CU - BCOM Sem VI -CRM

["Collaboration The Conversation Company collaborates structurally with its customers. This increases the average level of consumer commitment. It is possible to be fairly creative within this pillar. 4Food, a successful hamburger outlet in Manhattan, draws up a new menu every day with the help of its own customers. Using a series of tablets left on the tables, the diners can put together their own recipe for the perfect? Hamburger. Every new concept put on display for the other customers and the best-selling burgers are promoted via Twitter and Facebook. For each burger sold, the recipe-maker receives 25 cents. In a similar vein, Proctor and Gamble has developed Vocal point, a community in which 350,000 mothers help to develop new product ideas for the P&G brand. These mothers are also the first users of the new products during the development phase, so that they can provide feedback with regard to possible problems\/weaknesses before the product is finally launched on the market. 7.2 CUSTOMER ACQUISITION STRATEGIES Customer acquisition refers to the activities and actions a company takes to gain new customers. A successful customer acquisition strategy helps you win new business, retain loyal customers, and improve profits. It\u2019s important to remember that acquisition starts at first contact with a new customer and rolls into your strategy for retention \u2014 the two work together to keep a marketing program profitable. Customer acquisition covers each aspect of the customer journey, from lead generation to activation, customer loyalty, and conversion rate optimization. Customers won\u2019t always stick around \u2014 no matter how good your retention strategy is \u2014 so you need a way to fill the gaps and keep your business moving forward. How to create a customer acquisition strategy To make planning easier, we\u2019ve highlighted some best practices you\u2019ll want to consider when creating a customer acquisition strategy: 1. Identify your ideal customers. 2. Define your goals. 3. Choose your customer acquisition channels. 4. Develop a unique strategy for each channel. 5. Communicate with your customers. 6. Measure and improve your strategy. 1. Identify your ideal customers 1 0 1","The first step toward customer acquisition is to gain an understanding of your customer base \u2014 both your current and target audiences. This includes studying competitors and analyzing market research done by Pew Research Center or the U.S. Census Bureau. Learning your product-market fit will help you identify ideal customers and set marketing goals. If you don\u2019t have a good idea who your audience is yet, ask yourself the following questions: 1. What do customers accomplish with your product or service? 2. What are your customers' struggles? 3. What are your customers\u2019 demographics? 4. What benefits do customers look for in buying your product(s)? 5. Where do your ideal customers find information? 6. Why wouldn\u2019t they buy your product(s)? 7. When does your ideal customer buy your product or service? As you grow, keeping track of these customer profiles can help you analyze, understand, and expand your customer base. You can identify your highest-value customers' different traits and behaviors, which you can use to invest more or less in the best customer acquisition channels. 2. Define your goals With your ideal customers in mind, you can define your goals and objectives. Setting an end result will help you think through a customer acquisition plan and guide your efforts. To meet revenue expectations, set goals for your customer acquisition strategy that account for customer churn and current customer growth. You could earn $20 million in new business over the next year, but you may not reach total revenue goals for the year if your industry has high turnover. It\u2019s not hard to prove your marketing efforts are working. By measuring customer acquisition metrics such as customer lifetime value (CLV), monthly recurring revenue (MRR), customer acquisition costs (CAC), and churn rate, you can create a strategy that aligns with overall business goals. 1 0 2","3. Choose your customer acquisition channels Identifying your ideal customers and customer acquisition goals is a great start to creating an effective strategy, but that\u2019s only the beginning. You\u2019ll want to think about which channels to use based on your research and what types of content do best there. A customer acquisition channel is any place your customers meet your brand for the first time \u2014 whether through social media, organic search, or a paid ad. Customer acquisition channels are how you bring in new customers. Some popular customer acquisition channels include: \uf0b7 Instagram: Visually attractive posts and short videos. \uf0b7 Facebook: Live video streaming, one-to-one messaging, advertising. \uf0b7 YouTube: Longer, more informative, and entertaining video content. \uf0b7 SEO: Written, long-form content that's optimized for search engines. \uf0b7 Paid social: Short, snappy ads with compelling visuals. \uf0b7 Referrals: Discounts and loyalty rewards. 4. Develop a unique strategy for each channel You may want to get on every channel possible to start, but this can hinder your customer acquisition strategy. For example, if you are trying to reach customers in their early 20s, you may find your audience is on Instagram or TikTok. It wouldn\u2019t be worth putting all your resources into Facebook or Google Shopping ads. When creating a marketing strategy for each channel, focus on: \uf0b7 What content your audience interacts with. \uf0b7 What your competitors are posting. \uf0b7 What your KPIs tell you. Depending on your customer acquisition strategy, you may realize that you don\u2019t have to use TikTok if your customers are mostly on Facebook. Or if you find that you can say more in video than you can with words, YouTube or Inst01agram may be more useful. 3","Research the best strategies for each channel you use to get the most out of your customer acquisition efforts. 5. Communicate with your customer base It\u2019s hard to find the gaps in your customer acquisition process without direct feedback from your customers. To collect this valuable information, you have to request it. Customer surveys, email contact forms, customer interviews, social media posts, and blog posts are all excellent ways to communicate with your customer base. You can promote a deal, ask for feedback, and be available to talk. Create a communication plan to keep conversations going with your customers regularly. This will help you identify and capitalize on the value customers expect from your products and services. 6. Measure and improve your strategy Building an online business without utilizing analytics is like driving with your eyes closed. If you don\u2019t know what\u2019s working (or what\u2019s not), where people are visiting, and how your pages are performing, then you\u2019re headed toward failure. Many factors can affect customer acquisition, and that\u2019s why it\u2019s so important to analyze and measure your results. Customer acquisition analytics can help you figure out: \uf0b7 Where customers hear about your products. \uf0b7 Where they bought products. \uf0b7 Where they live. \uf0b7 Other identifying factors. Before you start tracking, figure out which customer acquisition metrics you will monitor. Some common metrics include the following: \uf0b7 Customer acquisition costs (CAC) \uf0b7 New customer growth \uf0b7 Customer lifetime value (LTV) 1 0 4","\uf0b7 Churn rate \uf0b7 Ratio of lifetime value to customer acquisition cost (LTV:CAC) Customer acquisition may seem daunting, but with the right preparation and tactics, your business can attract high-value customers, keep them around longer, and grow more sustainably. 7 best customer acquisition techniques As you start to build out your strategy, consider the following seven customer acquisition techniques that will help get your products in front of more prospective customers. 1. Content marketing Content marketing involves creating blog posts, guides, infographics, videos, podcasts, and more to answer questions, solve problems, and introduce readers to your business. Content marketing is efficient, compelling, and persuasive for capturing website traffic. Plus, it generates over three times as many leads as outbound marketing and costs 62% less, according to research from Demand Metric. With content marketing, you can: \uf0b7 Improve ROI 13x by prioritizing blogging in your marketing strategy. \uf0b7 Build authority in your industry with lower upfront costs and more profound long- term benefits. \uf0b7 Support your entire customer journey, from lead generation to acquisition and retention. \uf0b7 Create videos that capture up to 66% more qualified leads than those without. \uf0b7 Build marketing assets for multiple customer segments. \uf0b7 Build trust with prospects, considering 61% of U.S. consumers bought something after reading recommendations on a blog. \uf0b7 Assist your SEO efforts by adding more targeted, indexed pages to your website. 1 0 5","But how often should you be blogging? It depends. For smaller businesses, you can see success by publishing one to four blog posts per week. Larger companies (think Shopify or Forbes) often publish articles daily or multiple times per day. Even if you don\u2019t have the budget for a full content team, you can have people from different departments write content for your audience, hire an editor, and start publishing. The goal is to create good content consistently so you can build closer ties with readers and get the most from your acquisition budget. 2. Search engine optimization (SEO) Search engine optimization is the process of tailoring your website content to boost rankings on Google or other search engines. SEO is one of the most important customer acquisition methods for online businesses, and it\u2019s likely your customers are using search engines to find information. That\u2019s why it\u2019s a valuable channel for acquiring new customers. With SEO, you can: \uf0b7 Drive quality traffic to your website. Unlike paid acquisition channels that involve unsolicited outreach, customers can find you when they\u2019re looking for information. It\u2019s a more customer-centric approach to customer acquisition. \uf0b7 Lower Google ad spend. Producing content that ranks high in Google search is an investment. But once you rank in a good position, you can drive the equivalent monthly cost of PPC campaigns so you don\u2019t have to spend as much on ads. \uf0b7 Get more clicks than pay-per-click advertising. Even though Google ads show up higher on search result pages, 71.33% of people click through an organic result on page one. \uf0b7 Convert more leads. SEO leads have an average 14.6% conversion rate versus traditional outbound marketing (think direct mail or advertising), which has an average 1.7% close rate. The one drawback of SEO is that it\u2019s not an overnight success. Getting your articles found in search results can take time, so you want to plan for the long term. However, the results from SEO are worth your time. NerdWallet, a personal finance company, bet big on SEO over the past five years. In July 2020, the company, valued at roughly $500 m1illion, generated nearly 14 million organic 0 6","search visits. You\u2019d think a company of this size would be dumping money into paid ads, but the story is quite different. In a recent post on Some Good Content, the company revealed how it took over the market on all \u201cThe Best of\u2026\u201d content on the web related to personal finance. Through well-written content and a simple SEO strategy, the company continues to acquire new customers from search engines. 