Chapter 3+4 + Customer Relationships + Customer Pyramid

Question 1

MP 2

Answer 1

All customer change -> managing customer dynamics

Question 2

Sources of customer dynamics

Answer 2

• discrete life events
• aging people mature
• product lifecycle (after using a product their preference might change)
• changes in economy market conditions

Question 3

3 approaches to managing customer dynamics

Answer 3

• lifecycle approach
• AER model acquisition, expansion and retention
• customer lifetime value

Question 4

Lifecycle approach

Answer 4

Introduction
Growth
Maturity
Decline

-> easy simple to use

Question 5

AER acquisition expansion retention model

Answer 5

Acquisition: attracting customers
Customer onboarding , homogeneous

Expansion: increasing the relationship value’s

Retention : maintaining engagement and loyalty
Some customers are lost due to a change in dynamics, preferences or life events

-> personalised offers, loyalty programs, other incentive to keep customer due to competition

Question 6

CLV customer lifetime value approach

Answer 6

A way to measure the financial value of customers over time
-> long term profitability that a customer can generate for the firm
-> retention rate, profit margin, acquisition, retention cost

Question 7

MP 3

Answer 7

Managing relationship based sustainable competitive advantage

Question 8

Relationship marketing

Answer 8

Developing and maintaining strong customer relationship to build loyalty and create relationship equity which is crucial to achieve SCA

Question 9

Relationship equity

Answer 9

Refers to the value that is created through strong long lasting relationships between a brand or business and its customers, employees, or othe stakeholders.
-> trust, commitment, gratitude

Influence customer behaviour which in turn enhance the seller’s financial outcomes

Question 10

4 mechanisms of relationship equity

Answer 10

• increased coorperation benefits
• loyalty
• word of mouth
• empathic behaviour

Question 11

Increased cooperation

Answer 11

Strong relationships foster cooperation between seller and customers, leading to value creation for both parties. Thus value creation enhances financial performance over time as customers become more adaptive to sellers requests and changes

Question 12

Loyalty

Answer 12

Relationship equity fosters customer loyalty which reduces customer churn and increases repeat business, thereby improving financial outcomes

Question 13

Positive word of mouth

Answer 13

Satisfied customers who value their relationship with the seller are more likely to recommend the seller to others leading to new customers acquisition and financial growth

Question 14

Empathic behaviour

Answer 14

Trust and commitment within relationship encourage empathic behaviour where customers are more willing to support the seller through difficult times providing financial stability

Question 15

Relationship quality

Answer 15

Commitment
Trust
Gratitude
Reciprocation

Question 16

CRM customer relationship management challenges and new insights

Answer 16

• interconnected relationships
• rising costs of relationship maintenance
• proactive relationship termination
• customer are more strategic
• multi faced customer value
• churn prevention

Question 17

Customer tier system

Answer 17

Companies categorise their customers into different levels or groups based on their profitability,loyalty, or overall value to the business.

Question 18

Characteristics of a tier system

Answer 18

• pyramid structure
• differentiated service levels: each tier offers different benefits to customers
  (Top tier receive personnalisées services exclusive discount)
• incentive for advancement: encourage customers to increase their engagement or spending to move up to higher tiers and received better rewards

Question 19

Why companies use a tier system?

Answer 19

• resource allocation : allocate resource more efficiently
• customer retention and loyalty
  -> profit maximisation

Question 20

Customer pyramid

Answer 20

Platinum tier: top tier most profitable and loyal
Gold tier: also profitable and loyal but may not spend as much or frequent
Iron tier: contribute to firms profitability but are not as high value
Lead tier: customer that cost the firm

Question 21

80/20 rule

Answer 21

20% of the customer produce 80% of sales or value of the company

Question 22

Think-Feel-Act model

Answer 22

• customer must be exposed to the communications strategy
• the message needs to capture customers attention
• customer must understand the message
• customer needs to develop favorable attitudes towards message
• customers must generate intentions to act
• person must behave in desires way