CU - BCOM Sem VI -CRM

["UNIT - 4 CUSTOMER RETENSION STRUCTURE 4.0 Learning Objectives 4.1 Introduction 4.2 Building Customer Relationship Management by Customer Retention 4.3 Stages of Retention 4.4 Sequences in Retention Process 4.5 Summary 4.6 Keywords 4.7 Learning Activity 4.8 Unit End Questions 4.9 References 4.0 LEARNING OBJECTIVES After studying this unit, you will be able to: \uf0b7 Describe nature of Building Customer Relationship Management by Customer Retention \uf0b7 Identify scope of customer retention \uf0b7 State the stages of Retention \uf0b7 List the sequence in Retention process 4.1 INTRODUCTION It is difficult to exactly define customer retention as it is a variable process. A basic definition could be \u2018customer retention is the process when customers continue to buy products and services within a determine time period\u2019. However this definition is not applicable for most of the high end and low purchase frequency products as each and every product is not purchased by the customer. For example in the stock brokerage industry, a customer may not buy a particular scrip in the given period of ti5me but is tended to buy the same when the conditions to buy the scrip becomes favorable an1d when the customer evaluates that now this","scrip could be profitable to buy. In this case the definition of customer retention could be \u2018customer retention is the process when customer is intended to buy the product and services at next favorable buy occasion\u2019. These products are called as long purchase cycle products. In some scenarios customer\u2019s buying intentions cannot be determined with respect to financial aspects. For example, some magazines are available online for free and there are no intended charges to read these magazines. A reader who is frequently reading every edition of magazine online could be considered as retained customer as through his intentional behavior he shows the magazine company that he likes the magazine content and he tends to maintain a valuable relationship with the company. Hence this magnifies one more aspect in customer retention definition that revenue is not the deciding criteria that indicates that the customer is retained or not. Customer retention highly depends on attrition and silent attrition rates. Attrition is the process when customers no longer want to use product and services provided by the supplier and breaks the relationship bond by informing the supplier that he will be no more a customer. Most of the defecting customers don\u2019t even intimate the supplier that they are defecting. This process is called silent attrition where the customer stops purchasing the product and services and divert to other suppliers without even informing them. During attrition, organization should prepare serious customer retaining strategies to save the customer to defect. It is often seen that if these corrective measures are implemented successfully to save defection then retention level increases to a much higher level as compared to a normal retention process. Silent attrition causes the real damage to the organizations because they do not even know when the customer defected. They find no time to implement the corrective measures to try retaining that particular customer or even determine if the customer can be retained or not. Customer retention does not make sure that the customer is loyal. For example, a brokerage firm has both traditional trading platform and online trading platform. A customer has his trading account in traditional platform but after some time he feels to switch to online trading platform. Now in this situation, the customer is not considered to be loyal to the given services, but the customer is said to be retained by the same organization. Customer retention is a strategic process to keep or retain the existing customers and not letting them to diverge or defect to other suppliers or organization for business and this is only possible when there is a quality relationship between customer and supplier. Usually a customer is tended towards sticking to a particular brand or product as far as his basic needs are continued to be properly fulfilled. He does not opt for taking a risk in going for a new product. More is the possibility to retain customers the more is the probability of net growth of business. 4.2 BUILDING CUSTOMER RELATIONSHIP MANAGEMENT BY CUSTOMER RETENTION Brands need to adopt to survive a world where customer loyalty is no longer assured. Consumers have an infinite number of choices; they expect personalization, need relevancy, and desire an emotional connection. Three-quart5ers of consumers are more inclined to shop at 2","brands that make their loyalty experience fun and rewarding. And two-thirds frequently make purchases in order to advance their status in loyalty programs. The best customer retention strategies are built on business goals and understanding the right actions customers need to take to go from first purchase to lifetime brand loyalist. One of the best ways to do that is with dynamic offers. With dynamic offers, brands can explicitly define and target incremental behaviors such as spend, visits, and engagement at the individual level in order to maximize revenue from each customer. Then the machine learning from a platform like Formation\u2019s creates personalized offers that incentivize customers to take those actions based on their previous purchases and brand interactions. Dynamic offers use machine learning to analyze that data and provide a balance of highly-personalized rewards and non-transactional actions the consumer can use or take, which can create that emotional connection that drives real brand loyalty. After identifying the metrics you\u2019ll be using, make sure all decisions keep customers top of mind. Ensure you're setting yourself up to grow and connect with customers through their journey by creating a flexible tech stack that continuously adapts to changing consumer behaviors and optimizes offers and experiences based on new data. Now let us look at seven effective strategies to increase your retention percentages. 