17-Dec-20

CUSTOMER RELATIONSHIP MANAGEMENT Stages of the customer lifecycle

There are three stages of
CLC:
• Customer acquisition

CONCEPTS AND TECHNOLOGIES • Customer retention

Theme 3
Managing the customer lifecycle – • Customer development
customer acquisition

Key customer acquisition questions Types of new customer

Two Types of new
• Which prospects (potential Customers:
new customers) will be • New-to-category customers
targeted? • are customers who have
• How will these prospects be either identified a new need
approached? or have found a new category
of solution for an existing
• What offer will be made? need.
• New-to-company
• are customers won from
competitors.

Portfolio purchasing Strategic switching

• Customers buy on a portfolio • Strategic switching occurs

basis when they buy from a when customers shift their
choice set of several more or allegiances from one
less equivalent alternatives. supplier to another in
• A customer who has not pursuit of a better deal.
bought from one of the
portfolio suppliers for a matter • Banks know that their
of months or even years, may promotional pricing
still regard the unchosen stimulates hot money.
supplier as part of the
portfolio.

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Hofmeyr’s Conversion Model
Profiling of committed and uncommitted customers
• Committed customers
• Entrenched customers are
unlikely to switch in the
foreseeable future
• Average customers are
unlikely to change in the
short term but may switch in
the medium term
Profiling non-customers
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Profiling of Committed and Uncommitted Customers
• Hofmeyr’s basic premise is that
customers who are not
committed are more likely to be
available to switch to another
provider.
• Commitment is a function of Profiling of Committed and
satisfaction with the brand or Uncommitted customers
offer, the attractiveness of
alternatives, and involvement in
the brand or offer.
Four questions to assess commitment
1. How happy are you with
• Uncommitted customers <whatever it is>?
• Shallow customers have a
lower commitment than 2. Is this relationship
average, and some of them something that you care
are already considering about?
alternatives 3. Is there any other
• Convertible customers are <whatever it is> that
most likely to defect appeals to you?
4. If so, how different is the
one <whatever> from the
other?
Sources of B2B prospects
• Open non-customers • Personal referrals from
• Available non-customers prefer satisfied customers
the alternative to their current
offer though they have not yet • Online sources
switched, and are ready to switch
• Ambivalent non-customers are as • Search engines
attracted to the alternative as • Company websites
they are to their current brand
• Unavailable non-customers • Portals
• Weakly unavailable non- • Social media
customers prefer their current
brands • Networking
• Strongly unavailable non-
customers have a strong
preference for their current
brands
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Sources of B2B prospects Example: The CEOExpress portal

• Promotional activities
• Attendee and delegate lists
from exhibitions, seminars,
workshops, tradeshows,
conferences, events
• Advertising response
enquiries
• Publicity
• Email campaigning
• Lists and directories
• Canvassing
• Telemarketing

Engaging content on social media Promotional activities that build B2B leads
• Blogs
• White papers • Exhibitions
• Videos • Seminars
• Presentations
• Podcasts • Workshops
• Reports • Trade shows
• Case studies • Conferences
• Testimonials
• Competitions and games • Advertising
• Tools • Publicity
• Surveys • Email campaigning

Sources of B2C prospects Advertising

• Advertising • Advertising is the creation

• Sales promotion and delivery of messages to
targeted audiences through
• Buzz or word-of-mouth the purchase of time or
• Social media space in media owned by
• Merchandising others.

