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
What is a typical objective for customer retention?
Provide premium customer service
List some measures for customer retention.
- Number of premium customers
- Quality ratings from premium customers
- Time for resolving concerns
- Percentage of unsatisfied customer queries
What is the ultimate objective of any customer management process?
Increasing the value of the company’s customers
What does cross-selling involve?
Expanding share of customers’ spending by providing higher-margin products and services
Fill in the blank: Customer retention and growth processes should yield increased customer _______.
value
How does providing additional features after the sale benefit companies?
Increases customer retention and provides high-margin revenue streams
What is a lock-in strategy?
Developing specific solutions for targeted customer needs to retain them
What is a key measure for Metro Bank’s customer growth objective?
Number of high-value customers using more than three of the bank’s services
What is the primary focus of customer management processes?
Relationship and image dimensions of the customer value proposition
What financial measures are associated with customer management?
- Revenue from new customers
- Revenue from new products and services
- Account share
What role does information technology play in customer management?
Enables customized, personalized approaches for customer interactions
What is a necessary condition for effective customer management processes?
Strong support from information technology and employee competencies
Fill in the blank: Customer management processes require a new organizational _______.
climate
What competencies are essential for customer acquisition?
- Communication skills
- Negotiation skills
- Understanding customer needs
What does a customer-centric culture emphasize?
Aligning all employees toward common, customer-based objectives
List some key learning and growth objectives for customer management.
- Develop strategic competencies
- Attract and retain top talent
- Create a customer-centric culture
What is the significance of the Handleman Company strategy map?
It communicates and implements strategies for long-term partnerships with large retail customers
What is Handleman Company known for?
Handleman Company (HDL) is one of the world’s largest category managers and distributors of prerecorded music.
In how many retail stores does Handleman Company manage its category?
More than 4,000 retail stores on three continents.
What was Handleman Company’s annual sales figure?
$1.3 billion.
How many employees does Handleman Company have worldwide?
Approximately 2,400 people.
What percentage of all music sold in the United States does Handleman Company distribute?
More than 11 percent.
Name two mass merchant retailers that are customers of Handleman Company.
- Wal-Mart
- Kmart
What is the name of the independent home video label owned by Handleman Company?
Anchor Bay Entertainment.
What were some reasons for the decline in music industry sales after 2000?
- Illegal file sharing over the Internet
- Competition from DVDs and computer games
- Lack of hit records
What was the primary focus of Handleman Company’s strategy to maintain its leadership position?
To increase shareholder value.
What were the three main components of Handleman Company’s three-year strategy?
- Profitably growing its customer base
- Optimizing capital
- Diversifying through strategic transactions
What was the ultimate financial objective of Handleman Company?
Increase long-term shareholder value by maximizing free cash flow.
What was a primary driver of Handleman Company’s strategy?
Grow profitable revenue.
What did Handleman Company aim to manage relative to growth?
Cost.
What does Handleman Company need to optimize to increase shareholder value?
Capital.
What was Handleman Company’s approach to growth?
Growth via strategic transactions.
How would Handleman Company increase its price earnings multiple?
By clearly communicating its strategy to analysts and investors.
What are the four key value propositions Handleman Company provides to its customers?
- Brand, reputation, and relationship
- Improved economic value
- Market, customer, and consumer knowledge
- Responsive and efficient operations
What is the first strategic objective in the Relationship Management Theme for Handleman Company?
Link functions to accounts and suppliers.
What does Handleman Company aim to maximize for its current customers and suppliers?
Sales by identifying growth opportunities.
What is the focus of the Indispensable Link Theme in Handleman Company’s strategy?
Build and apply knowledge of customers, consumers, markets, and industries.
What is one of the objectives related to forecasting demand for Handleman Company?
Accurately forecast demand for its products.
What does Handleman Company aim to capitalize on to differentiate itself?
Innovative processes and products.
What is the objective under the Superior Supply-Chain Effectiveness Theme?
Excel in efficient and effective operations.
What does Handleman Company need to identify and fund?
Compelling growth opportunities.
What is the first objective in the People and Knowledge Perspective?
Attract and retain the best people.
What does Handleman Company aim to cultivate within its organization?
An aligned culture.
How does Handleman Company plan to enable growth and decisions?
Through the application of technology.
What are the values that drive the achievement of Handleman Company’s strategy?
- Honesty and integrity
- Accountability
- Continuous learning
- Focus on stakeholders
What did Handleman Company do after completing its corporate scorecard?
Cascaded scorecards to its shared services units, subsidiaries, and departments.
