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Session 1

Session 1. OLD MARKETING Transaction oriented Market share oriented All customers are equal Marketers sell 4P marketing Mass marketing Sell to the customer Focus on new customers Offensive Broadcast oriented Transaction profit. NEW MARKETING Relationship oriented

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Session 1

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  1. Session 1

  2. OLD MARKETING Transaction oriented Market share oriented All customers are equal Marketers sell 4P marketing Mass marketing Sell to the customer Focus on new customers Offensive Broadcast oriented Transaction profit NEW MARKETING Relationship oriented Share of wallet oriented All customers are not equal Marketers manage demand Relationship marketing Individual marketing Manage customer experience Focus on existing customers Defensive Dialogue oriented Customer lifetime value Changes in Marketing

  3. Offensive vs. Defensive Marketing • OM refers to increasing your customer base. • DM refers to activities aimed at existing customers. • Defensive marketing has become more profitable. “Mass and Blast” is being replaced by 1:1.

  4. Customer ? • Human being • Person-who has acquired or thinking of acquiring our product or service CRM Case of a Bank Manager.doc

  5. Importance of Customer Focus • Let us hear Mr. Jayant Kochar ..\Importance of customer focus\start.exe

  6. Organizational Charts

  7. The Customer Development Process Suspects Prospects Disqualified First-time customers Repeat customers Clients Members Dissatisfied Dissatisfied Dissatisfied Dissatisfied Partners Ex-customers Dissatisfied

  8. Product value Services value Total customer benefit Personnel value Image value Customer delivered value Monetary cost Time cost Total customer cost Energy cost Psychic cost What is Perceived Customer Value?

  9. Customer Satisfaction • The extent to which a product or service’s perceived performance matches a buyer’s expectations. • What are expectations based on? • Past buying experiences • Friends, family and other associates • Information about the competition • Promises made in marketing materials (your brand) Word of Caution • If you promise too little…people won’t try your product! • If you promise too much…customers will be dissatisfied

  10. Measuring Satisfaction • Complaint System / Telephone Hot Line / Email • Customer Surveys • 25% of customers not satisfied • 5% will complain • 95% just switch or buy less • Lost Customer Analysis • Follow up with customers who have stopped buying • Monitor lost customer rate Go for TCS

  11. Techniques for Exceeding Customers’ Expectations • Live up to their expectations. • Become familiar with your customers. • Ask your customers what their expectations are. • Tell your customers what they can expect. • Maintain consistency. • Ask “ Why are they using your product”

  12. Delivering customer value & satisfaction • Not just the people in charge of marketing are in charge of marketing. • Must have an effective value chain focused on serving the customer. • Employees need to be trained and understand what expectations are for customer service – and • Need to be empowered to address certain situations.

  13. Profit Generated by a Customer Over Time Source: An exhibit from F. F. Reichheld and W. E. Sasser, Jr., “Zero Defection: Quality Comes to Services,’’ Harvard Business Review, September–October 1990.

  14. Customer Satisfaction • Highly satisfied customers are: • Less price sensitive • More likely to talk favorably about you • More likely to refer you to others • Remain loyal for longer

  15. Greater Pricing Leverage Increased Customer Loyalty Increased Market Share Increased Sales Superior Customer Satisfaction Increased Financial Performance Increased Usage Superior Operating Results Competitive Advantage Superior Customer Satisfaction Affects Bottom Line

  16. Churn (or Churn Rate) • The number of customers who leave a business in a year’s time divided by the number of new customers in the same period. • e.g 17 Doctors stopped Rxing Becosules & 34 new Doctors started Rxing it in 2008 • Churn Rate = 17/34 = 0.5 Lower Churn Rate indicates Customer Satisfaction ? Different time period for different products( B2B,B2C)

  17. Defection Rate • The percentage of customers who leave a business in one year. • If 17 out of 255 Doctors have stopped Rxing Becosules so Defection Rate = 17/255*100 = 6.67 % Higher Defection Rate indicates Customer Dissatisfaction ?