7 Customer Retention Tactics Your Brand Should Use Right Now When developing your customer retention plan, focus on these key areas to keep customers coming back. 1. Build customer trust and long-term relationships. Fostering customer trust requires a strategic focus on every aspect of the customer experience. To build lasting relationships, deliver relevance and value at every stage of the customer journey. Educate your customers on the most effective use of your product or service, both before and after purchase. Provide outstanding customer service with multiple service channels and fast, accurate responses that solve customer issues. Develop a frequent communication calendar on all channels. Offer convenience with features like fast shipping, free returns, and\/or mobile pickup orders, like Starbucks\u2019 Mobile Order & Pay. To build trust, you must listen and empathize with your customers. Through listening to customers you will collect customer feedback that will enhance how you deliver customized experiences. 5 3","2. Create a robust customer loyalty program. Maybe your brand already has a loyalty program, but you\u2019d like it to deliver better ROI. Or, perhaps you\u2019re just expanding your retention efforts for the first time. Either way, an effective loyalty program should contain these three elements at a minimum: Rewards that reinforce your core business goals: whether you want to encourage more visits, more trials or more incremental purchases, make sure your program and rewards are structured to achieve that result. Greater benefits for more valuable customers: create a tiered program where loyal customers who spend more get more valuable rewards, from accelerated earning to exclusive promotions. Targeted offers and rewards that are highly relevant: use the capabilities of your MarTech stack to personalize your offers and rewards to customers' interests and preferences. 3. Leverage your customer data. Many lists of customer retention strategies mention the ubiquitous customer feedback survey\u2014but to retain customers successfully, you need to understand their preferences and motivations without always having to ask. Collecting and mapping customer data like transaction histories, customer service interactions, and loyalty program data will help you prevent churn and identify where the wants of your customer intersect with your business objectives. 4. Re-engage customers using marketing automation. Today\u2019s marketing automation technologies can take on entire marketing processes to simplify workflows for marketing teams. Re-engaging customers is just one of these processes. Instead of your marketing team needing to track which customers have lapsed, a marketing automation solution that uses AI and machine learning (ML) can automatically recognize when customers lapse and re-engage them with personally relevant offers. 5. Measure customer lifetime value. Customer lifetime value (CLV) is an estimate of the net profit attributed to your brand\u2019s future interactions with a customer. Understanding CLV can enable you to shift from a short-term business strategy focused on the next quarter\u2019s profits to a long-term one that values ongoing customer relationships. The simplest way to calculate customer CLV is to subtract the amount you spent acquiring and retaining a customer from the amount of revenue that a customer generates. You can also use an online calculator, such as this one from WebFX, or this more complex option. 6. Personalize your offers and communications. Beyond simply putting the customer's name in an email subject line, use the customer dat5a you\u2019ve collected to make your marketing 4","offers and messages more personally relevant to your customers. There are four types of offers: Mass Offer - This offer is available to everyone in a given program, regardless of other demographic data. If our home goods store offered a 10% discount off the next purchase to all members, that would be a mass offer. Segmented or Targeted Offer - With a segmented or targeted offer, the customer base is segmented into groups based on a particular data point. Each person in that group is eligible for the same offer and may have group-specific messaging. This gives a small level of personalization but does not not truly take individual preferences into account when building the offer. For example, they could offer a 10% discount to everyone who lives within 20 miles of their stores in California. Personalized Offer - This offer is individualized for the consumer with unique actions and rewards based on the consumer\u2019s preferences and purchase history. For example, a home goods store could offer 15% off an interior design consultation with anyone who has spent more than $1,000 in the past six months and personalizes the designer based on the type of decor the consumer purchases. However, launching a succession of personalized campaigns that continue to be individualized based on the most up-to-date data science models has been historically challenging due to technology integration and scale limitations around the number of hours the team has to create variations and their technology\u2019s ability to support more variation. Dynamic Offer - This is a highly flexible and powerful offer, typically built using machine learning and automation. It is constructed using a dynamic offer template and machine- learning-calculated actions and rewards for each individual. Types of dynamic offers range from a simple, single-step spend X and get Y construct to more robust constructs that ask consumers to complete multiple steps to reap a large reward. Dynamic offer platforms automate the generation of these offers and manage the fulfillment, measurement and optimization of these offers. Because of this, they solve for the scale and continuous optimization challenges we\u2019ve historically seen with personalized-offer approaches. For example, a dynamic offer platform generates an offer for a customer that asks them to complete multiple purchases across different decor categories or brands and in return reap a larger 25%- off discount than the original 15%. This allows marketers to drive incrementality in a new and dynamic way. The closer you get to dynamic offers, the greater relevance and value you will deliver, and the more you will retain customers. 5 5","7. Surprise and delight with gamification. \u201cSurprise and delight\u201d has become something of an overused buzzword\u2014but that\u2019s because it works, and nowhere is that more evident than with gamification. Using game design to motivate customers is highly effective because it leverages people\u2019s competitive natures while at the same time lighting up the reward center of the brain. Gamification incorporates game mechanics to increase customer engagement, improve sales, and strengthen brand loyalty. Allowing you to engage with customers in a modern way, a gamified loyalty program provides benefits to both you and your buyers. Early gamification tactics often tacked simple game mechanics, like badges or cartoonish elements designed to feel like a video game, to existing loyalty programs. But those badges didn't convey any status or provide any meaningful value; they didn't build a relationship with customers. On the other hand, modern gamification leverages customer data insights and creates experiences with multiple steps, all connected to driving value for the customer and business outcomes for the brand. 