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Cognitive and affective advertising objectives
• Cognitive advertising objectives
include: raising awareness,
developing understanding and
generating knowledge. New
customers generally need to be
made aware of the product and to
understand what benefits it can
deliver
‘Cut-through’ Advertising
Pre-testing ads
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Advertising questions for customer acquisition
• Affective advertising objectives • Which messages will
include developing a liking for the generate most new
product, and generating preference customers?
• Which media are most cost-
effective at customer
acquisition?
Execution styles
• An advertisement must stand out • Slice-of-life
from the background clutter and
claim the audience’s attention. • product being used in a
Advertisers call this ‘cut-through’. recognizable context
• Standing out is a matter both of • Aspirational
message creativity and execution,
and media selection. • associates the product with a
desirable outcome or lifestyle
• What stands out?
• black and white ads in colour • Testimonial
magazines
• the product is endorsed by an
• image-based ads in text-dominated
media opinion-influencer
• loud ads in quiet media • Comparative
• ads that leave you wondering ‘what
was that all about?’ • the ad compares one or more
• ads that challenge your alternatives with the advertised
comprehension and emotions. product
Reach and frequency definitions
• Recall. How much of the ad
can the sample recall? • Reach is the total number of
• Comprehension. Does the a targeted audience that is
sample understand the ad? exposed at least once to a
particular ad or campaign
• Credibility. Is the message
believable?
• Feelings evoked. How does the • Frequency is the average
sample feel about the ad? number of times that a
• Intention-to-buy. How likely is targeted audience member
it that the sample will buy? is exposed to an ad or
campaign
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Media efficiency statistics Sales promotion definition

• Response rates provide a first-
level indicator of ad • Sales promotion is any
effectiveness.
• Examples include the number of behaviour-triggering
coupons clipped and returned, temporary incentive aimed
or calls requesting information
(RFI) made to a contact centre. at prospects, customers,
• Conversion rates offer a channel partners or
second-level indicator of ad salespeople.
effectiveness.
• Examples include sales made as
a percentage of coupons
returned, or proposals
submitted as a percentage of
RFIs.

Types of consumer sales promotion Types of consumer sales promotion

• Sampling • Banded packs

• Free trials • Free premiums
• Discounts • Cross-promotions
• Coupons • Lotteries
• Rebates or cash-back • Competitions
• Bonus packs

Buzz or word-of-mouth definition Social media

• Word-of-mouth is • Social media are Internet-

based applications that
interpersonal allow the creation and
communication about a exchange of user-generated
product or organization in content.
which the receiver assumes • Examples: Facebook, Twitter,
the communicator to be flickr, YouTube and Tumblr.
independent of commercial • Strategies: create a page or
influence. channel; advertise in social
media; promote buzz by
revenue leaders; co-opt key
influencers.

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Other tools for customer acquisition Example: Referral schemes

• Referrals
• Customer Referral Schemes (CRS) are
• Events also known as Member-Get-Member
(MGM) and Recommend-A-Friend (RAF)
• Shows schemes.
• Publicity • These work by inviting existing
• Telemarketing or cold customers to recommend a friend and
rewarding the recommender with a gift.
canvassing
• Need to choose the right customer and
• SMS campaigning the right time to invite a referral.
• Email campaigning • Schemes are more effective when
• Product placement and targeted at a relevant section of the
customer base, e.g. customers who are
integration satisfied or customers who have just
• Pitching experienced excellent service.

Example: Email campaign: Singapore Airlines KPI’s for customer acquisition programmes

• How many customers are

acquired?
• What is the cost per
acquired customer
• What is the value of the
acquired customer?

Making the right offer Operational CRM tools that help customer acquisition

• Some industries are consistent • Lead management

in their use of entry-level • The lead management process
products for customer includes a number of sub-
acquisition. processes, including lead
generation, lead qualification,
• Insurance companies use lead allocation and lead
automobile insurance to acquire tracking
new customers.
• Banks use relatively high interest • Campaign management
rates on deposit accounts, or • Campaign managers design,
relatively low charges on credit execute and measure
cards. marketing campaigns with the
• Supermarkets price high support of CRM technologies.
demand, frequently purchased Sometimes these are
items such as bread as loss multimedia campaigns across
leaders in order to build store direct mail, email, fax,
traffic. outbound telephony and SMS
platforms

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Operational CRM tools that help customer acquisition CRM analytics supports customer acquisition

• Event-based marketing • Operational CRM tools have to

• EBM provides companies be supported by sound
with opportunities to analytics to ensure that the
approach prospects at times right offer is made to the right
which have a higher prospect through the right
probability of leading to a channel at the right time.
sale, e.g. important life-stage
events • It is often possible to query
current customer-related
databases for clues to guide
customer acquisition.