  18. Annual Defection Rates • Newspaper subscriptions 66 percent • Residential tree and lawn care 32 percent • U.S. long distance telephone 30 percent • Clothing catalogues 25 percent • Internet service providers 22 percent Griffen and Lowenstein 2001

  19. Outcomes of Commitment & Trust • Retention • Positive Word of Mouth • Cooperation • Ease of Complaining • Reduced Uncertainty • Increased Share of Wallet • Faster New Product Adoption

  20. How do we generate Commitment & Trust? Economic Content Resource Content Social Content

  21. Understanding How Customer Relationships Develop Relationships’ Economic Content Attitudinal Outcomes Relationships’ Resource Content Relationship Attitudes Behavioral Outcomes Relationships’ Social Content

  22. Building Relationships First, let’s look at the fundamental drivers of relationships, the economic, resource, and social contents. Relationships’ Economic Content Attitudinal Outcomes Relationships’ Resource Content Relationship Attitudes Behavioral Outcomes Relationships’ Social Content

  23. Economic Content The purely economic costs and benefits of participating in the relationships Examples: Service fees Interest rates Costs saved due to superior management of customer’s wealth

  24. Resource Content Benefits gained that match/complement the needs or resources held by the partner. Examples: Professional competence Comprehensive financial services Business development assistance Convenience (time as a resource) Tangibles Brand equity

  25. Social Content Psychic benefits gained due to feelings of compatibility -- similar values, goals, etc. -- that result in a feeling of comfort. Examples: Relationships with employees Fit of firm’s mission and actions with customers’ values High quality communication programs

  26. Building Relationships Next, let’s look at the ultimate outcomes of relationships, which impact firm’s business performance. Relationships’ Economic Content Attitudinal Outcomes Relationships’ Resource Content Relationship Attitudes Behavioral Outcomes Relationships’ Social Content

  27. Attitudinal Outcomes Customer beliefs that result from relationship dynamics, these attitudes can go on to impact behaviors and the development of even stronger attitudes. Examples: Reduced uncertainty Brand equity Cooperation

  28. Behavioral Outcomes Partner behaviors and intended behaviors that directly or indirectly impact the firm’s performance. Examples: Retention Positive word of mouth Complaining Faster New Product Adoption Increased Share of Wallet

  29. Consumer Buying Behavior Video: Marketing Psychology & Consumer Buying Behavior

  30. Exercise • Think of a service provider/product to whom you are loyal. • What do you do (your behaviors, actions, feelings) that indicates you are loyal? • Why are you loyal to this provider? • What factors have influenced the formation of your loyalty?

  31. Loyalty • Loyality is an emotion • Helps in maintaining a close relationship • A series of positive experiences • Leads to commitment & trust • Leads to Customer Alchemy

  32. A Loyal Customer is one who… • Show Behavioral Commitment • Buys from one supplier (sole loyalty) • Buys a large proportion, increasingly buys more • Provides constructive feedback/suggestions • Exhibits Psychological Commitment • Commitment-doesn’t consider terminating the relationship • Has a positive attitude toward • Say good things about

  33. The Wheel of Loyalty

  34. Build a Foundation for Loyalty • Deliver quality service • Segment the market to match customer needs and firm capabilities • Be selective; only acquire customers who fit the core value proposition • Manage the customer base via effective tiering of service

  35. 2. Create Loyalty Bonds Deepen the relationship  Cross-selling/Bundling Build higher level bonds  Social  Customization  Structural bonds

  36. Social Bonds • Personal Relationships • Memberships/ Formal & Informal • Affinity Programs

  37. Customization • Mass Customization – Dell computer • Customer Intimacy- Infosys, Accenture • Anticipation/ innovation – Apple • Nectar – Stretch Discounts

  38. Structural Bonds • Integrated information systems • Joint investments • Shared processes and equipment

  39. Example • Adding financial benefits (e.g., frequent flyer programs) • Add social benefits (e.g., recognizing repeats guests and greats them by name) • Add structural ties (e.g. reservation systems for travel agents, special phone lines, flexible check-in, check-out time for best customers, send limousine) • Add Customization ( e.g food, movies of choice, special packages)

  40. 3. Reduce Churn Drivers • Conduct churn diagnostic and monitor declining/ churning customers • Address key churn drivers: •  Proactive retention measures •  Reactive retention measures • Put effective complaint handling and service • recovery processes in place • Increase switching costs

  41. Dating your Customer

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