4.3 STAGES IN RETENSION The sales revenue closest to home has never been more vital, says Richard Higham, so customer retention plans are still stalling due to misconceptions. He gives four key steps to implementing a solid strategy. The guiding principle and starting point for any customer relations strategy is to hold on to what you have got. Sometimes it is temptin5g to be driven by the \u2018need\u2019 to find new opportunities when the real priority is a lot clos6er to home. If you have aggressive plans to","acquire new customers as a response to the economic downturn but are pouring water into a leaky bucket, your customer strategy is flawed. Some would say that if the organisation\u2019s re-buy rate (its contract renewal rate) is currently less than 70%, it should not be wasting time and money on the drive to acquire new customers; rather, it should be fixing the hole in its bucket first. While customer retention may be tough but it can be a lot easier than winning new business \u2013 especially in this climate. There are four steps to effective customer retention: segmentation, service, systems and selling. Together they deliver customer stability \u2013 and customer stability delivers profitability. STEP ONE: Segmentation Many successful sales organisations segment their customers by buying behaviour: are they loyal and relationship-based, value-seeking or fickle, transactional or price-driven? Treat them differently and expect different responses. Constant stimulus and repetition of sales offers will work with the fickle transaction customer. A more subtle, less salesy approach will be needed with the loyal, relationship-centred customer. STEP TWO: Service Excellent service builds a brick wall around the customer. They may be tempted away with a crazy price but your good service makes it hard for them to leave you. Make sure your service is as good as you think it is. Use customer surveys (but use them well) and conduct reviews with top customers. Do what one successful business does: each senior manager calls one customer a week simply to check that all is well and to tell them that they value their business. Good service sells repeat business. STEP THREE: Systems Ask yourself if your systems are working for you - or against you. Do they flag up contract- end early enough? Is there a sound system in place for customer contact? I was speaking recently to two mortgage lenders: one sends a letter the month before a fixed rate is due to end, but no one is instructed to follow up. The other builds in an automatic reminder in the relationship manager's diary two months before the end and monitors follow-up rates. Not surprisingly, the latter consistently wins business from the former and then holds onto it. Think, too, about your reward systems. Are you paying people only to win new business or are you also rewarding highly profitable but less glamorous customer retention activity? STEP FOUR: Selling Are you selling actively to your existing customers? It's ironic that no one knows a customer better than their existing providers, yet all too often we fail to sell to existing customers. We do not want to seem greedy or we fear we will damage the relationship. Often, we think we have \u2018already got what we came for\u2019. Yet, cus75tomers expect us to come to them with new","ideas and new offers. If we have been doing our job they will want to stay with us, so why surrender your hard-won ground to your competitors? Customer retention is the key to profit and business stability but it is often (still) overlooked. Review your segmentation, your service, your systems and your selling, and seize the opportunities that lie within your grasp. 4.4 SEQUENCES IN RETENTION PROCESS 1. Who are your customers and how do they segment? In an ideal world, you\u2019d know each customer\u2019s satisfaction level or NPS score and you\u2019d have a good handle on understanding their objectives and needs. However, that\u2019s difficult to scale, over time. As you grow, you need to become strategic about how you touch customers to inform, add value, and ultimately cultivate a strong relationship and a deeper understanding. To know what strategies make sense for any given customer, you need to understand: \uf0b7 What the account(s) means to your business, i.e. long term value \uf0b7 What outcomes and behaviors you\u2019re aiming for with the account(s) \uf0b7 The current state of the account(s), aka \u2018health score\u2019 With that information, you can determine the type of relationships you want to build, identify the health of the account, and establish the touch strategies or playbook to run. And, of course measure the effectiveness of your strategies over time. This all begins with understanding the shape of your existing customers and what constitutes an ideal customer and their value to your business. From there you segment your customers by certain criteria. If you\u2019re early stage, this may be their Annual Contract Value (ACV). If you are farther along and experiencing growth, you may decide to segment by size, geography, vertical, or further by journey phase. Regardless of your current stage, your customer segments will continue to evolve as you organically grow and take on new markets. The ultimate goal here is to balance the personalized touch for each segment, manage costs, without compromise for healthy accounts, and of course, retention. 5 8","2. What\u2019s the customer journey, by segment? Next, you need to understand the end-user journey and all your touch-points along the way. Heads-up! - it\u2019s never linear or as smooth as you\u2019d like. However windy (curvy, not weather) it may be, each segment\u2019s path needs to be documented and charted so everyone on the GTM team can agree. The goal is to be able to help your customers succeed in their goals throughout their journey. For example, if your product experience begins with a self-guided trial, delivering on that first touch user experience is critical. You want to help your customers get to their \u201cAha\u201d moment where they start experiencing value from your product quickly. Understanding your users and their workflow enables you to guide them to those first and subsequent features, helping them graduate and stick around. With a good understanding and mapping of end-user steps, you can start to develop, then fine-tune a positive overall experience. Yes, even before acquisition. As users progress, knowing the right time to communicate is important. The trick is to be helpful without being interruptive. 