Customer Focus & Managing Customer Loyalty + Ch1 Flashcards
What underwhelms customers and what happens as a result
Having minimal or no customer focus. Leads to:
Unfocused competitive position
Minimal customer satisfaction
Low customer loyalty
Exercise customer turnover
Higher cost of marketing & sales
Below-average profits
Stagnant shareholder value
Short-run pressure
Keys to long-run survival
Proactively identifying customer needs
Thinking in a customer-first perspective
2 components that drive customer profitability
Customer satisfaction
Customer loyalty
Customer satisfaction index (CSI)
Measure the impact of customer satisfaction on company profit
Three components of a strong customer focus (CVC)
Customer leadership
Voice of customer
Customer metrics
Customer leadership (SEC)
Senior management - understands that their paychecks come from the customers they serve
Employee customer training - spends hours in training to create positive customer experiences
Customer involvement - feedback, good or bad, are shared across the organization
Voice of the customer (Customer ESC)
Customer experience - examines how customers acquire, use, maintain, and replace their products to understand their experience
Customer solutions - understanding what customers want instead of the company believing they are delivering what they want
Customer complaints - view complaints as an opportunity to understand sources of dissatisfaction and address them, and learn to improve in the future
Customer metrics (Customer SRL)
Customer satisfaction - percentages of customers who are satisfied vs dissatisfied have large impacts on profit)
Customer retention - the longer a business keeps a customer, the more profitable the customer becomes
Customer loyalty - more likely to recommend a product to a customer, account for a large percentage of overall customer profits
Key consideration to holding market share in a mature business
Business must replace lost customers
Impacts of higher customer retention rate (CR rate)
Greater profit impact
Greater customer lifetime value
Customer terrorists
Likely to spread negative WoM to 8-10 others
Social media has allowed sharing negative experiences to be much easier
5 types of customers based on loyalty scores
70-100 Loyal
50-69 Repeat
<50 Captive
0-60 New
0-40 Unprofitable
Loyalty components (CPDPW)
Customer history
Purchase amount
Desire to repurchase
Product preference
Would recommend
Loyalty components of the five types of customers
Loyal - high in all areas
Repeat - purchase frequently but score low in some components
Captive - dissatisfied, would leave if there were other options
New - score low on all aspects at first
Unprofitable - score low on all aspects
