fundamentally. In the special case of a private broadcasting radio stations we will divide the customer strategy into listener and advertiser strategy. On one hand, listeners can be satisfied by an appropriate program (main value) and by added values like MyRadio by online channel. On the other hand, advertisers have to be satisfied by a good coverage-to-price ratio. For both, a particular strategy is necessary. The most noticeable difference between these two markets is that the listener market has to be regarded under the paradigm of business-to-customer markets (B2C), whereas the advertiser market has to be regarded under the paradigm of business-to-business markets (B2B).
To set a successful business strategy the actual company-situation referring to customer retention has to be analyzed. We recommend the classical SWOT-analysis to identify the internal strengths and weaknesses and external opportunities and threats ([Stableton, 1998], p. 69). Therefore, it is necessary to identify the position of the company at the radio market in comparison to their competitors (c.p. Section 4.5). In the case that a CRM strategy with a performance assessment process is still launched, data therefrom can be used to analyze the current situation. Based on this, a comparison of the targeted and actual situation can be started. In the following it is necessary to set up a business strategy for the radio company, a business vision. A general vision could be, for example to bind listeners by holding the coverage constant and bind the advertiser clients by booking out all advertisement spaces beforehand (c.p. Section 4.5). In the light of the business vision strategies for listener and advertiser retention should be developed. The targets of each strategy have to be controlled by the Performance Measurement Process (c.p. Section 4.5).
The initiation point for strategic listener retention is the listener market segmentation. One approach to segment could be found in [Oehmichen/Schroter, 2000], p. 361, where listener are segmented into nine target groups (i.e. one identified group is called the ”event-orientated people”, including the people round about 30 years). Primarily, the radio station has to realize a target-group-oriented program that supports interaction and offers identification-enhancing added values through added services. Customer retention is realized by expanding the product mix. This requires a high innovation potential. For analyzing the listener’s preferences the conjoint analysis could be useful ([Green/Srinivasan, 1978], p. 103-122). Besides the creation of a listener loyalty strategy, one of the main strategic targets is to realize a time strategy. This is the approach of gaining the maximum share of the listener’s time budget. This results in an increase of coverage. The trend and scene marketing is a field of investigations that cannot be ignored by radio broadcasters, as they depend heavily on being up to date with their services ([Meffert/Bruhn, 1995], p. 719). The building of long-term relationships and binding of advertisers through customer retention is as essential as it is for the listener market. Advertisers try to spend their budgets on that advertisement space that promises the biggest amount of potential customers, which depends on the radio station's target group, so for an advertiser strategy it is necessary to know what target group of listeners the radio station is willing to address. The close contact to the listener, who is targeted audience of advertisers, can be used by the radio station to gain further profits through added services. Listener-oriented stations collect a bunch of information about the preferences of their audience which can be used to offer consulting services for advertisers. A look into the television market shows that this concept has been realized already: the private music channel VIVA offers a kind of trend consulting for it’s advertiser clients. Special interest radio programs are appropriate to gather listener preferences ([Viacom Research, 2007], published in the Internet, last accessed: 01.06.2007,05:35). The expansion of a radio broadcaster’s activities benefits the development of long-term relations. Advertiser satisfaction will be reached when the radio station is able to deliver a stable level of service quality. The point of measurement has to be the service quality noticed by advertisers. Just like the approach in the listener retention, the expectations of advertisers have to be monitored perpetually. Without this, it would not be possible to act or react in time to fulfill customer needs.
This chapter examines the value creation process. Creating customer value can be seen as the key source of customer retention. The value creation process is a critical component of CRM as it translates business and customer strategies into specific statements of what value is to be delivered to listeners and advertisers and, consequently, what value is to be delivered to the radio station. In the following we will change the original process of the framework by breaking into the terms ’’Value Customer Receives” through the terms ’’Value Listener Receives” and ”value advertiser receives”.
The value the customer receives from the radio station is the total package of benefits which are delivered through the program as the main value and different online and offline channels as the added values (c.p. section 3.2) We are now going to identify the value, for the listener transported by each channel. The program as the main value has to ensure that the listener gets the entertainment and the information he is looking for. Therefore, it is essential that the program is adjusted to the special needs of the target group.
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