3. Mobile marketing Mobile marketing refers to reaching customers on their smartphones through SMS, Facebook Messenger, push notifications, or mobile apps. Mobile sales are expected to reach over 280 billion dollars in 2020, making up 45% of the total ecommerce market. With mobile marketing, you can: \uf0b7 Easily create automated omni-channel campaigns. With marketing automation software like ManyChat, you can create integrated, cohesive shopping experiences across your customer touch points, including email, text, Facebook Messenger, and push notifications. \uf0b7 Align with consumer market demand. Audiences today want to interact with brands 24\/7. An omni-channel presence can help deliver an informed, consistent message across multiple channels. \uf0b7 Personalize at every stage of the buyer journey. Mobile channels help you more easily collect customer data to create more targeted outreach to cold audiences. For example, hideAWAY Handmade, an Australian online retailer, developed a customer acquisition process for new website visitors that drove over $100,000 in additional monthly revenue. The company captured new leads on their website, built detailed customer profiles \u2014 based on buying behavior, quizzes, giveaways, and demographics \u2014 to create personalized experiences for shoppers, generating 68,000 subscribers to improve future marketing efforts and sell more products. 4. Social media For online businesses, having a presence on social channels like Facebook, Instagram, TikTok, and Twitter matters. With an estimated 3.6 billion people on social media worldwide, it\u2019s easy to promote your business. Benefits of getting on social media include: 1 0 7","\uf0b7 Increasing brand awareness by posting consistently. \uf0b7 Showing customers a more creative side of your business. \uf0b7 Engaging with your audience on social media to bring them back to your website. \uf0b7 Promoting your products to followers. Three key tactics to consider when looking at social media are: \uf0b7 Organic social posts \u2014 Scheduling or instantly publishing posts on Facebook, Instagram, and other social media channels your audience lives on. \uf0b7 Facebook ads \u2014 Finding new fans, connecting with existing ones, and retargeting website visitors who didn\u2019t buy. \uf0b7 Instagram ads \u2014 Visually promoting your brand to find new customers and retarget visitors. Kortni Jeane, an online swimwear brand, ran Facebook video ads and photos in a campaign to reach more shoppers and increase sales. Using the Facebook ads platform, they automatically placed ads where they were likely to drive results at the lowest cost possible. They also used budget optimization to distribute the budget across top-performing ad sets in real time. In five days, the Kortni Jeane campaign resulted in: \uf0b7 A 22.9x return on ad spend. \uf0b7 Over 2,000 purchases. \uf0b7 An 11% increase in conversion rate. 5. Email marketing Do you know what smart entrepreneurs do with the traffic they receive from content marketing and SEO? They build an email list. Outside of direct sales, there is no better business outcome attached to first-time visitors than when they subscribe to receive updates from you. You can send sales or discounts for your products or services, exclusive content, customer features, and other promotional campaigns. 1 0 8","When you want to communicate something with your customers, email marketing is one of the most cost-effective ways to do so. In fact, a study by the Direct Marketing Association found that for every $1 spent, email has an average $38 return on investment. Some other reasons to use email marketing are: \uf0b7 It\u2019s easy to start. Email marketing platforms like MailChimp are easy to use and intuitive. They come packed with features to help you get sign-ups, design emails, collect data, segment customers, measure success, and more. \uf0b7 To automate marketing tasks. Unlike paid marketing campaigns, you can set up an automation to trigger a series of emails you can set and forget. From welcome series to post-purchase follow-ups to rewarding customers with special promotions, you can connect with thousands of customers quickly and easily. \uf0b7 To increase brand awareness. Each time you send an email, your customer gets a notification. Whether they decide to open your email or not, they see your brand and offer, which can keep you top of mind the next time they want to buy something. \uf0b7 It\u2019s easy to measure performance. Email marketing platforms also make it easy to collect data and use it to improve your marketing strategy moving forward. You can track opens and clicks, ecommerce activity like purchases and abandoned cart recoveries, and even how much traffic you send to your online store or website. If you have the means, hiring an expert in email marketing can pay off. But if you don\u2019t have the budget, you can still invest in client acquisition software with email marketing features, which can expand your reach and increase your sales. 6. Referral program Referral programs are an easy way to improve client acquisition in your business. You\u2019ve probably come across them before for professional services or online stores. The programs are typically straightforward: The more people you refer, the more you save or earn. Some key reasons to start a referral program are: \uf0b7 People are 4x more likely to make a purchase when referred by a friend. 1 0 9","\uf0b7 Referred customers' lifetime value is 16% higher when compared to non-referred customers. \uf0b7 Customers acquired through referrals have a 37% higher retention rate. \uf0b7 81% of consumers are more likely to engage with brands that have reward programs. \uf0b7 Referred customers have an 18% lower churn than customers acquired through other channels. \uf0b7 Referred customers bring in 16% more in profits at minimum than non-referred ones. One of the top customer acquisition examples using a referral program comes from the cloud- based storage company Dropbox. The famous program offers you and your friends 500MB of additional free storage space \u2014 up to 16GB in total. Upon launch, Dropbox\u2019s refer-a-friend program increased their sign-ups by 60%, seeing over 2.8 million referral invites in the first month. They also went from spending up to $388 in ad spend per customer down to zero, thanks to their referral program. Dropbox now has over 14.3 million customers and has continued to use this referral program to drive customer acquisition for nearly a decade. When creating your referral program, give something away for free so that referred leads have nothing to lose when signing up. If you\u2019re a SaaS business, offer Pro features for a limited time. For ecommerce businesses, give them a fair discount on their first purchase. Once a customer interacts with your brand (and enjoys it), they\u2019ll continue to refer new customers to your business. 7. Paid advertising If you\u2019re a newer business or online store, chances are you\u2019ll have to invest more in paid advertising to acquire new customers. Ads produce results immediately, generating traffic, leads, and sales right after you launch. And paid ads can support SEO efforts by helping you find keywords to drive your organic search campaigns. However, pay-per-click (PPC) can get expensive fast without the right tactics. Some best practices to follow to maximize ad spend are: 1 1 0","\uf0b7 Always include a remarketing strategy. Whether you run Facebook ads or Google ads, not everyone who clicks through your ad will buy something. Support your paid advertising with remarketing ads to (basically) follow shoppers around the internet while showing your ads until they buy. Some brands see up to 1,300% ROI from using remarketing ads. \uf0b7 Use Google Dynamic Search Ads. Dynamic Search Ad headlines and landing pages pull content from your website based on what a person was shopping for. They help keep your ads relevant, save you time, and increase conversions for your ads. \uf0b7 Use automation for Facebook ads. If you choose to run Facebook ads, consider using a chatbot to start a conversation with paid traffic. It\u2019s an easy way to create interactive experiences for potential customers and maximize your ad spend versus traditional methods. Customer acquisition costs Customer acquisition cost (CAC) is the total cost involved in getting a new customer, including marketing, research, sales, and product cost. It\u2019s an important metric because it helps a company determine how important a customer is. CAC also helps you calculate the ROI of an acquisition strategy. How to calculate customer acquisition cost An essential part of maintaining a viable customer acquisition process is making sure that the channels and tactics you choose are working for your company. To do that, you need to know how to calculate your CAC. Here\u2019s what a common CAC formula looks like: CAC = (Cost of Sales + Cost of Marketing) \u00f7 Ne1w Customers Acquired 1 1","7.3 CUSTOMER RETENTION STRATEGIES Customer retention is the collection of activities a business uses to increase the number of repeat customers and to increase the profitability of each existing customer. Customer retention strategies enable you to both provide and extract more value from your existing customer base. You want to ensure the customers you worked so hard to acquire stay with you, have a great customer experience, and continue to get value from your products. In short, acquisition creates a foundation of customers while your retention strategy is how you build customer relationships and maximize revenue for each one. But how much time and resources should you devote to your retention program? The answer to that depends on your store. When to focus on customer retention Whether you should focus more on customer acquisition or retention is heavily influenced by where your store is in its lifecycle. A store that started yesterday is vastly different than one that\u2019s been up and running for many years. Take a look at the timeline below for general guidance on your store\u2019s potential investment levels. 