Chapter 10 Flashcards
One Key Purpose of the Marketing Plan
To develop and maintain long-term customer relationships
*Definition of Customer Relationship Management (CRM)
*A business philosophy aimed at defining and increasing customer value in ways that motivate customers to remain loyal
About retaining the “right” customers
Groups Involved in CRM
- Customers
- Employees
- Supply Chain Partners
- External Stakeholders
Shifts from Acquiring Customers to Maintaining
Customers - Clients
Mass Marketing - One-to-One Marketing
Get New Customers - Keep Current Customers
Discrete Transactions - Continuous Transactions
Increase Market Share - Increase Share of Customer
Based on Groups - Based on Individuals
Homogeneous Group Needs - Heterogeneous Needs
Short-Term Focus - Long Term Focus
Standard Products - Mass Customized Products
Lowest-Cost - Value-Based
Relationship Capital
Stems from the value generated by the trust, commitment, cooperation and interdependence among relationship partners.
*Stages of Customer Relationship Development
Intensity
- Awareness
- Initial Purchase
- Repeat Customer
- Client
- Community
* 6. Advocacy
Increasing the Share of Customer
Abandon all old notions of acquiring new customers and increasing transactions to focus on more fully serving the needs of current customers
5 Changes in Business Relationships
- Roles of the Buyers and Sellers
- Increase in Sole Sourcing
- Increase in Global Sourcing
- Increase in Team-Based Buying Decisions
- Increase in Productivity Through Better Integration
*Quality
Relative term referring to the degree of superiority of a good or service compared to a competitor or standard.
*Is NOT value
Core Product of Service Offerings
Components
- People
- Process
- Physical Evidence
Supplemental Products
Goods or services that add value to the core product
Often the difference between two products lies here
Why Businesses Struggle with Product Quality
- Customers have high expectations
- Most products are in mature markets
- Little differentiation
How Businesses can Improve Quality
4 Standout Issues
- Understand Customers’ Expectations
- Translate Expectations into Quality Standards
- Uphold Quality Standards
* 4. Do NOT Overpromise
*Perceived Value
*Perceived Value = (Core Quality + Supplemental Quality + Experiential Quality) / (Monetary Costs + Non-monetary Costs)
Transactional Cost
Immediate financial outlay or commitment that must be made to purchase the product
Life Cycle Cost
Additional costs that customers will incur over the life of the product
I.E. Consumable supplies, maintenance, and repairs.
The Key to Customer Retention
Customer Satisfaction
Customer Satisfaction
The degree to which a product meets or exceeds the customer’s expectations
Range of Customer Expectations
- Ideal Expectation
- Normative Expectation
- Experience-Based Expectation
- Minimum Tolerable Expectation
Zone of Tolerance
The difference between desired and adequate performance of a product.
- Customer Delight
- Customer Satisfaction
- Customer Dissatisfaction
Managing Customer Expectations
- Why are expectations unrealistic?
2. Should we delight out customers?
How to Develop Customer Loyalty
- Seek Out Negative Feedback
- Manage from the Outside In
- Recognize the One Size Does Not Fit All
- Put Service Over Personalization
Typical percentage of profitable customers
20%
Keys to Customer Satisfaction and Retention
- Understand What Can Go Wrong
- Focus on Controllable Issues
- Manage Customer Expectations
- Offer Satisfaction Guarantees
- Make It Easy for Customer to Complain
- Create Relationship Programs
- Make Customer Satisfaction Measurement a Priority
Customer Satisfaction Measurement Methods
- Lifetime Value of a Customer (LTV)
- Average Order Value (AOV)
- Customer Acquisition/Retention Costs
- Customer Conversion Rate
- Customer Retention Rate
- Customer Attrition Rate
- Customer Recovery Rate
- Referrals
- Social Communication
Benefits of Focus Groups
Allows firm to measure customer satisfaction
Includes emotional and psychological underpinnings.
Customer Relationship Strategies
- Financial Incentives
- Social Bonding
- Enhanced Customization
- Structural Bonding
Value
Definition
Subjective evaluation of benefits relative to costs that determines worth of product offering relative to other offerings
