hello, everyone. Today I’m going to speak briefly to you about creating customer value, satisfaction, and loyalty, specifically, I’ll touch on Maximizing Customer lifetime value, Cultivating customer relationships, and customer database marketing
How do you know if you are delivering value to your customers? You ongoingly analyze your customer perceived value relative to your competitors. Customer perceived value is total customer benefit minus total customer cost.
Customer Satisfaction is all about expectation--whether the product performs the way the customer expects it to. Interestingly, consumers often form more favorable perceptions of products from brands they already like.
Customer satisfaction is key to customer retention. However, the link is not linear. High satisfaction or delight creates an emotional bond with the brand, not just a rational preference
You can see some ways to measure satisfaction listed onscreen. It’s particularly important to talk to customers who have stopped buying to find out why and to compare yourself to your competitors in terms of customer satisfaction.
Customers are dissatisfied about 25% of the time, but only 5% complain. The rest feel complaining is not worth it, or they don’t know how to complain, so they just stop buying. However, most customers will do business with you again if their complaint is resolved quickly.
Quality, Satisfaction and profitability are intimately connected. Consider when Home Depot decided to cut costs by replacing full-time employees with part-time workers. Their share price fell 24% during the biggest home improvement boom in history.
Your goal is to attract and keep customers. But not all customers are created equal. The 80/20 rule states that 20% of your customers will generate 80% of your profits. The least profitable 10 or 20% of your customers may actually be loosing you money.
So, who’s who? First estimate all revenue and costs for each customer and then group them accordingly. You can then try to sell unprofitable customers more profitable products, or try modifying your unprofitable products.
It’s not all about attracting new customers. Acquiring new customers can cost five times more than satisfying current ones. And a 5% reduction in customer defection can increase your profits 25 to 85%.
Lifetime value is the net present value of the future profit stream for the lifetime of the customer relationship. Usually, the customer profit rate tends to increase over time due to increased purchases, referrals, and reduced costs to service the customer
So how to we keep customers? The key is cultivating strong, long-term customer relationships through strategic management of all customer “touch points”, or occasions when the customer encounters the brand, including functions like billing.
When interacting with customers you must go beyond listening to become a customer advocate. USAA Insurance has the highest customer satisfaction in the industry. Members tell how the company looks out for them, counseling them not to take out more insurance than they need.
Other tactics to build loyalty include reward programs for frequent purchasers, using technology to individualize and personalize marketing, and suppling your customers with support and technology to help them in other areas of their business
To know your customer you must collect pertinent customer information and store it in a database. A mailing list is not a customer database. A customer database includes information about purchase patterns, demographics, psycographics, etc.
Each time there is a customer touch point you want to be collecting information and organizing it into a data warehouse. Then you can have marketing statisticians extract useful info about individual, trends, and segments.
Here are the general ways to use your database. You can sort out and contact the best prospects. You can set up criteria for the ideal target for a particular offer and comb the database for those customers. You can send appropriate gifts or items of interest to foster loyalty.
You can send out automatic mailings at birthdays, holidays, or even your off-season. And, lastly, you can be sure which customer you’re talking to. You don’t want to be giving your premium customer only standard service.
There are drawbacks to CRM, though. In addition to the sheer costs in time and money, many consumers are resentful at companies for having so much of their personal information. Also, CRM assumptions may not hold true for you. It may not actually cost less to serve more loyal customers.
The main reason CRM efforts fail is because companies focus on customer contact processes without making internal changes in structures and systems. Be sure you have a customer strategy and you’ve changed your organization to match before implementing CRM.
Creating Customer Value, Satisfaction, and Loyalty