1 1 2","1. Just starting: When you\u2019ve just started your store there is one thing you should be focused on: getting customers. At this point your acquisition efforts should completely trump retention. Focus on strategies and tactics that will help you grow your customer base. 2. Gaining traction: You now have customers and you are getting sporadic sales. At this stage you can begin to introduce retention elements to encourage each customer to buy more. My recommendation would be to start with retention email campaigns that focus on encouraging a past customer to purchase from you again. 3. Consistent: You aren\u2019t quite an ecommerce juggernaut, but sales are growing. This is the point where you should begin to think about mixing in more retention with your acquisition efforts. You can look at starting a referral and\/or a loyalty program as well as getting more serious with marketing automation. Your retention strategy is how you maximize the profitability of each customer. 4. Established: You are now an established ecommerce store. A common problem for retailers of this size is finding ways to continue to grow. Acquisition may be leading to a lot of one time purchases, but a retention strategy can get customers to buy more often which increases their lifetime value. At this stage, you should be serious and deliberate about your retention efforts. 5. Well-established: At this stage your store has made it past the initial gauntlet. You\u2019ve achieved many early successes and you have a lot of processes and automations in place. Now is the time to focus heavily on retention. For example, in the graph below, each store has 100 customers buying a $10 item each month. The light purple store is retaining 5% of those customers each month, and the dark purple is retaining 10%. As you can see the 5% increase can lead to rapid growth that is difficult to match with straight acquisition. 1 1 3","Aside from the current stage your store is in, you'll also want to tailor your strategy based on what you sell. Strategies to boost customer retention 1. Use customer accounts 2. Improve your customer service 3. Start a customer loyalty program 4. Send engaging emails to customers 5. Offer a discount or credit to return We\u2019ve explored why developing a strategy to retain our current customers can be just as valuable as finding ways to acquire new ones. We've also looked at what we should measure in order to stay on track. Now, let's outline some tangible ideas you can apply to improve customer retention. 1. Use customer accounts Customer accounts can be a double-edged sword. On one hand, accounts can make repurchasing easier by giving customers instant access to previous orders as well as pre-filled shipping information. On the other hand, customer accounts are often seen as too big of a commitment for new customers. 1 1 4","Because of this, many people choose to checkout as a guest if given the option. So how can you effectively implement and encourage customer accounts while not hindering conversions of first time customers? The trick is to provide the option to create an account after the first order has been placed. If you're on Shopify and your customer accounts are optional, you can send customers direct invitations to encourage them to activate an account after they\u2019ve completed a purchase. 2. Improve your customer support Support systems help you effectively communicate with your customers and provide them with the right level of support. A support system can help both pre- and post-sale by enabling you, or a customer service rep, to clearly communicate with the customer. Having a live chat or help desk tool available can turn a customer question into a sale or a customer complaint into a resolution, whether they come in on site, through email, or via social media. Very often, an effectively resolved complaint or problem can turn an unhappy customer into a loyal, repeat customer. And that's to say nothing of the value of customer feedback, which can help you improve your products and your overall shopping experience. 1 1 5","Data suggests that while delight has its place, customers see fast, friendly, and consistent customer service as the gold standard. If you help customers avoid problems and get the most out of your products, you\u2019ll be doing both of you a favor. Depending on your niche, product mix, and margins, sending a small gift to your best customers can be a great way to remind them to return while adding the element of surprise and delight, which can increase customer satisfaction. Giving an unexpected gift also plays to the law of reciprocity, which refers to our tendency to respond to a positive action with another positive action. Delight has its place. However, customers see fast, friendly, and consistent service as the gold standard. For example, in a world where everything is instant and done over the internet, sometimes people just want a change of pace. A handwritten thank-you note is a thoughtful way to show customers you care and can encourage them to come back and purchase from you again. When something is handwritten, it shows your customer you\u2019ve taken the time to address them personally. This attention to detail will hel1p you stand out from the deluge of automated 1 6","receipts and one-size-fits-all order confirmation emails. These considerations go a long way and can potentially create a loyal customer for life. 3. Start a customer loyalty program Loyalty programs, sometimes referred to a customer retention program, are an effective way to increase purchase frequency because they motivate customers to purchase more often in order to earn valuable rewards. This becomes a profitable exchange for both you and your customers: they get more value each time they shop, and you benefit from their repeat business. You can encourage customers to continue investing in the program by giving them welcome points when they create an account. When they see how easy it is to earn rewards, they\u2019ll be excited to come back to your store to do it again. Creating a loyalty program can be as simple as rewarding customers on their second purchase, or after a set dollar figure. Your store reports make it easy to see who your best customers are by dollar value and total number of orders. Additionally, you can opt for automated loyalty apps which can reward your customers for a variety of actions they take in your store. 4. Send engaging emails to customers If purchase frequency is the backbone of customer retention, email marketing is the backbone of customer engagement and your retention toolkit. 1 1 7","Emails give you the opportunity to continue building a relationship with your customers before and after their initial purchase. It\u2019s critical that each message you send adds value to your customer\u2019s experience. If it doesn\u2019t, you run the risk of losing them. Shopify data from Black Friday Cyber Monday also shows that, relative to other sources, email has the highest conversion rate at 4.29%, followed by search in second. It's clear email is a channel that converts. A great way to get started is with follow-up emails. A week after a customer\u2019s first purchase, send them an email that acknowledges and thanks them for buying. This type of acknowledgement helps customers feel good about their decision to buy from you, and makes your brand more approachable. You can make this initial email even more impactful by recommending products that complement their initial purchase. Finally, you can even start including customer reviews as well. These endorsements will increase both the value of each recommended product and the customer\u2019s desire to buy. 1 1 8","After this initial follow-up has been sent, you should make sure to send personalized messages regularly. Beard King does this beautifully, sending personalized emails that offer new products or sales every two to three weeks. Making additional product recommendations and sending invitations for upcoming sales and promotions for new products are great ways to keep the conversation going with first-time buyers. If you have a product that is perishable, consumable, or otherwise needs to be refreshed over time, knowing your products\u2019 lifespan and sending well-timed emails can be the perfect way to bring back dormant customers. This tactic can be particularly effective because ideally, you\u2019ll be delivering the right message to the right person at the right time. For example, Luxy Hair mentions in their FAQ section that their hair extensions will last three to six months on average, or up to a year depending on wear. 1 1 9","Knowing this, Luxy could set up a series of automated emails to go out after three months, six months, and one year that explain to customers the benefits of a fresh set of hair extensions. These emails would help educate a first-time buyer, keep Luxy top-of-mind, and encourage repeat business, all while providing customers with a great experience. In all of your post-sale marketing communications, remember to remind customers of why they bought from your brand in the first place. Getting them to come back rests on your ability to show them why an additional purchase is worth their time and money. 5. Offer a discount or credit to return Generally, I would tell you to be wary of discounting. When you discount your products you enter a perpetual race to the bottom that conditions customers to expect dropping prices, which ultimately results in a loss of revenue for your store. When margins are tight, discounting is even more of a risk. However, when discounts are sent to a first time buyer I actually love it! Sending a discount code for their next purchase with a first time order is a great way to nudge them to come back. For this reason, discounting can also be an effective way to bring back customers that haven\u2019t purchased in a while. You can strengthen that nudge by giving them more than the standard 10% off. Giving 20%+ is more motivating and according to Market Wired, once a customer comes back for a second purchase they have a 54% chance of doing so again. When you think of that 20% off as an investment in boosting your repeat customer rate, it sounds a lot more reasonable. 7.4 UPSELLING AND CROSS-SELLING Upselling and cross-selling are cousins of selling. Buy a cow from me, and I\u2019ll offer you a better one for 50 bucks more: the better cow is an upsell. Buy a cow from me, and I\u2019ll throw in a hay bale for 5 bucks: the hay bale is a cross- sell. 1 2 0","Upselling is a strategy to sell a superior, more expensive version of a product that the customer already owns (or is buying). A superior version is: \uf0b7 a higher, better model of the product or \uf0b7 same product with value-add features that raises the perceived value of the offering 1 2 1","Upselling is the reason why we have a 54\u201d television instead of the 48\u201d we planned for. It\u2019s also the reason you might have subscriptions which include services you don\u2019t use. Cross-selling is a strategy to sell products related to the one a customer already owns (or is buying). Such products generally belong to different product categories but will be complementary, like socks with a pair of shoes, or batteries for a wall -clock. 