The Definition
Customer Marketing is a business method which uses process
control techniques to measure, manage and improve customer
performance and customer focus. The customer performance factors
are:
- Customer Profitability
- Customer Behavior
- Customer Satisfaction.
The customer focus factors are:
- Organization
- Communications
- Information.
The Customer Marketing Method can be represented graphically
like this:
Customer Performance Factors
Let's look at this in more detail. These are the factors determining the performance of your customers:
1. Customer Profitability.
Operational profit is the result of the profit generated from
profitable customers plus the losses from unprofitable customers.
It's as simple as that. Hence the need to maximize
customer profitability, as measured in profit per customer
and customer lifetime value.
2. Customer Behavior.
While cost factors play an important role in the profitability
of a customer, customer value is to a large extent determined
by customer behavior. Positive customer behavior means in the first place that a customer is a customer -
he buys your products. A second customer behavior parameter is customer lifetime,
or the average length of time during which a customer does business
with you. A third and important customer behavior factor is "customer share
": the extent to which a customer does business with you instead
of with your competitors.
3. Customer Satisfaction.
Happy and satisfied customers behave in a positive manner.
They will buy a lot from you and will give you a large share
of their business. Customer satisfaction is derived largely
from the quality and reliability of your products and services.
You make good on your explicit and implied promises. But customers
who are only just satisfied are likely to walk
away for a slightly more attractive proposition from your
competitor. The major goal of customer satisfaction program
should be to achieve "preferred supplier" status
with as many customers as possible.
Customer Focus Factors
Customer Performance - profitability, behavior and satisfaction -
is something which happens outside the company. But Customer
Performance is to a large extent determined by the Customer Focus
inside the company. There are three primary and six secondary Customer Focus Factors:
A. Organization
1. Managers are committed to customer focus, set an example
themselves and budget time and money for customer process
improvement.
2. Employees possess the necessary customer care skills and
experience; they have a customer care attitude and work in teams
with others who have customer contacts.
B. Communications
3. Contact Logistics: customer communications are well planned,
on time and without sloppiness in execution.
4. The most appropriate methods/media/messages are applied
to each customer (segment); communications are interactive and
stress customer benefits rather than product features.
C. Information
5. Customer data is relevant, complete and up to date.
6. Customer information systems are effective, flexible and
user-friendly.
There is clearly a direct correlation between Customer Focus
and Customer Performance. All things being equal, if you can improve
your Customer Focus you will improve Customer Performance:
Putting customer performance and customer focus together brings
us to a Customer Relationship Management model:
The model represents the idea that if your internal Customer
Focus is strong, your customers will be very satisfied.
And if your customers are very satisfied, they will behave
very nicely, giving you a large part of their business, often
without any major marketing and sales effort or squeezing
every cent off the price. ("Send me another thousand
Widgets and the invoice.") This positive customer behavior
will lead to higher customer value-and therefore more operational
profit!
It's quite a simple concept. But... if you can't measure the factors
in Customer Relationship Management model, you can't manage them.
There is a whole tribe of professionals out there measuring
your profits - the accountants. But is anyone measuring customer
profitability, customer behavior, customer satisfaction and
customer focus so that they can be managed and improved?
The answer all too often this: not really. That's why process
control techniques are also needed.
Process Control Techniques
Managing customer performance and customer focus is not really
possible without measuring progress and results. Marketing,
sales and service must be subjected to the same process control
techniques that are often used for production, logistics and
administration. This is what Customer Marketing is about: applying
these process control techniques to CRM:
Registration
- Customer Performance Registration: You acquire or
integrate from internal sources data on customer profitability,
behavior and satisfaction.
- Customer Focus Registration: You undertake a customer
focus audit or self-assessment of your customer information,
communications and organization.
Analysis
- Customer Performance Analysis: You analyze the profitability,
behavior and satisfaction of your customers and prospects
to identify problems and opportunities.
- Customer Focus Analysis: You analyze the current status
of your customer information, communications and organization
and identify priorities for improvement.
Planning
- Customer Performance Planning: You set top-down/bottom-up
profitability, revenue and satisfaction targets for each customer
(and prospect) which, when realized, will meet corporate goals
for profitability, revenues and satisfaction.
- Customer Focus Planning: You make plans to make measurable
improvements in your customer information, communications
and organization.
Realization
- Customer Performance Realization: You execute customer
performance plans.
- Customer Focus Realization: You execute customer focus
plans.
You have now learned some key Customer Marketing concepts.
Do you want to know more about the benefits? Then click
to Customer Marketing: What's in it for me?
or else go back.
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