5 9","At the right time in their journey, you can even extend offers that will further increase their value from your product and, in turn, their retention, such as: \uf0b7 Upgrade: Move to a different tier with greater functionality \uf0b7 Buy an add-on: An adjacent module or feature-set \uf0b7 Share a review or refer: introduce to another group 3. How will GTM teams know where a customer is on their journey? Now that you have your segments and their respective journey paths documented, you need to start communicating, automate, and track engagement and outcomes. The objective is to provide your GTM teams complete visibility of your customers. This enables GTM teams to seamlessly support users through every step. There are many different ways to execute customer engagement with different tech stack tools. At a minimum you need to: Capture account and contact details: and also relevant customer data that will depend on the user\u2019s milestones such as activation, onboarding, or up-leveling. Much of this data can be captured from apps including Salesforce.com or data that your own product is capturing. Track usage data: Important measures such as login frequency and length of time in-app, daily, weekly, and monthly usage rates across the entire team. With a clear picture of product usage by feature, you can start to determine the account health score. Document inside and outside product communications: GTM teams need to create the right combination of communication, ideally based on user behavior. They will need complete visibility into the communications a customer has received to be able to extend communications seamlessly between teams. Last, the holy grail metric for all teams focused on retention is Net Recurring Revenue (NRR) and you\u2019ll need to determine the best way to track both gross and net, by customer segment. 4. What are the right KPIs to determine health scores? With all of the tools in your tech-stack, GTM teams can become overwhelmed when trying to understand the best KPIs that point to a healthy score. You may track a different set of KPIs at different journey stages. Getting everyone \u201con the same page\u201d to determine the customer journey path is critical before determining that shortlist of KPIs. 6 0","As you develop metrics, involve all relevant teams in the process. Remember retention is everyone\u2019s job. Bring together Customer Success with Support, who have qualitative and quantitative data about top questions and trends. Marketing mostly cares about conversions and latency concentrating on the early and late phases. Product teams want to know where there\u2019s friction as well as feature adoption rates. Regardless of a team's top focus, it\u2019s important to share the full picture so processes improve. Ultimately, the customer will let you know when it breaks down. These KPIs are never static and are often identified incorrectly at the outset. The process is iterative and will evolve as features expand and needs change. Take every opportunity to learn more when a churn event happens or upsell rates slow down to improve your KPIs. By analyzing the characteristics of churned accounts, you can draw correlations and develop a more robust understanding of what constitutes \u201cat-risk\u201d. 5. What are the right retention strategies for each segment? With a clearer picture and some answers to these four questions, you can begin crafting retention strategies, or playbooks. Each should encompass three criteria: 1. Determine success or milestones along the user journey 2. Balance the right type of interactions at each stage: in-product, email, or \u2018human\u2019 touch 3. Determine what behavior constitutes churn risk Once you know the leading indicators, teams become better informed when a customer is at-risk, far ahead of renewal. With time to execute a strong, proactive outreach rather than a single \u201811th hour\u2019 call the week, teams can fine-tune the cadences and customers will come to expect it. For smaller accounts with a lower ACV, a retention playbook should be adopted with a higher degree of automation and in-app answers. For high value accounts a different retention playbook is needed. Often personalized, such as a custom video from a dedicated CSM team is required. 6 1","Regardless of segment, there are numerous opportunities to learn how to manage those at-risk so you ultimately improve churn, which impacts top-line revenue and brand loyalty. Finally, successful retention strategies hinge on listening. Collecting feedback from users at the right opportunities gives you the qualitative and quantitative info that helps to improve your strategies. Build feedback into your retention playbooks to increase up- sell and cross-sell success rates by 15-20%. Retention is the key to sustainable growth and will absolutely become mission-critical, if it isn\u2019t already. Never \u201conce and done\u201d, retention strategies are iterative as your product changes, business expands and the market gets new entrants. Though business priorities change, proactive retention strategies are always a good investment. 4.5 SUMMARY Relationship between any two parties is actually the interaction or transaction done between the two over-times or consists of a continuous series of synergistic episode of interaction many a times. This relationship only exists when the two parties diverge from a state of autonomy to mutual or interdependent. Occasionally having a cup of tea from a caf\u00e9 does not mean that there is a relationship. If the customer returns to the caf\u00e9 and orders the same tea again because he likes the environment and taste or the method of making tea, more looks like a relationship. The guiding principle and starting point for any customer relations strategy is to hold on to what you have got. Sometimes it is tempting to be driven by the \u2018need\u2019 to find new opportunities when the real priority is a lot closer to home. If you have aggressive plans to acquire new customers as a response to the economic downturn but are pouring water into a leaky bucket, your customer strategy is flawed. There are four steps to effective customer retention: segmentation, service, systems and selling. Together they deliver customer stability \u2013 and customer stability delivers profitability. 