1 2 2","Cross-selling is a battle-ready strategy. Here\u2019s how McDonald\u2019s does it: Their apple pie dispensers are kept right behind the cashier, in full view of customers. The head of the U.S. division for McDonald\u2019s Corp., Jeff Stratton, said in an interview that moving the dispensers to the back kitchen area would probably cut apple pie orders by half. There is another popular selling technique known as bundling. Bundling is the offspring of cross-sell and upsell. You bundle together the main product and other auxiliary products for a higher price than what the single products are sold for alone. What is bundling in eCommerce? By bundling together the camera and two very related (even essential) products, Nikon makes a compelling offer. Screenshot from Amazon mage source: Amazon Bundling is also quite often used along with a discount to increase the perceived value of the offering. Pure Bundling is when products are made available only in bundles and cannot be bought individually. Mixed bundling is when both options (individual buy and bundle buy) are made available. Vineet Kumar from HBS and Timothy Derdenger at Carnegie Mellon University teamed up together and studied bundling as used by Nintendo in their video game market. Revenues fell almost 20% when Nintendo switched from mixed bundling to pure bundling. In the gaming market, prices fall each day, so customers looking to buy just that one thing will choose to wait until it becomes available, likely at a cheaper price. 1 2 3","So should you use upselling, cross-selling, pure bundling, or mixed bundling? Specifying a minimum order amount to qualify for free shipping is a great way to use bundling \u2013 but it\u2019s important to choose the right minimum order amount that maximizes conversion rates to the bundle. Amazon does all of this brilliantly. Why are upsell and cross-sell important for eCommerce? Upselling and cross-selling are often (and mistakenly) seen as unethical practices to squeeze more out of the customer. As a strategy, however, upselling and cross-selling should be used to \u2018help customers win\u2019. It\u2019s about making recommendations that might better meet a customer\u2019s current needs, and aiding them to make a choice being fully informed about their options.. Remind Bob to buy some batteries along with his new wall-clock Jack might be looking for something more powerful than an i5 processor, show him the i7, too. So how does upselling help you, as a marketer? Increases customer retention Leaving aside impulse buys, customers buy products and services to solve a problem. They are aware of the problem, but might not be aware of the best solution to the problem. Steve Jobs was right when he said \u2018people don\u2019t know what they want until you show it to them.\u2019 Upselling or cross-selling done right helps the customer find more value than they were expecting. It can increase revenues by up to 43%, thereby improving your customer retention. Increases average order value and life-time value 1 2 4","Cross-selling and upselling increases your average order value, creating revenu e and profit at very low incremental cost. You\u2019ve already spent valuable marketing dollars to get the customer to your eCommerce store, so maximizing order value is key to ROI. A Marketing Metric study reports that the probability of selling to an existing customer is 60-70%. The probability of selling to a new prospect is 5-20%. Upsell to existing customers is a highly cost-efficient way to boost life-time value. Should you upsell or cross-sell in eCommerce? There\u2019s no easy answer as to whether upsell or cross-sell is the best strategy. The best way to decide is through A\/B testing. However, PRWD head of usability, Paul Rouke explains why cross-sell works best on checkout pages. Image source: Advancedwebranking What and how should you upsell? One of the most common ways to upsell is to suggest the next higher model. But when it\u2019s just 4% that you are targeting, the margin for error is as thin as the edge of a blade. Here are some suggestions on how to upsell: \uf0b7 Promote your most reviewed or most sold products \uf0b7 Give more prominent space for the upsell, display testimonials for the upsell \uf0b7 If you have customer personas in place, use those to make relevant suggestions \uf0b7 Make suggestions relevant by giving 1context: why should I buy that instead of this? 2 5","And always, always, make sure you suggest products from the same category. Don\u2019t ask your website visitor to buy a 17-inch laptop when they\u2019re shopping for a MacBook air. The two products don\u2019t satisfy the same needs. Use cross-sell techniques more on the check-out page to tap into impulse buying: \uf0b7 Cross-sell products should be at least 60% cheaper than the product added to cart so buyers consider adding it to their carts even though they didn\u2019t originally intend to purchase them \uf0b7 Go for products that are easily missed out: filters for lenses, earphones for mobile phones, lighter for a gas stove, and of course, scrub for cows.. the possibilities are endless \uf0b7 Try not to bombard them with too many choices that distract them, so they end up abandoning their cart. If you are manually pushing upsell\/cross-sell suggestions, it would be worthwhile to automate the system. Products should be categorized and related products should be tagged so as to enable automation. How to effectively cross-sell and upsell? A study by Bain showed that reducing complexity and narrowing choices can boost revenues by 5-40% and cut costs by 10-35%. 1. Upsell smart by narrowing choices Too many choices can be paralyzing. Professor Iyengar and her research assistants conducted a study on the effect of choices in the California Gourmet market. They set up booths of Wilkin and Sons Jams \u2014 one offered an assortment of 24 jams while the other had on display 6 jam varieties. 60% of the visitors stopped by the larger booth while only 40% flocked to the one with fewer choices. But 30% of visitors that sampled at the small booth made a buy, while only 3% of the 60% visitors to the larger booth went on to make a purchase. 1 2 6","Actionable Tip: Don\u2019t bombard your customers with too many choices. If they\u2019ve already said no to an upsell product, do not push for it. Think of upsell as a gentle suggestion, not an aggressive sales tactic. And when in doubt, A\/B test! 2. Offer bundles to reduce decision complexity Every action the user has to take makes the decision making more complex. Think of ways to reduce the number of actions in a buying decision. We\u2019ve a limited amount of energy to be spent on decision making. Bundling brings together related products that are of relevance to a customer. Buying them individually involves more decision making, and more steps. Whereas through bundling, in one a customer is able to buy multiple products together. It\u2019s also important to understand how we make decisions. Exactly how rational are we at decision making? Turns out, not so much. Turns out, not so much. 3. Use price anchoring: The surprising power of dummy choices A few years back, The Economist ran an ad that looked like this: 1 2 7","Image source: Researchgate You get a web-only subscription for $59, a print-only subscription for $125 or both, again, for $125! Needless to say, the print-only option is a dummy choice. Who would ever choose an inferior option when the price is the same? Dan Ariely took the ad and took it to 100 MIT students to see what they would choose. Image source: NPR.org An overwhelming majority chose what seemed the \u2018best\u2019 option \u2013 both print and web subscription at $125. 1 2 8","16% chose the web-only subscription. Nobody chose the print-only subscription at $125. Dan then took off the middle choice\u2014the print-only one. And ran the test again on 100 people. This is how the opt-in rates looked now. Surprisingly, the majority (68%) people chose the cheaper option when the dummy choice was removed. The print and web subscription that saw 84% subscription in the presence of the dummy choice now got a significantly low 32% subscription rate. An inferior choice makes a similar but superior choice look better even when other options are cheaper. Actionable Tip: consider a customer looking at a top-tier entry-level DSLR. Show him a mid-level DSLR without add-ons for a marginally higher price and the same mid-level DSLR with add-ons at the same higher price. Upsell it with the proper communication \u2014 how does the mid-level DSLR help the customer win? \u2014 and you have a good probability of making the upsell. 4. Be helpful and offer value, not pushy or aggressive A key principle in cross-selling and upselling is to assist the customer, suggesting products which make sense to them and are relevant to their needs. Use data and customer behaviors to offer informed recom1mendations that are likely to meet their needs or solve a current or potential problem2. 9","Here\u2019s what you shouldn\u2019t do: 1. Suggest upsells and cross-sells before a customer picks a product 2. Bombard customers with too many cross-sell and upsell products 3. Sly tactics like hiding pre-selected add-ons in the hope customers don\u2019t notice it 5. Don\u2019t forget post-purchase cross-selling Your opportunity to cross-sell doesn\u2019t end once the customer has checked out. In fact, the experience after the purchase is a key moment in the customer journey that too many eCommerce businesses forget about. Don\u2019t just send the receipt and the product \u2013 use the opportunity to develop loyalty and make special offers. Use emails, confirmation pages and other post-purchase communications to offer further products, incentives and value to the customer. Final takeaways If there\u2019s one thing to take away from this post, it has to be this: Upsell and cross-sell techniques are powerful strategies that can help customers make better decisions, faster. To figure out which of these work for your customers, you shouldn\u2019t rely on guesswork. A\/B test differing upsell and cross-sell strategies for your multiple visitor segments to determine what works for each of them, so you can deploy the one that drives maximum improvement in sales. VWO Testing allows you to create and run tests on your key pages to experiment with the various upsell and cross-sell tactics discussed above and optimize them for increased revenue. With an easy-to-use Visual Editor, you can create and run tests independently without having to rely on your IT team. Sign up for a free trial to assess the tool for yourself or request a personalized demo from one of VWO\u2019s optimization experts. 