Need to build satisfaction through customer relationship development activities.
Relationship Marketing, process of attracting and retaining customers. Add financial benefits, social benefits and structural ties.
Life-time Value of a customer versus cost of acquiring a customer
Customer Acquisition Math Example:
Cost of Sales Call $500
Succes of Sales Call: 1 / 5
Cost of new customer $2,500 (not including overhead)
Average Life Value of Customer:
Annual Customer Revenue: $10,000
Average Life Time: 3 years
Profit Margin: 10%
Life Time Value: $3,000
This looks at averages, not at different consumers.
Do not try to satisfy all customers ... some more profitable than others. Fire customers, or move them to higher profitability (increase price, reduce cost of service). 20-80-30 rule
Customers do not ordinarily complain, they simply do not buy, and they may tell others! Encourage complaints to filter to your company. (See Kellogg discussion)
Cost of lost customers?
Surveying lost customers
Discussion Topic: How does your company process customer complaints. what is done with them re: interaction with customer and changing business process? (Alternatively, as a customer, how have your complaints been handled?)
Internal marketing needs
Making Customer Relationship Management Work
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