4 - Customer Management Processes Flashcards
What is the primary focus of customer management in modern business strategy?
Building long-term, profitable relationships with customers
Reflects a shift from product-driven strategies of the Industrial Era to customer-centric approaches.
List the four customer management processes.
- Select customers
- Acquire customers
- Retain customers
- Grow relationships with customers
These processes are essential for effective customer management strategies.
True or False: In the new economy, customers react to marketing and sales calls.
False
Customers now lead transactions and initiate purchases.
What is the first step in the customer selection process?
Segmenting the market into niches
This involves identifying customer segments with distinctive characteristics.
Fill in the blank: Customer segmentation should ideally be based on the _______.
[customer value proposition]
This refers to the benefits customers seek from products or services.
What are some factors used for customer segmentation?
- Use intensity
- Benefits sought
- Loyalty
- Attitude
- Demographic factors
- Geographic factors
- Lifestyle factors
These factors help in identifying different customer groups.
What is a common mistake companies make regarding customer selection?
Failing to segment and target the market
This can lead to confused pricing strategies and unprofitable customer relationships.
What is the main challenge in customer acquisition?
It is the most difficult and expensive customer management process
Companies must effectively communicate their value propositions to new customers.
What is an entry-level product in customer acquisition?
A product that is inexpensive and serves as a low-risk introduction for new customers
Examples include checking accounts or credit cards in financial services.
List some objectives of the customer acquisition process.
- Communicate value proposition
- Acquire new customers
- Develop dealer/distributor relationships
These objectives focus on expanding the customer base.
What is the significance of customer retention?
It is far less expensive to retain customers than to acquire new ones
Loyal customers often spend more and are less likely to switch to competitors.
How can companies measure customer loyalty?
By monitoring the share of wallet spent on repeat purchases
This indicates customer satisfaction and loyalty.
What is customer commitment?
When customers actively promote the company’s products and services
Committed customers are likely to provide feedback and referrals.
True or False: Customer apostles are customers who make credible recommendations.
True
Their endorsements carry significant weight compared to regular customer feedback.
What role does service quality play in customer retention?
Ensures customers remain satisfied and do not defect to competitors
Companies must address customer requests and problems promptly.
What is a key aspect of Harrah’s Entertainment’s customer retention strategy?
Issuing loyalty cards to track customer preferences and behaviors
This helps in personalizing marketing efforts and enhancing customer loyalty.
What is a committed customer likely to do when dissatisfied?
Provide feedback rather than defect to competitors
Committed customers offer suggestions and referrals, enhancing company improvement.
How can companies measure customer commitment?
By the number of:
* Suggestions made by customers
* Referrals existing customers make
* New customers acquired from referrals
What are customer apostles?
Highly credible and authoritative committed customers
Their recommendations carry more weight than those from regular customers.
What is the highest form of customer loyalty?
Ownership behavior for the company’s products and services
How do customer owners contribute to a company?
They actively participate in product design and service enhancements
What metric did Marine Engineering use to measure its customer partnership strategy?
Number of sole-sourcing relationships
What did Metro Bank monitor to assess service levels?
Request fulfillment time for high-value customers
What is a Customer Report Card?
A tool introduced by Acme Chemicals to gain feedback from industrial customers