7.5 SUMMARY While CRM is a term that most often relates t1o the software by the same name (which is created to help businesses stay on top of03 their deals) the Customer Relationship","Management process also involves such skills as attention to detail, listening, and consistency.Therefore an effective CRM process results in your customers experiencing that you value them and their time. It is a process that not only helps businesses to establish trust but it even adds value to the relationship by offering the best products and services for their unique and respective needs. Easy to use CRM software irrespective of whether it is enterprise-level CRM or any other robust and affordable Salesforce Alternative CRM tools mostly used by SMB and startups is just a platform that can be used as a part of the process to do these things more efficiently. Customer retention is the collection of activities a business uses to increase the number of repeat customers and to increase the profitability of each existing customer. Customer retention strategies enable you to both provide and extract more value from your existing customer base. You want to ensure the customers you worked so hard to acquire stay with you, have a great customer experience, and continue to get value from your products. In short, acquisition creates a foundation of customers while your retention strategy is how you build customer relationships and maximize revenue for each one. But how much time and resources should you devote to your retention program? The answer to that depends on your store. Cross-selling is a strategy to sell products related to the one a customer already owns (or is buying). Such products generally belong to different product categories but will be complementary, like socks with a pair of shoes, or batteries for a wall -clock. Cross-selling is a battle-ready strategy. Here\u2019s how McDonald\u2019s does it: Their apple pie dispensers are kept right behind the cashier, in full view of customers. The head of the U.S. division for McDonald\u2019s Corp., Jeff Stratton, said in an interview that moving the dispensers to the back kitchen area would probably cut apple pie orders by half. 7.6 KEYWORDS Customer acquisition refers to the activities and actions a company takes to gain new customers. A successful customer acquisition strategy helps you win new business, retain loyal customers, and improve profits. Customer retention is the collection of activities a business uses to increase the number of repeat customers and to increase the profitability of each existing customer. Upselling is a strategy to sell a superior, more expensive version of a product that the customer already owns (or is buying). 1 3 1","Cross-selling is a strategy to sell products related to the one a customer already owns (or is buying). Such products generally belong to different product categories but w ill be complementary, like socks with a pair of shoes, or batteries for a wall -clock. 7.7 LEARNING ACTIVITY 1. Define Customer acquisition. ___________________________________________________________________________ ___________________________________________________________________________ 2. State the elements of CRM process. ___________________________________________________________________________ ___________________________________________________________________________ 7.8 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. Define customer acquisition? Explain the scope of it? 2. Identify the best customer acquisition techniques? 3. Elaborate about the customer retention strategies and its relevance in present scenario. 4. What are the criteria that determine whether an organization\u2019s CRM practices are effective? Long Questions 1. How to create a customer acquisition strategy 2. Describe the concept of upselling and cross selling. 3. Explain in detail about customer acquisition strategies. B. Multiple Choice Questions 1. A person or company that yields a revenue more than incurred costs of selling and serving is called A. dissatisfaction B. superior value C. profitable customers D. satisfied customers 1 3 2","2. Customers lifetime purchases that generate net present value of future profit streams is called A. customer lifetime value B. customer purchases value C. customer cost incurred D. customer relationships 3. First step in analysis of customer value is to A. identify customers value attributes B. assessing attributes importance C. assessing company\\\\s performance D. assessing competitor\u2019s performance 4. Difference between customer\u2019s evaluation including all costs incurred and benefits is called A. customer perceived value B. company market value C. customer affordability D. customer reliability 5. Process of building, organizing and using databases of customers to build customer relationship is classified as A. database marketing B. customer database C. detailed database D. company database Answers 1-c, 2-a, 3-a. 4-a, 5-a 7.9 REFERENCES Website \uf0b7 http:\/\/www.slideshare.net\/sreenath.s\/evolution-of-crm \uf0b7 www.articlesbase.com\/training-articles\/evolution-of-customer-relationship- management-1294285.html \uf0b7 http:\/\/www.oppapers.com\/subjects\/different-kinds-of-elements-to-crm- page1.html 1 3 3","UNIT - 8 CUSTOMER LOYALITY STRUCTURE 1 3 8.0 Learning Objectives 4 8.1 Customer Equity 8.2 Customer Metrics 8.3 Customer loyalty 8.4 Loyalty ladder 8.5 Summary","8.6 Keywords 8.7 Learning Activity 8.8 Unit End Questions 8.9 References 8.0 LEARNING OBJECTIVES After studying this unit, you will be able to: \uf0b7 Describe nature of customer equity \uf0b7 Identify scope of loyalty ladder \uf0b7 State the need and importance of customer metrics \uf0b7 List the functions of customer loyalty 8.1 INTRODUCTION Every supplier wants to create and retain a loyal customer who engages in continued profitable business with him. Customer Loyalty is the measure of success of the supplier in retaining a long term relationship with the customer. Thus customer loyalty is when a supplier receives the ultimate reward of his efforts in interacting with its customer. Customer loyalty tends the customer to voluntarily choose a particular product against another for his need. The loyalty may be product specific or it may be company specific. When a loyal customer has repetitive requirement of the same product, such customers may be described as being \u2018brand loyal\u2019. On the other hand he may also require different products of the same manufacturer. That is to say he makes significant purchases direct from the same supplier and that counts as the company specific loyalty. Loyalty also means that customer is sticking to the supplier on certain grounds though he may be having other options also. It may be possible that the supplier may not have the best product or the customer may be having some problems with the supplier in respect of his supply of the product but the customer likes to ignore other options and prefers to continue with the same supplier as the customer thinks the supplier provides him more value and benefit than others. Such loyal customers tend to spend more money buy more, buy longer and tell more people about the product or supplier. This type of long-term customer loyalty can only be created by making the customers feel that they are number one priority with the supplier. Some customers are inherently predictable and loyal, irrespective of the supplier with which they are doing business. They simply prefer long-term relationships with him. Loyal customers are predisposed to stay with one product or supplier, resisting competitive offers and also recommend the supplier to others. In case the business is done directly the relationship is direct so also the loyalty. But if the selling is through two or more intermediaries th1en the loyalty has to be measured at different levels. In that case the end customer loyalty is 3influenced by the loyalty of the intermediate 5","customers. Then the supplier has to focus his loyalty retention plan accordingly and has to judge and analyze the loyalties of the intermediaries. This process depends on what amount of importance he gives to each of the intermediaries and how much to the ultimate customer. But it is certain that well-managed customer retention programs are sure to give the ultimate customer loyalty. True, the customers who are targeted by a retention program demonstrate higher loyalty to a business. Therefore such customer retention programs should include regular communication with customers, and provide them opportunities to remain active and choosing to do business with the supplier. Loyalty is demonstrated by the actions of the customer. But it doesn\u2019t mean that the customer satisfaction level can measure his loyalty. Customer loyalty is not customer satisfaction. Customer satisfaction is the basic entry point for a good business to start with. A customer can be very satisfied with the deal and still not be loyal. On the other hand a customer may not express satisfaction but wants to remain loyal to the supplier due to some reasons which keeps him benefited from that supplier. For the same degree of satisfaction, the loyalty level may also be different for different suppliers. On the other hand, loyalty should not be considered as just an attitude. Customer loyalty should have a direct connection to a company\u2019s financial results. The supplier should be able to plan a clear and direct economic benefit of some kind, as the result of the strategies and tactics he employs to increase its customers\u2019 loyalty. Measuring customer loyalty and developing a retention strategy are of great importance to an organization success. 8.2 CUSTOMER EQUITY Customer equity is a result of customer relationship management. Customer equity is the total of discounted lifetime values of all of the firm\u2019s customers. In layman terms, the more loyal a customer, the more is the customer equity. Firms like McDonalds, Apple and Facebook have very high customer equity and that is why they have an amazing and sustainable competitive advantage. The theory of Customer Equity can be defined as the value of the potential future revenue generated by a company\u2019s customers in the entire lifetime of the firm. The company with high levels of Customer Equity will be valued at a higher price as compared to a company with low customer equity at the marketplace. Breaking down Customer Equity Customer Equity represents the value that current and future potential customers will provide to a company during the entire lifespan of their r1elationship. 