4.6 KEYWORDS \uf0a7 Exploration- Exploration is the process when customer investigates or tests the supplier\u2019s capabilities and performance or cross verifies the product\u2019s or brand\u2019s usefulness. If the test results fail to satisfy customer\u2019s demands, the relationship can drastically come to an end. \uf0a7 Expansion- Expansion is the process when the supplier wins customer\u2019s faith and customer falls under huge interdependenc6e of the supplier. This is time when there are more chances of business with that partic2ular customer and expand business.","\uf0a7 Commitment- Commitment is a powerful stage when suppliers learn to adapting business rules and goal to excel. \uf0a7 Dissolution- Dissolution is a stage when customer requirement suddenly changes and he looks for better perspectives. This sudden change is the end of relationship. 4.7 LEARNING ACTIVITY 1. Define Exploration ___________________________________________________________________________ ___________________________________________________________________________ 2. State the sequence of retention process. ___________________________________________________________________________ ___________________________________________________________________________ 4.8 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. Define customer retention. 2. Identify and discuss CRM functions? 3. Explain the Retention strategies for poor performers. Long Questions 1. Why Employee Retention Should Be on Your Radar in 2020. 2. Describe nature of Building Customer Relationship Management by Customer Retention. 3. Explain in detail the stages in retention. B. Multiple Choice Questions 1. The first step in developing a ___ is to analyze the market in which the firm is operating. a. Marketing concept b. Marketing mix c. Marketing strategy d. None of these . 2. 4P\u2019s of marketing does not include. a. Promotion b. Price 6 c. Distribution 3","d. Preservationa 3. B2B stands for. a. Business to business b. Behaviour to behaviour c. Based on business d. None of these 4. One cannot be everything to everyone but we can be everything to a select few is the basis for. a. Mass marketing b. Mass customizationd. c. Market segmentation d. None of these Answers 1-c, 2-d, 3-a. 4-c 4.9REFERENCES References book \uf0b7 Aswathappa, K. (2002). Customer Relationship Management.New Delhi: Tata McGraw-Hill. \uf0b7 Dessler, G. (2012). Customer Relationship Management.New Delhi: Prentice-Hall of India. \uf0b7 Decenzo, A. & Robbins P Stephen. (2012). Personnel\/Customer Relationship Management.New Delhi: Prentice-Hall of India. 6 4","UNIT \u2013 5 LIFE TIME VALUE OF CUSTOMER STRUCTURE 5.0 Learning Objectives 5.1 Introduction 5.2 Understanding Strategies to Prevent Defection and Recover Customers 5.3 Market share vs. Share of customers 5.4 Life Time Value of Customers 5.5 Summary 5.6 Keywords 5.7 Learning Activity 5.8 Unit End Questions 5.9 References 5.0 LEARNING OBJECTIVES After studying this unit, you will be able to: \uf0b7 Understanding Strategies to Prevent Defection and Recover Customers \uf0b7 Identify scope of Life Time Value of Customers \uf0b7 Discuss about the Market share vs. Share of customers \uf0b7 State the need and importance of CRM 5.1 INTRODUCTION 6 5","5.2 UNDERSTANDING STRATEGIES TO PREVENT DEFECTION AND RECOVER CUSTOMERS It is a known fact that one of the variables which hit\u2019s the bottom line of all established companies hard is the customer defection rate. The customer defection rate is the rate at which existing customers leave the brand and switch over to a competitor. It is possible that the customer has stopped using this type of product altogether. Or the more likely scenario is that the customer has switched over to a competitor. In fact, the defection rate is higher now, and more than ever in the current market environment. It is very common nowadays to acquire customers by giving schemes and discounts. However, research has found that customers who have been acquired because of discounts, have half the customer life time value as compared to customers who have been acquired without any additional monetary benefits. The second type of customers, customers acquired solely through the company and product value, are more likely to stay with the brand longer. This is the crux of solving the problem of customer defection. If you want to reduce customer defection, you need to find out why the customer is defecting from your brand. There can be many reason that the customer has stopped being loyal to your brand 1. He doesn\u2019t like your product 2. He doesn\u2019t like your customer service 3. He wants more discounts 4. The commercial transaction was upsetting (billing problems) 5. Any unmet expectations of customers The above reasons sound very vague. But if it is your company, then you will find that one of the above is amiss in each transaction to cause the defection of customers. Thus, the one factor which causes the most defection, needs to be isolated and rectified. Here are three simple yet most effective ways of reducing defection. It is a known fact that one of the variables which hit\u2019s the bottom line of all established companies hard is the customer defection rate. The customer defection rate is the rate at which existing customers leave the brand and switch over to a competitor. It is possible that the customer has stopped using this type of product altogether. Or the more likely scenario is that the customer has switched over to a competitor. 