exam 2 Flashcards
Define the 3 stages of the customer life cycle
Acquisition, Retention, Development
If a company wants to reduce its sales and marketing expenses, why should you argue that an emphasis on customer acquisition is misguided?
Costs money to acquire a customer. Customer retention and development don’t need advertising
“new to category” customer
Customers who have either identified new need or found a new solution for their need. Ex) Couple having first child are new to category for baby stuff
“new to company” customer
Customers won from competitors. Very expensive, might not get total share of wallet
Hofmeyr’s conversion model
Determines the likelihood of a customer switching to your company by segmenting customers into 4 levels of commitment
COMMITTED CUSTOMERS
- entrenched: unlikely to switch
- average: unlikely to switch in the short term, but may switch in the medium turn
UNCOMMITTED
- Shallow: probably already considering alternatives
- convertible: most likely to defect
Hofmeyrs 4 questions to measure committment
- How happy are you with ___?
- Is this relationship something you care about?
- Is there any other alternative that appeals to you?
- If so, how different is the alternative from the other?
Hofmeyrs non customer segments
OPEN NON-CUSTOMERS
available: non customers that prefer alternative to current offer
ambivalent: attracted to alternative
UNAVAILABLE NON CUSTOMERS
weakly unavailable: prefer current brands
strongly unavailable: strong preference for current brand
relate hofmyers use of “commitment” to “attitudinal loyalty.”
Commitment is how people feel about the company. Feelings lead to endorsement
Discuss how a company would use the knowledge that some of its customer are “committed” and that some are “uncommitted.”
of open non-customers > # of uncommitted customers, companies should focus strongly on acquisition
Customer churn
customer ceases relationship with company
Why is the objective of retention not to retain every customer?
Some customers are more valuable than others and some cost you more money than they bring in
What are the three measures of customer retention?
Raw customer retention rate
Number of customers doing business with a firm at the end of a period expressed as % of those who were active customers at the beginning of the period.
Sales-adjusted retention rate
Value of sales achieved from the retained customers expressed as a % of the sales achieved from all customers who were active at the beginning of the period.
Profit-adjusted retention rate
Profit earned from the retained customers expressed as a % of the profit earned from all customers who were active at the beginning of the period
Why does a focus on retention usually lead to increased profits
- Purchases grow as tenure grows
- Customer management costs fall over time
- Customer referrals grow
- New customers may have greater future life-time value potential than longer tenure customers
Positive retention strategies
delight, create engagement
negative retention strategies
Create exit barriers Enforce the contract Extract switching penalties
Explain how a market researcher would use Kano’s customer delight model as she tries to understand which specific product features her company should emphasize in its marketing.
Based on insights about customers’ reactions to features, functions, and/or attributes of a product or service Helps firms differentiate “I like this” A delighter: competitive advantage An expectation: need it to stay in the game Understand what customer is expecting (based on promises, desires, experience, ideals), set that expectation with them
Loyalty program
a program that offers delayed or immediate incremental rewards to customers for their cumulative patronage
Boots: advantage card with points Increased retention, in-store spending, profitability, targeted customers correctly
What are two specific strategies employed in customer development? Explain the tactics and goals of each, and how each maximizes profit.
Cross selling: selling additional products and services to an existing customer
Upselling: selling higher priced or higher margin products and services to an existing customer
Harrah’s refresher
Who his big customers were, what they were looking for, differentiate treatment
single view of the customer
all departments have one solitary view of the customer through systems, databases and records
CRM Ecosystem
CRM solutions providers, service providers and hardware and infrastructure vendors
Define a “cloud-based” CRM system and how it differs from a premises-based solution. What are some advantages of each
Allows the system to be put on the internet so there is no single place for the database. The advantage of cloud based is that it can really help out large corporations giving them access to all of data rather quickly. b. Premise based is much less complicated and can be cost-effective for smaller companies who do not have the capital to deal with a cloud based system
Salesforce automation
application of computerized technologies to support salespeople and sales management in the achievement of their work related objectives
Manage accounts, opportunities, events and activities
Marketing automation
application of computerized technologies to support marketers
Used for campaigns
service automation
Application of computerized technology to support service staff and management
customer service
application integration
tying together crm system and other business systems such as accounting, billing and human resources
telephony integration
ties the crm application to telephone system allowing inbound calls to be routed to the right person based on caller profile and outbound calls to be automatically made from the call center desktop
Entity relationship diagram
What Jake land drew
Bath and body works KMS
KMS is knowledge management system. BBW has soo many products. Fast implementation led to fast training.