3 6","This equity measure is usually referred to as the customer lifetime value which is equal to the net present value of the estimated relationship lifespan cash flow generated from the customer. To obtain the effective CLV, businesses need to take into account the details such as amount spent to acquire one customer, amount required to retain the customer, and profit and cash flows generated by a customer overestimated retention and specific time frame. Customer Equity is a measure that is quite important to companies since it is an indicator of how valuable business is in the market and in the minds of the customers. It is also a vital and imperative data metric to know in order for a business to develop the right and effective marketing strategies to promote its products and attract customers to generate more profits and revenues. By knowing the value that segments of its customers will bring, the company can know where to concentrate its marketing efforts and budget on initiatives that are meant to bring in or retain customers for a longer period of time. This way, unnecessary marketing costs, and efforts can be avoided, and funds can be channeled to marketing projects that will yield the highest value and profit. Customer Equity becomes more interesting when \uf0b7 You begin to benchmark Customer Equity within similar companies in the same industry domain, thereby identifying which companies are more valuable in the market and to the customer\u2019s specifications. \uf0b7 With the realization that the proper calculation of Customer Equity includes the proper assessment of the goodwill towards the brand because it depends on an insight with respect to the future brand equity of the firm to help assess the nature of future purchases by the customers. \uf0b7 Realizing that the proper calculation of Customer Equity requires insight with respect to the customer\u2019s assessment of your firm\u2019s customer value proposition, which in turn is impacted by the various operations drivers such as customer service and more. Importance of Customer Equity 1) Customer Equity indeed is the subject of an entire driver tree, with the drivers impacting Customer Equity in the various different ways. It is the crucial realm of strategic marketing to understand how these drivers need to be tweaked in order to maximize the levels of Customer Equity over a period of time. 1 3 7","2) It is also quite important because it incorporates many other measures important to the marketing team of the firm and presents it as a point measure or as a probability distribution. 3) However, one of the most important facets of Customer Equity is that it can be used to estimate your future marketing ROI or your future return on marketing. This is because Customer Equity cannot be properly assessed in an efficient manner unless you not only truly understand what sort of marketing interventions and tactics will be required to drive future value. 4) Customer Equity is one of the seldom forward-looking measures in your business strategy and measurement techniques, which places it in a league of its own as far as marketing performance measurement and marketing strategy are concerned. 5) It is quite unfortunate that so many marketers tend to be very scared of the numbers because while the value may take quite some work to calculate the overall result to arrive at the proper conclusion, it is not unduly difficult at all. 6) However, it does become a lot more interesting in nature when statistical methods are applied to the calculation because then probability theory can be applied as well befitting uncertainty, which is a lot more powerful a management tool than merely arriving at the point numbers. Customer Equity is made up of three components. Value Equity, Brand Equity and Relationship Equity. 1) Value Equity \u2013 This is the customer\u2019s unbiased assessment of what the firm has to offer in the market based on perceptions of what the customer is willing to or sacrifices for what is received to him. One of the common terms used in marketing is \u201cValue for Money\u201d also known as \u201cVFM\u201d. Thus Value equity is the customers assessment based on the offer, its price and its convenience. Thus if all the three match for the customer, the firm is said to have high value equity. McDonalds is a fast food item, it is available in most places and its price is considerable highly reasonable. Thus it has high value equity because it is \u201cvalue for money\u201d product. Reebok and Adidas are available at select malls, they are perceived as the leaders in sports shoes and people are ready to go out of the way to get a reebok and adidas shoe. Thus even Reebok and Adidas have value equity. Value equity is especially important in Industrial markets mainly because B2B customers are highly aware of the convenience and pricing parameters for high cost products. 1 3 8","2) Brand Equity \u2013 A normal pizza might cost you around 100 rupees. But if the pizza is from Pizza hut, or a sandwich is from Subway, you will be ready to shell out more money without even looking at them. This is mainly because of your perception and this plays a crucial role in defining brand equity. Brand equity is the customer\u2019s subjective and intangible assessment of the brand above and beyond its objectively perceived value. In essence, on the name of a brand, a customer might be ready to pay more value just because of his trust on the brand. The drivers of brand equity are brand awareness, customer attitude and finally brand ethics and its perception by customers. The tools used in developing brand equity mainly include advertising, public relations and an overall holistic marketing approach. Brand equity is very important in the consumer market. 3) Relationship Equity \u2013 Relationship equity is what makes a customer stay back with the preferred brand rather than shift to any other. However, True relationship equity comes when a customer is ready to stay with the brand ignoring loyalty programs, special recognition programs and all other programs. An excellent example of a company with probably the highest relationship equity is Harley Davidson. Relationship equity comes to a firm which is good in maintaining personal relations and therefore the customer continues with the supplier out of habit or inertia. 8.3 CUSTOMER METRICS Picking the right CRM metrics to measure may not be difficult, but it should relate to your overall strategy. \uf0b7 Customer relationship management metrics help companies more accurately measure their progress toward achieving their ultimate goals as a business. \uf0b7 Part of deciding what metrics are important to your company means also ensuring that the data you\u2019re analyzing is accurate. \uf0b7 Before choosing what metrics are essential to your company, consider each metric and determine if it pertains to business performance, user adoption or customer perception metrics. \uf0b7 This article is for small business owners looking to learn more about how they can use CRM metrics for their business. Customer relationship management (CRM) software is an essential small business product. With the right kind of CRM software, you can t1rack your overall sales process, log customer 3 9","information and monitor company goals. CRM software also offers a treasure trove of data about your company. By isolating and tracking specific CRM metrics, you can ensure that your company constantly has eyes on the data that matters. Before diving into specific metrics you should track, it\u2019s a good idea to first review and consider how to keep data accurate and the overall types of CRM metrics to be aware of. Keep in mind that as your company begins using CRM software, you should tie your findings with your overall business goals. CRM software isn\u2019t effective, and CRM metrics aren\u2019t illuminating, if you can\u2019t frame them in the overall context of your business strategy. Before diving into which CRM metrics are worth tracking, it\u2019s important to first understand how these metrics can help your business. CRM metrics are marquee data points for you to identify and follow while keeping your business goals in mind. Depending on your business\u2019s situation and overall goals, you may have several key metrics you\u2019ve identified and want to highlight to motivate your team and help explain your business\u2019s overall goals. Properly using CRM software can result in higher sales and more engagement with customers. Identifying key metrics can allow you to draw in more customers, enhance sales and create further success for your business. It can provide context on sales as they are completed. In today\u2019s data-driven society, CRM metrics play a vital role in establishing benchmarks for a company. By defining what metrics are important to your business, your company can glean important insights and understand what strategies are working, and what ideas need to be changed. How to ensure your metrics are accurate Bad initial data leads to bad metrics and reporting. Studies show that bad data costs companies money: Marketing companies lose approximately 550 hours and as much as $32,000 per sales rep from using bad data. So, before you can identify and track important metrics, it\u2019s important to confirm that the information you\u2019re receiving is accurate and relevant to your business goals. Attaining good data is as simple as reviewing your collection processes, ensuring sensitive data is being treated properly and staying vigilant. The most important step you can take to maintaining good data is combing through existing customer data. Work with those in your company who have access to data collection processes. Ensure that customers are not entered twice into your system, and ensure that the information being collected about each customer is accurate. The same applies to your sales data. Talk with your reps about how they\u2019re tracking important sales metrics. By monitoring the data collection process, you can prevent potential mistakes and limit inaccurate data collection and analysis in the future. 1 4 0","Another important step you can take is limiting people in your organization who have access to data and data collection processes. That way, if there are mistakes, you can work closely with a few individuals in your company to remedy them. More importantly, it makes staff training easier on the best practices for handling sensitive data. This can reduce your company\u2019s risk of data breaches and phishing attacks from occurring. Types of CRM metrics Bill Band, a CRM thought leader, classifies CRM metrics into three categories. The number of CRM metrics can be daunting; using Band\u2019s classifications can help you decipher which metrics are relevant to your business. On a macro level, Band recommended that smaller companies analyze internal operations-based metrics with customer perception metrics. By doing so, Band said, small businesses can gain insights about how internal operations are affecting customer perception, and vice versa. When considering which metrics are worth tracking, it can be helpful to organize them into the following categories: \uf0b7 Business performance metrics \uf0b7 User adoption metrics \uf0b7 Customer perception metrics Business performance metrics These metrics comprise a wide range of data, including pipeline, sales performance and other sales-based metrics. Overall, these types of metrics measure your company\u2019s overall performance and progress in relation to your company goals. User adoption metrics This metric focuses on how your organization is using its CRM software, such as how your workers are using the system, and leveraging the data that is being collected. Customer perception metrics These metrics speak to how customers interact with your business. They highlight data about the customer journey through your company\u2019s sales pipeline, whether your customers are satisfied, and which customers are return customers. By combining this data with information about internal sales processes, companies can better meet their customers\u2019 needs. List of potential CRM metrics Depending on your company, business model, industry, etc., one or more of the metrics below may be worthwhile for you to track. Amo1ng the metrics that can be tracked include the numbers of prospects, new customers or retained4 customers. You can also examine close and 1","renewal rates. How many sales calls were made, new revenue amounts and the number of open opportunities are other metrics to consider tracking. From a marketing perspective, you might evaluate how many campaigns you are running, the number of responses each campaign produces and how much revenue the campaigns generate. When considering your website, you might look at how long each person spends on your website and how many visitors make a purchase. On the customer service side, CRM metrics you might track include how many cases your support team hands, how many cases they close each day and how long it takes them to resolve the situation. 