Human Resource Knowledge

Attracting, retaining, and growing customers

Markets can be characterized by their long-term buying dynamics and how easily and often customers can enter and leave.

1.Permanent capture markets. Once a customer, always a customer (e.g. nursing homes, trust funds and medical care).

2.Simple retention markets. Customers can permanently be lost after each period (e.g. telecom, cable, financial services, other services, subscriptions.).

3.Customer migration markets. Customers can leave and come back (e.g. catalogs, consumer products, retail, and airlines)

Some customers inevitably become inactive or drop out. The challenge is to reactivate dissatisfied customers through win-back strategies. It is often easier to re-attract ex-customers (because the company knows their names and histories) than to find new ones. The key is to analyze the causes of customer defection through exit interviews and lost-customer surveys. The aim is to win back only those customers who have strong profit potential.

Customers are becoming harder to please. They are smarter, more price conscious, more demanding, less forgiving, and they are approached by many more competitors with equal or better offers. The challenge, according to Jeffrey Gitomer, is not necessarily to produce satisfied customers; several competitors can do this. The challenge is to produce delighted and loyal customers.
Mass Marketing —————————————- One-to-One Marketing
Average customer ———————————— Individual customer
Customer anonymity———————————Customer profile
Standard product——————————- Customized market offering
Mass production———————————- Customized production.
Mass distribution———————————- Individualized distribution.
Mass advertising———————————- Individualized message
Mass Promotion———————————- Individualized incentives
One-Way message——————————Two-way messages
Economies of scale——————————Economies of scope
Share of market———————————- Share of customer
All Customers————————————Profitable customers
Customer attraction—————————- Customer retention

Companies seeking to expand their profits and sales have to spend considerable time and resources searching for new customer. To generate leads, the company develops ads and places them in media that will reach new prospects ; it sends direct mail and makes phone calls to possible new prospects; it salespeople participate in trade shows where they might find new leads; it purchases names from list brokers; and so on. All this activity produces a list of suspects. Suspects are people or organizations who might conceivably have an interest in buying the company’s product or service, but may not have the means or real intention to buy. The next task is to identify which suspects are really good prospects—customer with the motivation, ability, and opportunity to make a purchase—by interviewing them, checking on their financial standing, and so on. Then it is time to send out the sales people.

It is not enough, however, to attract new customers; the company must keep them and increase their business. Too many companies suffer fro High customer churn—high customer defection. It is like adding water to a leaking bucket. Cellular carriers, for example, are plagued with “spinners"? customers who switch carriers at least three times a year looking for the best deal. Many lose 25% of their subscribers each year at an estimated cost of $2 billion to $4 billion. Marketing practices instead of concentrating on the art of attracting new customers must ensure on retaining and cultivating the existing ones. The emphasis is traditionally has been on making sales rather than building Relationships; on pre-selling and selling rather than caring for the customer afterward.

There are two main ways to strengthen customer retention. One is to erect high switching barriers. Customers are less inclined to switch to another supplier when this would involve high capital costs, high search costs, or the loss of loyal-customer discounts. The better approach is to deliver high customer satisfaction. This makes it harder for competitors to offer lower prices or inducements to switch.

How to handle Customer Complaints

No matter how perfectly designed and implemented a marketing program is, mistakes will happen. Given the potential downside of having an unhappy customer, it is critical that the negative experience be dealt with properly. As with any marketing crisis large or small, swiftness and sincerity are the key watchwords. Customers must feel an immediate sense that the company truly cares. Beyond that, the following procedures can help to recover customer goodwill:

1.Set up a 7-day, 24-hour toll-free “hotline"? (by phone, fax, or e-mail) to receive and act on customer complaints.

2.Contact the complaining customer as quickly as possible. The slower the company is to respond, the more dissatisfaction may grow and lead to negative word of mouth.

3.Accept responsibility for the customer’s disappointment; don’t blame the customer.

4.Use customer service people who are empathic.

5.Resolve the complaint swiftly and to the customer’s satisfaction. Some complaining customers are not looking for compensation so much as a sign that the company cares.

Labels: Marketing

posted by Paresh @ 11:26 AM