6 6","In fact, the defection rate is higher now, and more than ever in the current market environment. It is very common nowadays to acquire customers by giving schemes and discounts. However, research has found that customers who have been acquired because of discounts, have half the customer life time value as compared to customers who have been acquired without any additional monetary benefits. The second type of customers, customers acquired solely through the company and product value, are more likely to stay with the brand longer. This is the crux of solving the problem of customer defection. If you want to reduce customer defection, you need to find out why the customer is defecting from your brand. There can be many reason that the customer has stopped being loyal to your brand 1. He doesn\u2019t like your product 2. He doesn\u2019t like your customer service 3. He wants more discounts 4. The commercial transaction was upsetting (billing problems) 5. Any unmet expectations of customers The above reasons sound very vague. But if it is your company, then you will find that one of the above is amiss in each transaction to cause the defection of customers. Thus, the one factor which causes the most defection, needs to be isolated and rectified. Here are three simple yet most effective ways of reducing defection. Suppose that you are a startup business with a 1000$ per month turnover. Due to loss of customers to other brands, you lose 20% of your customers. As you grow, so does your customer base. However, if 10 years down the line, your turnover is 1 crore dollars, and still the defection rate is 20%, then you are losing at least 20 lakh dollars a month!!! If you consider 15% as margins of turnover, then even after acquiring the customer, you have an opportunity loss of 3 lakh dollars per month of pure margin. That\u2019s a big big amount of your bottom line. So, defection rate is not only for start-ups but larger companies too. In fact, a startup would have a higher defection rate because other brands would already be present in the market. Thus it would be advised for a start up to keep an eye on the defection rate, so that the bottom line helps in the long run in building a better company. REDUCING CUSTOMER DEFECTION 6 7","There are five main steps a company can take to reduce the defection rate. First, the company must define and measure its retention rate. For a magazine, the renewal rate is a good measure of retention. For a college, it could be the first-to second \u00e2\u20ac\u201cyear retention rate, or the class graduation rate. Second, the company must distinguish the causes of customer attrition and identify those that can be managed better. The Forum Corporation analyzed the customers lost by 14 major companies for reasons other than leaving the region or going out of business: 15 percent switched because they found better product; another 15 percent found a cheaper product; and 70 percent left because of poor or little attention from the supplier. Not much can be done about customers who leave the region or go out of business, but much can be done about those who leave because of poor service, shoddy products, or high prices. Third, the company needs to estimate how much profit it loses when it loses customers. In the case of an individual customer, the lost profit is equal to the customer\u00e2\u20ac\u2122s lifetime value\u00e2\u20ac\u201dthat is, the present value of the profit stream that the company would have realized if the customer had not defected prematurely\u00e2\u20ac\u201dthrough some of the calculations outlined above. Fourth, the company needs to figure out how much it would cost to reduce the defection rate. As long as the cost is less than the lost profit, the company should spend the money. And finally, nothing beats listening to customers. Some companies have created an ongoing mechanism that keeps senior managers permanently plugged in to front-line customer feedback. MBNA, the credit card giant, asks every executive to listen in on telephone conversations in the customer service area or customer recovery units. Deere & Company, which makes John Deere tractors and has a superb record of customer loyalty\u00e2\u20ac\u201dnearly 98 percent annual retention in some product areas \u00e2\u20ac\u201cuses retired employees to interview defectors and customers Forming Strong Customer Bonds A marketing expert has identified three retention-building approaches adding financial benefits, adding social benefits, and adding structural ties. Adding Financial Benefits Two financial benefits that companies can offer are frequency programs and club marketing programs. Frequency programs (FP) are designed to provide rewards to customers who buy frequently and in substantial amounts. Frequency marketing is an acknowledgment of the fact that 20 percent of a company\u00e2\u20ac\u2122s customers might account for 80 percent of its business. Frequency programs are seen as way to bui6ld long-term loyalty with these customers, potentially creating cross-selling opportunities in8the process.","Erosion of market share and competition eating into market share has always been a challenge for companies and service providers. No company can ever rest on its oars or feel it has arrived; companies keep looking over their shoulders to stem the tide of competition. Only the paranoid survive on the international scene. Companies like Amazon, Google and Facebook seem to leave in paranoia and buy over or take positions in companies where they smell a threat in future. This could be a strategy, albeit expensive to undertake. In the banking industry, the rate of account dormancy is high, ditto for the telecommunications sector with high levels of churn further compounded by the number portability scheme. With increasing cost of operations due to infrastructural challenges , stagnating revenues, difficult business environment and sanctions placed by regulators for below par service, customer defection is an addition to the nightmare. According to the Nigeria Communications Commission in September 2013, there were a total of 13,072 defections between networks, with a particular telco provider accounting for half of those defections. Retention and reducing customer defections has now started topping the agenda of most companies, they understand that churn seriously affects their bottom lines, however they keep on hitting the wrong target. They have not fully woken up to the fact that customers now have more choices, they aggressively focus on sales and advertising to bring in more customers into a leaking basket, which could have been blocked by superior customer experience. The roots of customer defections are what can be seen and acted upon, but ignored or traded off due to seemingly competing demands by companies. According to one of the wisest men who ever lived, it is wise to quickly catch the little foxes that ruin the vineyard. These can be tackled with the below Pay attention to the entire customer journey Developing a deep understanding of the customer requires a detailed map of their journey and awareness of where the battlegrounds are for your organisation. Depending on the particular industry, customers go through different journeys with the company to get service. A bank customer\u2019s journey may start from listening to the bank advert, to