5 essential CRM metrics to track Here are five marquee metrics your small businesses may want to track using your CRM system. 1. Net promoter score The net promoter score measures how satisfied customers are with your business. Throughout the buyer\u2019s journey, you can ask them to rate their experience on a scale from one to 10. This can help further delineate how customers perceive your business. Engage Bay recommends viewing those scores on the following scale as: \uf0b7 0-6 ratings: These scores come from consumers who could be considered as \u201cdetractors\u201d for your product or service. \uf0b7 7-8 ratings: These ratings come from consumers that can be classified as \u201cpassives,\u201d or people who enjoy your product but who don\u2019t have a strong attachment to it. \uf0b7 9-10 ratings: These scores come from customers that can be classified as \u201cpromoters\u201d of your product, or people who will recommend your product or service to others. Regardless of how you define each rating, having some sort of feedback system linked to your CRM solution can help you better understand your customers\u2019 experiences. 2. Customer effort score This metric, referred to as CES, also measures customer satisfaction. It drills down into the customer experience, however, and measures overall satisfaction based on customer effort. The CES reflects how easy or difficult customers find working with your company to be. The CES can have multiple ranges, such as zero to 100 or zero to 10. If a customer, for instance, has to continually follow up to get answers on something product- or service-related for your business, the lower your CES score. 3. Rate of renewal 1 4 2","This CRM metric measures growth, which is especially relevant for subscription-based businesses, as it tracks how many customers decide to continue using your product or service once they\u2019ve signed up. Much like customer churn below, this is an essential metric for any small business looking to understand its overall growth compared to its business goals. 4. Customer churn Customer churn, also called customer turnover and customer attrition, informs you how many customers you\u2019re losing during a given time period, e.g., monthly, quarterly or yearly. This is an easy and incredibly useful metric to track for your small business. By tracking this type of metric, you can understand why customers are leaving and strategize how to keep them. 5. Customer retention costs Customer retention is essential for any small business. However, measuring it against the costs involved with running your business can provide major insights into how \u2013 and where \u2013 your company can become more efficient. Your customer retention costs should be less than the average revenue coming from permanent customers. When calculating customer retention, make sure to set the right time frame \u2013 be it monthly, quarterly or yearly \u2013 to ensure you\u2019re measuring the proper cost per customer. 8.3 CUSTOMER LOYALTY Most of the organizations have murkiness in considering customer loyalty and satisfaction. They feel that both are same and a satisfied customer is always loyal to them. But this is not true as the customer can be delightfully satisfied but he may be or may not be loyal. This is because satisfaction an emotional and slushy feeling over the job done. But loyalty is related to the action taken by the customer future. There can be following two combinations of aspect when satisfaction and loyalty are treated together: 1. Satisfied but disloyal customers: A customer can be fully satisfied but may not be loyal due to following reasons: a. Entrepreneur Customer: These types of customers like to experiment a lot and hence try to create various options for them to get more benefits. So even if they are satisfied they diverge to other options available in the market. b. Pressure from Competitors: Due to the pressure in market the customer tends to follow the competitors path and divert from the existing supplier to remain sustain in the global marketplace. c. Outdated Suppliers: The customer may be satisfied with the existing customers but sometimes feel that the product and services he is using are outdated in market. Due to the changing technology there is always a need to update the technical aspects and product features even if the old products and services are satisfactory. Focusing on these facets the customers normally go to other suppliers for his new requ41irements. 3","2. Unsatisfied but loyal customers: The other abnormal situation is when the customer is loyal but is unsatisfied. The reasons for this are following: a. Lack of available options: There can lack of options available for customers. This situation arises when the existing supplier is having a monopoly in a particular segment of products or when all other competitors are worse then the existing supplier. The customer feel trapped in this type of situation and is forced to be loyal to the supplier but at the end of the day he will be an unsatisfied customer. b. Improved Supplier: In another situation the suppliers may take the customers in confidence by convincing them to provide improved products and services in the coming future. This is an important tactic that supplier implement in their marketing strategy to become customer centric and to have customers stick to them and be loyal. To remain in a healthy relationship the customers also remain loyal but have a feeling of dissatisfaction beneath. But finally if the supplier continuously supply degraded products and services the customer could easily divert from them in search of better prospects. c. Customer Inertia: There are some customers who afraid to change the supplier. Even if they have bad experience with the supplier, they continue to have business with them. This may be due to the emotional and business attachments or bonding of customers with those particular suppliers. Their could be many others reason for this like, the customers\u2019 feel reluctant to face the complexity of the process of changing their way to other suppliers and prominently when they already have a long term relationship with their suppliers. Under this situation the customer tries to ignore the feelings of being unsatisfied and remain loyal to them. For an organization to be in business and make profit it is a very important aspect for them to gain customer loyalty. Even if high satisfaction may not guarantee loyalty but it can be literally a prerequisite for it. Customer Loyalty Breakers When customers end up his relationship with suppliers, he breaks the loyalty with him. Following are the reasons which are responsible for loyalty break ups: 1. Customer dis-satisfaction: Customer dissatisfaction is the primary reason that results in breaking up the continued loyalty with the supplier. Most of the unsatisfied customers try to find more prominent alternatives which results in their migration. In most of the cases the customer does not even complain about the dissatisfaction and simply divert their way to other supplier. 2. Tough competition and new options availability: Vivid competition also acts as a breaker of loyalty as it gives customers new options which are exposed in the market and are sometimes better than before. These new options results in enhancing expectations of customers which leads14 to accelerating break ups in relationship 4","between supplier and customers. This happens because the existing customer\u2019s supplier is unable to fulfill their demands in an appropriate manner. 3. Enhanced product features and advance technology: Due to the abrupt change in market conditions, inheritance of advanced technology in all ranges of products and service is inevitable. If the supplier is unable to follow the process of continuously updating technological related aspects of products and services he may loose customers as they divert in search of technological sound products and services. Apart from the advanced technology, if the customers get enhanced and user friendly product features then it acts like additional incentives for them to migrate. 4. Customer expectation: Expectations of customers can go way beyond expectations of supplier which results in breaking loyalty. If supplier is not able to meet customers\u2019 expectations then obviously customers would look for better alternatives. These expectations can be related to cost, quality, product service, efficiency, durability or any other aspect. Many a times these expectations could be unrealistic or unreasonable due to the market scenario or some external business pressure. Under this kind of situation it is becomes very difficult for an organizations to meet all the expectations which result in sudden divert by breaking loyalty bond. Any supplier which comes close to these unrealistic and unreasonable expectations of customers could retain him easily. 5. Customer Attitude: Customer attitude plays a vital role in breaking up the loyalty with existing supplier. This is because some customers have a habit to try new options and change business tactics. Even if they are fully satisfied with the existing supplier they would attempt a change for the sake of getting new and better option or because of any change in business rules and tactics. These types of customers are experimental in nature and try to be innovative and creative by taking high business risks. These customers are supposed to be least loyal because they less likely to be attached with any sort of bond with single supplier. To retain these types of customers is a pain for all the suppliers and they generally try to change their attitude by inheriting some business tactics in their marketing strategies. 6. Product Services: Providing products with low or bad service components will result in ending up loyalty with customers. Customers not only use the products but also demands valuable and spontaneous service. Hence apart from manufacturing good and sound products it is very important for the supplier to provide enhanced service components along with the product which will act as a roadblock for customer to divert. 