Customer Relationships Flashcards
What is customer perceived value?
A potential customer’s evaluation of the benefits and costs of the product, compared to the perceived alternatives.
What is total customer benefit?
The perceived value that customers expect to receive from a product, service, or brand.
What is total customer cost?
Total customer cost refers to the total perceived costs that customers anticipate incurring when they evaluate, acquire, use, and dispose of a product or service. These costs include monetary expenses as well as the time, effort, and psychological strain involved in the process.
What are the two key components of customer perceived value, and the subcomponents that fall under it? Which other Marketing concept does it relate to?
Customer perceived benefit comes from total customer benefit, and total customer cost.
Total customer benefit includes: product benefit, services benefit, personnel benefit, and image benefit.
Total customer cost includes: monetary cost, time cost, energy cost, and psychological cost.
What are three reasons a customer will purchase an alternative product to one with a better overall customer perceived benefit?
1) The buyer is under orders to buy at the lowest price.
2) The buyer retires before the rest of the company sees that they are getting a good deal for selecting our product.
3) The buyer has a long-term friendship with our competitor.
How do we define loyalty in marketing?
A deeply held commitment to rebuy or repatronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior
What does a value proposition consist of?
The value proposition consists of the whole cluster of benefits the company promises to deliver; it is more than the core positioning of the offering.
What does the value delivery system consist of?
The value delivery system includes all the experiences the customer will have on the way to obtaining and using the offering.
How do we measure satisfaction in marketing?
A person’s feelings of pleasure or disappointment that come from the expectations they have from the product. It logically follows, that higher expectations lead to less satisfaction(but we also want to consider that if people don’t expect good things from a product, they likely will not buy it).
What do customer’s who have high satisfaction experience in relation to the company?
-They don’t just experience a rational preference towards a company, they also experience an emotional bond with the company.
-The more highly the consumer ranks the brand in terms of satisfaction and loyalty, the more they spend on their products.
How well do complaints measure customer satisfaction?
-Studies show that while customers are dissatisfied with their purchases 25 percent of the time, only 5 percent of those people actually complain. The other 95 percent think complaining isn’t worth their time, so they simply stop buying.
-Of the customers who complain, 54 to 70 percent will do business with the organization again if their complain it resolved.
-This figure goes up to a staggering 95 percent if the customer feels the complaint was resolved quickly.
What are some practices to recover customer goodwill after a negative experience?
1) Set up a seven-day, 24-hour toll-free hotline (by phone, fax, or e-mail) to receive and act on complaints—make it easy for the customer to complain.
2) Contact the complaining customer as quickly as possible. The slower the response, the more dissatisfaction may grow and lead to negative word of mouth.
3) Accept responsibility for the customer’s disappointment; don’t blame the customer. 4) Use friendly, empathic customer service people.
5) Resolve the complaint swiftly and to the customer’s satisfaction. Some complaining customers are looking for a sign that the company cares, not for compensation.
What is the definition of Quality as defined by the American Society for Quality?
Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.
How does marketing play an important role in helping companies deliver high-quality goods to target customers
1) Correctly identifying customers’ needs and requirements
2) Communicating customer expectations properly to product designers
3) Making sure that customers orders are fulfilled correctly and on time
4) Checking that customers have received proper instructions, training, and technical assistance for product usage
5) Staying in touch after the sale to ensure customers are satisfied, and remain satisfied
6) Gathering customer ideas for improvements and conveying them to the appropriate departments
How does the 80-20 rule apply to company’s profits.
-80 percent of a company’s profits generally come from 20 percent of their customers.
-In extreme cases, 20 percent of customers contribute as much as 150 to 300 percent of profitability.
-The 60-70 percent break even.
-And the least profitable 10-20 percent can account for a loss of profitability by 50 to 200 percent.
What is a profitable customer?
A profitable customer is a person, household, or company that over time yields a revenue stream exceeding by an acceptable amount the company’s cost stream for attracting, selling, and serving that customer. Note the emphasis is on the lifetime stream of revenue and cost, not the profit from a particular transaction.
When certain customers are buying more profit losing products than profit generating product, what are a company’s options. What should they do?
Their options are to raise the prices of less profitable products, eliminate those products, sell the customers on more profitable products, or encourage the customer’s to switch to competitors.
The best choice is encouraging the customer to switch to competitors.
What is customer lifetime value?
The expected profits to be generated by a customer. Revenue subtract costs.
What is customer relationship management(CRM)?
The process of carefully managing detaled information about individual customers and all customer “touch points” to maximize loyaly.
What is personalizing marketing?
Making sure the brand and its marketing are as personally relevant as possible to as many customers as possible.
What is permission marketing?
Pioneered by Seth Godin, permission marketing involves marketing to consumers only after gaining their expressed permission. Accordingly, marketers develop stronger consumer relationships by sending messages only when consumers express a willingness to become more negaged with the brand.
What is high customer churn or defection? How can we reduce defection?
-Customer churn refers to the rate at which customers stop doing business with a company over a specific period.
-It’s a key metric for businesses, especially those operating in subscription-based or recurring revenue models, as it directly impacts growth and profitability.
-To reduce the defection rate, the company must first define and measure its retention rate, distinguish the causes of customer attrition and identify those that can be managed better, and compare the lost customer’s CLV to the costs of reducing the defection rate. As long as the cost to discourage defection is lower than the lost profit, spend the money to try to retain the custom
What is the key purpose of the marketing funnel?
1) Track Conversion Rates: Measure the percentage of customers transitioning from one stage to the next.
2) Identify Bottlenecks: Spot where customers drop off and address barriers to movement through the funnel.
3) Retain and Cultivate Customers: Focus on strategies to build loyalty and long-term relationships with existing customers.
What are the key stages of the marketing funnel?
1) Target Market: Represents the total audience or potential customers who could use your product or service.
2) Aware: Customers who have heard of your brand but may not have engaged with it.
3) Open to Trial: Customers who are open to trying your brand but haven’t taken action yet.
4) Trier (Non-Rejecters):
Customers who have tried the brand but have not used it recently (e.g., within the past 3 months).
5) Recent User: Customers who have used the brand in the past 3 months but are not yet regular users.
6) Regular User: Customers who use the brand frequently (e.g., at least once every two weeks), but it’s not their most preferred brand.
7) Most Often Used: Customers for whom your brand is their primary choice, although they might occasionally use other brands.
8) Loyal: Customers who exclusively use your brand and stick with it as long as it’s available.