opening an account, to using the bank channels for transactions, to complaint resolution. A wireless or internet service provider customer\u2019s journey may start from buying the product, to installation, actual use, subscription payment and trouble shooting. A lot can actually go wrong through these phases and a lot of potential areas of frustration arise from these stages. Defections do not just occur; they have their 6roots in particular unresolved issues which companies have not paid attention to. 9","According to experts creating excellent customer journeys not only increases customer satisfaction, but also boosts revenue up to 20 per cent and reduces service costs by an equal amount. Companies can take a critical look at the entire customer journey and remove the seemingly irritants. Some companies have invested in event triggered service escalations, whereby customers who have called the call center persistently are escalated to a \u201cSWAT TEAM\u201d for instant resolution of their complaints, to prevent any ill feelings and offer compensation for poor service. Empower and educate the customer In a bid to quickly make a sale or convert a prospect, some sales people inadvertently fail to make full disclosure and educate the customer about the terms and condition and offers of a product. In the banking sector, customers are surprised to see some unexplainable charges on their account, telecoms subscribers are quick to lament how their service providers \u201csteal their credit\u201d, upon loading or top up. It is better to give full disclosure to the customer before purchase and educate the customer fully about a product or service, also providing customers with cheap or free alternative means of communication manned by competent staff will help clients for issue resolution. Verizon an international wireless service provider upon installation of its service in a customer\u2019s residence uses well trained, well-spoken staff who spend four to six hours with the customer running through how the system works and ensuring all applications are working, which makes the experience memorable for the customer, reduces the hassles of future technical problems, customer dissatisfaction and its associated costs. This can be replicated in different sectors and modified to suit business needs. Empower employees with necessary tools In Nigeria, one of the biggest failings of call centers is the inability to provide First Call Resolution, for queries, which causes repeated calls, respectful agents turn to apology dispensing machines for the company, while the nonchalant tells the customer off and do not care if the customer takes a walk. The root of this malaise is empowerment, if employees are not equipped with the right tools for service delivery; they turn to helpless gatekeepers unable to help themselves or the customers. 5.3 MARKET SHARE VS. SHARE OF CUSTOMERS Market share is used to give you an idea of how large, powerful or important your business is within its particular sector. You can calculate7 your share by taking your total sales and dividing the figure by the total sales of the entire0sector or market you are selling in.","A company that maintains its share over time is growing its revenues in line with its competitors. But an increase shows a speedier, market-leading, boost in revenue. Why is market share important? Market share is a useful metric, delivering insights far beyond illustrating an organization\u2019s relative size within the market it is operating in. Knowing your responsibilities in the market also indicates how successful your business is in relation to competitors, and how effective your marketing, advertising, and new product development have been. Understanding and analyzing market share is vital for an organization looking to scale up or improve profitability. Fluctuations are usually indicators of a company\u2019s competitive advantage, which can be extremely important information for investors and for stock performance. How to gain market share Companies looking to increase their share have a few options. They can look to marketing and advertising to attract new customers, develop new products for the market, lower prices to undercut the competition, or attempt to expand the size of their target market by appealing to new demographics. Innovation and disruption are also great ways of increasing market penetration. After all, offering a new technology \u2014 one that competitors do not have access to \u2014 is a highly effective way of convincing users to migrate to your product or service. How to increase market share Increasing market share means increasing the effort put into sales as a company and using additional or new strategies to facilitate your journey to get there. Companies looking to increase their market share can take several approaches, including: Finding your niche and making products that fit into it Tap into your company\u2019s unique characteristics that set you apart from your competition. Are you known for brilliant design? Do you build powerful user interfaces that are easy to navigate? Identify the things that help customers remember your products and keep them coming back for more. If you incorporate these things into your products, you can create a clear brand identity, which helps you increase yo71ur market share.","Understanding your direct competitors To increase your market share, you first need to understand the market. Get to know what other leaders in your market are doing and how your offerings compare with theirs. If there are gaps in your offerings, look for unique and innovative ways to fill those gaps better than your competition does. Innovate and change your products as society changes There's a reason the Commodore 64 isn't the world's best-selling computer anymore, even though it once was. Other companies changed their products along with society's changes and found new, innovative ways to build computers that addressed customers' needs better than Commodore could. That's why it's important to keep innovating and iterating on your products. If you don\u2019t, you'll be left behind. Engage with your customers Since you\u2019re trying to increase your market share, and your market is represented by customers, it makes sense to engage with them. Customers know what they want and what their needs are, so asking them through a survey or social media is a great way to find out what else your company could do for them. Plus, when customers notice you\u2019re interested in their feedback, they\u2019ll be more likely to buy and recommend your products. Keep delivering great products and making customers happy This is as obvious as it is important \u2014 you can\u2019t increase your market share with unhappy customers. If you focus on delivering great products and features, excellent customer service and engagement, and keep innovating, you're much more likely to increase your market share. Share of customer Definition (1): It is the portion of the customer\u2019s purchasing that a company gets in its product. Definition (2): \u201cIt is defined as the share the company gets out of the customers\u2019 purchasing their offerings.