7. Market recession: Some unrealistic situation in global market which affects the allover economy of a country could also be a reason in ending up loyalty bond with customers. Under this situation called \u2018recession\u2019, intense cash flow problem is seen. This leads customers to cut-off expenses incurred in business and may lead to divert to other suppliers in search of low cost but reliable products and services. Drivers of Customer Loyalty 1 4 5","It is very important for an organization to identify the factors and facets which drive customer loyalty. These factors help the organization to manage customer loyalty in a better and efficient way. Following are the drivers of customer loyalty: 1. Attitude: A customer to bear on his loyalty can have following types of attitude: a. Emotional and sentimental- Some customers stick to a particular supplier due to the emotional and sentimental attachments with that supplier. This attachment may be due to the physical location of the supplier, product pattern provided by the supplier that exactly suits customer or may be due to the esteemed assistance and services provided by him. This type of bonding enhances customer loyalty and it is very difficult to break this bonding under any circumstances. b. Rational Type- Such type of customer makes purchase decision rationally. Before making any purchase they evaluate the suppliers and assess the profitability criteria. c. Entrepreneur Type- These types of customers have a habit to try new options. Their decision to choose supplier is normally irrational and can change their loyalty to other suppliers even if they are satisfied with existing customers. It\u2019s difficult for the supplier to retain or manage these types of customers as no situation could bind them. 1. Product and services: Following are the important aspects of product and services that could substantially help in retaining loyalty of customers. a. Differentiated Products and Services- Differentiation in products and services help the organization to reduce competition in market and have substantial influence on customers\u2019 mindset. b. Multiple Products for the same customer- By manufacturing multiple products for the same customer enhances the relationship with customer which increases loyalty. If the customer is loyal towards any one brand then there are good chances to retain his loyalty for whole range of1brands. 4 6","c. High Service Component- The products having a high service component captures more customer loyalty. This is because the customer does not want to experiment with other products provided by different supplier. Hence they become loyal to the existing customer due to the provision of high service components. 2. Technology: The technological aspects of product manufactured by the supplier plays a vital role in customer loyalty. The more products are technologically sound, more is the loyalty. 3. Human Resources: Organizational human resource plays a vital role in marketing segments where customer comes in direct contact. In some consumer sectors like household and automobiles, the customer gets a chance to evaluate capability of organizational human assets. If the customer evaluates these human assets as useful and is influenced by the aspects then he develops a positive feeling against the supplier who posses these enhanced human assets. 4. Supplier\u2019s Culture: Supplier\u2019s culture is most important driver of customer loyalty. In consumer sector this culture means quality and in core sector it can be related to technology. For example, in US \u2018Friedrich\u2019 has ranked with good quality, enhanced design and user friendly features which have created brand loyalty. In Indian the supplier of almost all the dairy product called \u2018Amul\u2019 has pursued customer loyalty because of their overall culture. In core sector the image of the supplier is the biggest driver of loyalty. This image could add a status symbol for most of the customers. \u2018Mercedes\u2019 automobiles and \u2018RayBan\u2019 sun-glasses are example of this. The customers uses these products only for maintaining or enhancing their lifestyle and always be loyal to them. 8.4 LOYALTY LADDER Customer Loyalty Ladder is a systematic way of classifying customers of an organization into five different categories depending upon the business level engagement of customers with the organization. Customer loyalty ladder helps customers to identify potential customers who can remain engaged with their business for a long time and also become loyal to their brand. Importance of Customer Loyalty Ladder The concept of Customer Loyalty Ladder comes under relationship marketing and brand management which deals with establishing long term relations with customers. It is said that the cost of attracting new customers is 4-6 times more than that of doing business with existing customers. Hence it is worth for any organization to keep its existing customers happy and satisfied in order to do a more profitable business. Customer Loyalty Ladder thus helps an organization plan engagement strategy wisely so that the customers would be tempted to move up the ladder. Customer Loyalty Ladder Categories and Exa1mples 4 7","Customer Loyalty Ladder classifies the people related to the product based on their engagement. People are classified as suspects, prospects, customers, clients and advocates. The below mentioned diagram shows the customer loyalty ladder: The five different categories under Customer Loyalty Ladder are: 1. Suspects They are the potential customers for an organization. They may be aware of the promotional campaigns of the organization but are currently doing no business with that organization. For example, A person who is happy with the cab services right now but is aware of all the car options available in the budget. 2. Prospects They are the ones who have been impressed with the organization\u2019s promotions and are in serious consideration of buying products of the organization. The organization must treat them cordially and solve all of their doubts. An example can be a customer looking to buy a car and places 5 particular cars in the consideration set. This person becomes a prospect for all the 5 companies as he or she would mostly buy 1 of these 5 options. 3. Customers They have bought products of the organization for the first time and are currently using them. The organization must extend them all possible after-sales assistance in order to pacify their concerns. These customers can be engaged with a loyalty program or a loyalty discount. For Example, A buyer of a car or a buyer of a smartphone is a customer 4. Clients 1 4 8","They are doing business repetitively with the organization and are willing to foster the engagement in future. Clients if well engaged can help boost business with their brand loyalty. These can also become key accounts. For Example, a client of a software company doing multiple projects in different technologies and domains 5. Advocates They are not only doing repetitive business with an organization but are also recommending the organization to their own acquaintances. They are the most valuable players and the organization must treat them royally with the highest priority. For Example, a person after buying the car of a company is so content that he or she tells people about it indirectly helping the brand. 8.5 SUMMARY Customer equity is a result of customer relationship management. Customer equity is the total of discounted lifetime values of all of the firm\u2019s customers. In layman terms, the more loyal a customer, the more is the customer equity. Firms like McDonalds, Apple and Facebook have very high customer equity and that is why they have an amazing and sustainable competitive advantage. Customer relationship management (CRM) software is an essential small business product. With the right kind of CRM software, you can track your overall sales process, log customer information and monitor company goals. CRM software also offers a treasure trove of data about your company. By isolating and tracking specific CRM metrics, you can ensure that your company constantly has eyes on the data that matters. Before diving into specific metrics you should track, it\u2019s a good idea to first review and consider how to keep data accurate and the overall types of CRM metrics to be aware of. Loyalty also means that customer is sticking to the supplier on certain grounds though he may be having other options also. It may be possible that the supplier may not have the best product or the customer may be having some problems with the supplier in respect of his supply of the product but the customer likes to ignore other options and prefers to continue with the same supplier as the customer thinks the supplier provides him more value and benefit than others. Such loyal customers tend to spend more money buy more, buy longer and tell more people about the product or supplier. This type of long-term customer loyalty can only be created by making the customers feel that they are number one priority with the supplier. 1 4 9","8.6 KEYWORDS \uf0b7 Customer Equity can be defined as the value of the potential future revenue generated by a company\u2019s customers in the entire lifetime of the firm. The company with high levels of Customer Equity will be valued at a higher price as compared to a company with low customer equity at the marketplace. \uf0b7 Customer relationship management (CRM) software is an essential small business product. With the right kind of CRM software, you can track your overall sales process, log customer information and monitor company goals. CRM software also offers a treasure trove of data about your company \uf0b7 Relationship equity is what makes a customer stay back with the preferred brand rather than shift to any other. However, True relationship equity comes when a customer is ready to stay with the brand ignoring loyalty programs, special recognition programs and all other programs. 8.7 LEARNING ACTIVITY \uf0b7 Define Customer Equity. ___________________________________________________________________________ ___________________________________________________________________________ \uf0b7 State the importance of relationship equity. ___________________________________________________________________________ ___________________________________________________________________________ 8.8 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. When Customer Equity becomes more interesting? 2. Identify the typical components of customer equity. 3. How to ensure your metrics are accurate. 4. Explain the concept of loyalty ladder. Long Questions 1. Describe about the importance of customer equity. 2. Explain the reasons which are responsible for loyalty break ups. 3. Describe the 5 essential CRM metrics to track. 4. Elaborate the importance of Customer Loyalty Ladder. B. Multiple Choice Questions 1 5 0"]