Post on 01-Nov-2014
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Market-Based Management
Copyright Roger J. Best, 2012
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
MBM6Chapter 1
Copyright Roger J. Best, 2012
Customer Focus, Customer Performance, and Profit Impact
Building a Customer-Focused Organization
MBM6Chapter 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.
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
MBM6Chapter 1
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
MBM6Chapter 1
How to build a customer focus organization?
Voice of the Customer
Customer Performance
Customer Focused Leadership
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
MBM6Chapter 1
Profitability of Satisfied Customers
Copyright Roger J. Best, 2012
MBM6Chapter 1
When we chart customer profitability against customer satisfaction, we see that the “very satisfied” customers are the ones who
drive profitability.
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-12
Measuring Satisfaction
Periodic SurveysPeriodic Surveys
Customer Loss RateCustomer Loss Rate
Mystery ShoppersMystery Shoppers
Monitor Competitive Performance
Monitor Competitive Performance
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
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
MBM6Chapter 1
Strategies for Complaint HandlingStrategies for Complaint Handling
Estimating Customer Retention
Copyright Roger J. Best, 2012
MBM6Chapter 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?
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.
Managing Customer Loyalty
Manage Selection
CRM Loyalty Promotions
Critical Care
Strategies to manage each type of customersStrategies to manage each type of customers
Crown JewelsCrown Jewels
Rough Cut DiamondsRough Cut Diamonds
Unpolished Gems
Unpolished Gems Profit DrainProfit Drain
Customer Satisfaction
Customer Loyalty
Company’s Profit
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.
Framework for CRM
Identify prospects and customersIdentify prospects and customers
Differentiate customers by needs and value to company
Differentiate customers by needs and value to company
Interact to improve knowledgeInteract to improve knowledge
Customize for each customerCustomize for each customer
CRM Strategies
Reduce the rate of defection
Enhance “share of wallet”
Terminate low-profit customers
Focus more effort on high-profit customers
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.
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 companyFingerhut possesses some 1,400 pieces of information about each of the 30 million households
in its massive customer database.
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.
Data MiningThrough 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.
Using the Database
To identify prospects
To target offers
To deepen loyalty
To reactivate customers