D077 Concepts in Marketing, Sales, and Customer -Module 5

Customer lifetime value (CLV)

The total profit a company expects to gain from a customer throughout the relationship

How is CLV calculated?

CLV = (profit margin per customer x # of years customer is active) - cost of acquiring customer

Why is customer lifetime value (CLV) utilized by organizations?

it can help marketers assess the effectiveness of marketing efforts and the value of specific customer segments

Customer life cycle

different steps in a company's relationship with the customer

Reach

getting a prospective customer's attention

Acquisition

bringing a prospective customer into a sphere of influence

Conversion

turning a prospect into a paying customer

Retention

engaging an existing customer to keep them

Loyalty and Advocacy

turning a customer into an advocate for the company

Customer equity

The combined customer lifetime values of all the company's customers

Why is customer equity an important measure for organizations?

The greater the ________ _____, the more future revenue in the lifetime of a company's customers.

Value equity

how the customer assesses the value of the product or service provided by the company

Brand equity

how the customer assesses the value of the brand, above its objective value

Retention equity

the tendency of the customer to stick with the brand, even when it is priced higher than an otherwise equal product.

Customer relationship management (CRM)

Processes implemented by a company to handle its contact with customers with the goal of creating a unified customer experience to maximize retention

Purpose of CRM

cultivate a lasting relationship with the customer

Functions of CRM software

capture internal data about customers and customer interactions and house these data in a central location; provide business users with access to customer data to inform a variety of customer touch points and interactions; conduct data analysis and generate insights about how to better meet the needs of target segments and individual customers; and deliver a marketing mix tailored to the needs and interests of these target segments and individual customers

Benefits of CRM

enables companies to be more responsive to (and retain) customers; customer experiences more unified, relevant communication with the company; marketing and sales can analyze the data collected to better fit their target customer needs

Operational

Ensure customer satisfaction by integrating sales, marketing, and customer support

Analytical

Use data to understand who the company's core customers are, how they behave, what they are looking for, and how satisfied they are

Collaborative

Work across teams and departments more effectively, including with suppliers and vendors

Challenges of CRM

consumer privacy and security, integrating a CRM system into all relevant departments and workflows.

Customer satisfaction

A measure of how products or services delivered by a company meet or exceed customer expectations

What is the role of setting expectations in assuring customer satisfaction?

establish appropriate expectations in the minds of customers and deliver on those expectations consistently

Customer Satisfaction Strategies

empower customer-facing personnel, offering customers warranties and guarantees

Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM) Act

U.S. federal act that establishes standards for commercial email

Permission marketing

Expectation that marketers will ask for permission to sell or to offer potential customers marketing messages

Notice

Consumers should be given notice of a company's information practices before any personal information is collected from them

Choice

Consumers should be given options to control how their data is used by opting in or opting out

Access

Consumer should have the ability to view the data collected and verify and contest its accuracy

Security

Information collectors should ensure that the data they collect are accurate and secure.

Nondisclosure agreements (NDAs)

Signed documents when entering into a business relationship detailing what information cannot be disclosed about another company