Professional Documents
Culture Documents
CRM
CRM
CRM
Referrals
Cost Savings
Revenue Growth
Base Profit
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Andrs Bauer
4 5 Marketing YearsManagement
Acquisition 7 Cost
2
Some explanations
Acquisition costs: depending on the category, it could be quite substantial. In fast growing businesses, firms are willing to spend upfront in hope of future recovery. Cellphones are prime examples. Average acquisition cost in the US: $ 300. However high churn rates may not justify this. (There is a market segmentation reason)
Andrs Bauer Marketing Management 3
Further explanations
Base profit: the average margin Revenue growth: retained customers might buy more from the company (partly because of cross-selling partly, because of they are happy) Operating costs: it is less costly to serve loyal customers
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More explanations
Referrals: satisfied customers make recommendations (however if you force them they become suspicious) Price premium: loyalty makes blind and customers are willing to pay higher prices (though it could just be inertia)
Andrs Bauer
Marketing Management
Discussion
If the basic assumptions hold, firms should pursue loyalty building strategies Loyalty strongly depends on customer satisfaction However, if the basic assumptions do not hold, caution is advised
Andrs Bauer
Marketing Management
Andrs Bauer
Marketing Management
Customer satisfaction
Is a multidimensional construct based and measured on many dimensions. Usual dimensions: response, info exchange personal service, price, availability, attributes Need for own measures: customersat.com
Andrs Bauer Marketing Management 8
Andrs Bauer
Marketing Management
Low
Lifetime Revenue
High
Long
Lifetime Length
Short
Source:Reinartz & Kumar
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Interpretation
This is a non-contractual business In this business (direct marketing) rewarding long lifetime with the company is counterproductive It might be different in contractual relations
Andrs Bauer
Marketing Management
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Industry approaches
Industries might follow different approaches to customization such as one-toone, mass customization etc. Measurement is more and more possible, though industry specific Could be very important in B2B
Andrs Bauer
Marketing Management
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Some examples
High-value customers receive better treatment Can use more services Receive more rewards Low value customers are treated badly Customer apartheid ?
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Andrs Bauer
Marketing Management
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Andrs Bauer
Marketing Management
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Beyond CRM...
Consumers are co-producers, not just users We can manage consumer by marketing and HR tools Customer Efficiency Management
Andrs Bauer
Marketing Management
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Employees
Customer
Andrs Bauer
Marketing Management
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Andrs Bauer
Marketing Management
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Employees
Firm Customer
Efficient customers use company systems better and create better serv ices
Satisfied customers have better relationship with the company and with other customers, as well.
Andrs Bauer Marketing Management 21