Chapter 1 marketing managment
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The document discusses building a customer-focused organization and how customer satisfaction drives profits. It provides strategies for understanding customer needs through voice of the customer programs, measuring customer performance metrics, training employees, and handling complaints to increase customer retention and loyalty. Customer relationship management programs use customer databases and data mining to personalize interactions and improve relationships over time. While requiring significant investment, CRM can provide a competitive advantage when properly implemented based on a customer strategy.
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Chapter 1 marketing managment
- 1. Market-Based Management Copyright Roger J. Best, 2012
- 2. Customer Focus, Customer Performance, and Profit Impact Satisfied is not good enough. Completely satisfied—that’s a big deal. A completely satisfied customer is at least three times more likely to return than one who’s just satisfied. ―Andrew Taylor, CEO, Enterprise Rent-A-Car Very Satisfied Customers Drive Profits Chapter 1 Objectives Building a customer focused organization MBM6 Chapter 1 Copyright Roger J. Best, 2012
- 3. Customer Focus, Customer Performance, and Profit Impact Building a Customer- Focused Organization MBM6 Chapter 1 Copyright Roger J. Best, 2012 In this section we will look at how customer-focused organizations not only outperform their competition over the long term by consistently delivering higher levels of customer satisfaction, they also realize higher profits over the short run.
- 4. Underwhelming Customers Little or no customer focus translates into an unfocused competitive position and minimal customer satisfaction. The result is a vicious circle of poor performance. Copyright Roger J. Best, 2012 MBM6 Chapter 1
- 5. Top Performers Produce Higher Investor Returns Apple, Southwest Airlines, and Clorox would be a part of the top performers in the graph above.. Copyright Roger J. Best, 2012 MBM6 Chapter 1
- 6. How to build a customer focus organization?
- 7. Voice of the Customer Customer Experiences Every interaction with the customer is considered an opportunity to better understand the customers needs & wants Customer Solutions Every customer is different so organization tend to focus on customized solutions Customer Complaints Organization seeks comments from dissatisfied customers & address their complaints to retain the customers
- 8. Customer Performance Customer Matrix Customer Performance Metrics are calculated e.g. CSI,CLI,CLV etc. Customer Profile Managers & employees understand target customers’ profiles Customer Intelligence Managers encourage employees to share consumers insights within the organization
- 9. Customer Focused Leadership Senior Management Leadership Managers are passionate about customers & regularly visit them to better understand their needs Employee Customer Training New & existing employees receive proper training on customer satisfaction Customer Involvement Customer feedback is shared across the organization to identify the problem areas & to improve product/servi ces/process
- 10. Benchmarking Customer Satisfaction ACSI studies have shown that Customer Satisfaction is a leading indicator of company financial performance. The ACSI database reports all companies by industry. American Customer Satisfaction Index - University of Michigan (www.theACSI.org) Copyright Roger J. Best, 2012 MBM6 Chapter 1
- 11. Profitability of Satisfied Customers Copyright Roger J. Best, 2012 MBM6 Chapter 1 When we chart customer profitability against customer satisfaction, we see that the “very satisfied” customers are the ones who drive profitability.
- 12. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-12 Measuring Satisfaction Periodic Surveys Customer Loss Rate Mystery Shoppers Monitor Competitive Performance
- 13. Complaint Behavior and Retention Copyright Roger J. Best, 2012 Each year, the business above loses $22,400 customers who are dissatisfied, but do not complain. Dissatisfied customers often do not complain, but they do walk and they do talk. Marketing Performance Tool 1.2
- 14. Customer Dissatisfaction and the Use of Social Media Facebook as an Outlet for Customer Dissatisfaction • An individual’s car was towed despite being legally parked with a valid parking sticker. The individual created a Facebook page to express his dissatisfaction with the towing company. • More than 10,000 supporters, some using other social media, also expressed their dissatisfaction with the towing company. • Many related their own bad experiences, and 20 formal complaints were filed over a 3-year period as a result . Copyright Roger J. Best, 2012 MBM6 Chapter 1
- 15. Strategies for Complaint Handling Set up a 7-day, 24-hour toll-free hotline (by phone, fax, or e-mail) to receive and act on customer complaints. Contact the complaining customer as quickly as possible. The slower the company is to respond, the more dissatisfaction may grow and lead to negative word of mouth. Accept responsibility for the customer’s disappointment; don’t blame the customer. Use customer service people who are empathic. Resolve the complaint swiftly and to the customer’s satisfaction.
- 16. Estimating Customer Retention Copyright Roger J. Best, 2012 MBM6 Chapter 1 To estimate retention rates, businesses can use a customer survey as outlined above. How likely are you to buy this product or brand again on your next purchase?
- 17. What is Loyalty? Loyalty is a deeply held commitment to re-buy or re-patronize a preferred product or service in the future, despite situational influences and marketing efforts.
- 18. Managing Customer Loyalty Top Performers: Advocates Loyalists High Potentials Big Spenders Underachievers New Opportunities Win Back Customers New Potentials Non-profits Misfits Spinners Manage Selection CRM Loyalty Promotions Critical Care Strategies to manage each type of customers Crown Jewels Rough Cut Diamonds Unpolished Gems Profit Drain
- 20. What is Customer Relationship Management? CRM is the process of carefully managing detailed information about individual customers and all customer touch points to maximize customer loyalty.
- 21. Framework for CRM Identify prospects and customers Differentiate customers by needs and value to company Interact to improve knowledge Customize for each customer
- 22. CRM Strategies Reduce the rate of defection Enhance “share of wallet” Terminate low-profit customers Focus more effort on high- profit customers
- 23. Database Marketing It is the process of building , maintaining, and using customer databases and other databases (products, suppliers, resellers) to contact, transact, and build customer relationships.
- 24. Customer database VS Mailing list A customer mailing list is simply a set of names, addresses, and telephone numbers A customer database contains much more information, accumulated through customer transactions, registration information, telephone queries, cookies, and every customer contact Many companies confuse a customer mailing list with a customer database. Ideally, a customer database also contains the consumer’s past purchases, demographics (age, income, family members, birthdays), psychographics (activities, interests, and opinions), Media graphics (preferred media), and other useful information. The catalog company Fingerhut possesses some 1,400 pieces of information about each of the 30 million households in its massive customer database.
- 25. Data warehouse • Banks and credit card companies, telephone companies, catalog marketers, and many other companies have a great deal of information about their customers, including not only addresses and phone numbers, but also transactions and enhanced data on age, family size, income, and other demographic information • These data are collected by the company’s contact center and organized into a data warehouse where marketers can capture, query, and analyze them to draw inferences about an individual customer’s needs and responses. • Telemarketers can respond to customer inquiries based on a complete picture of the customer relationship, and customized marketing activities can be directed to individual customers.
- 26. Data Mining Through data mining, marketing statisticians can extract from the mass of data useful information about individuals, trends, and segments. Data mining uses sophisticated statistical and mathematical techniques such as cluster analysis, predictive modeling etc. Some observers believe a properly developed database can provide a company with a significant competitive advantage.
- 27. Using the Database To identify prospects To target offers To deepen loyalty To reactivate customers
- 28. Wrong Planning • Implementing CRM before creating a customer strategy Some situations are just not conducive to database management. • The product is a once-in-a-lifetime purchase • Customers show little loyalty to a brand • The Unit sale is very small (a candy bar) so CLV is low • There is no direct contact between the seller and ultimate buyer. CRM requires high investment • Building and maintaining a customer database requires a large, well-placed investment in computer hardware, database software, analytical programs, communication links, and skilled staff.