\u201d Thus, banks want to increase \u201cshare of wallet\u201d. Supermarkets and restaurants want to get more \u2018share of stomach\u201d Car companies want to increase \u201cshare of garage\u201d and airlines want greater \u201cshare of travel\u201d. 7 2","Beyond simply retaining good customers to capture customer lifetime value, good customer relationship management can help marketers increase their share of customers. Apple, Amazon, Netflix, Starbucks, and Uber, all concentrate on growing their share of customers. Use of the Term in Sentences: \uf0b7 Nowadays companies focus more on growing their share of customer than their market share. \uf0b7 Companies find it better to increase their share of customer than their market share for increased profits. \uf0b7 The company has taken different strategies to increase their share of customer. \uf0b7 One of the advantages of growing the share of customer is that the company already knows these customers. MARKET SHARE VS. SHARE OF CUSTOMERS Here\u2019s a big tip: forget market share, set your sights on customer share. As a business owner, you\u2019ve probably heard many times that getting one new customer costs five times as much as retaining an existing one. Why then are so many businesses putting so much money into going after new customers? The answer is that they\u2019re looking to increase market share. You may be thinking, so what? Isn\u2019t that a good thing? Isn\u2019t that what I should be doing? Well, the problem is that for small businesses this approach won\u2019t really work in your favour. Sure, if you\u2019re a massive corporation, like the major supermarkets, then you will probably earn yourself a market share. But if you\u2019re a small business owner, it\u2019s highly unlikely that you\u2019ll even make an impact on market share regardless of the number of customers you acquire. What I recommend you go for instead is customer or wallet share. Having a customer share will let you compete with the big market leaders and, often, beat them. Today\u2019s consumer is hungry for good service. Look after a customer well enough and they\u2019ll give you your loyalty. You\u2019re more likely to go back to the coffee shop that gave you an extra stamp on your loyalty card, than the shop that didn\u2019t. Even tiny, generous gestures such as that free stamp can have a big impact on retaining your customers. Not to mention the reputation your business gains through the positive recommendation those customers might give to others based on a great experience. 7 3","The point is that you want to look after your existing customers so they don\u2019t need or want to go elsewhere. To go after customer share is to aim at getting 100% of your customers. What I mean by this is that you should aim to have your customers buy 100% (or as near as possible) of their goods or services from you. Do you think your customers do this with your business? If you\u2019re not sure, perform a survey to find out. I can tell you that most customers will buy from more than one outlet. So seriously consider redirecting your attention and efforts away from market share. Focus on customer share. Instead of clamouring for new customers, nurture and retain the ones you already have. You can go about this in a variety of ways but it always comes back to attentive service. Follow up on your sales, alert them to special offers, run promotional events and\/or start birthday clubs or loyalty programs. Be creative, be generous, be different. Anticipate your customers\u2019 needs and wants and deliver. Above all, provide excellent customer service and maintain regular contact with your customer base. And if you\u2019re still sceptical about making the change from market to customer share, you can always test it out first. Pick a handful of your customers and make it your target to increase their business over 3-4 months. Based on your results you can refine your approach before applying it to your entire customer base. 5.4 LIFE TIME VALUE OF CUSTOMERS Customer lifetime value (CLV) is a business metric that measures how much a business can plan to earn from the average customer over the course of the relationship. Differences in products, costs, purchase frequencies and purchase volumes can make customer lifetime value calculations complex. However, with the right tools, you can find customer lifetime value in just a few clicks. With an understanding of CLV, you can make better-informed marketing and sales decisions, among other benefits. This guide provides insights about customer lifetime value, how to calculate this metric and more useful information about CLV that business owners and managers should know. What Is Customer Lifetime Value (CLV)? Customer lifetime value (CLV) is a measure of the total income a business can expect to bring in from a typical customer for as long as that person or account remains a client. 7 4","When measuring CLV, it\u2019s best to look at the total average revenue generated by a customer and the total average profit. Each provides important insights into how customers interact with your business and if your overall marketing plan is working as expected. For a more in-depth look, you may want to break down your company\u2019s CLV by quartile or some other segmentation of customers. This can give greater insight into what\u2019s working well with high-value customers, so you can work to replicate that success across your entire customer base. Customer lifetime value boils down to a single number, but there may be significant nuances. By understanding the different parts of your CLV, you can test different strategies to find out what works best with your customers. Thanks to its simplicity, CLV can be an important financial metric for small businesses. For example, let\u2019s examine how a grocery chain may look at CLV. Based on data in the company\u2019s ERP system, it can see that the typical customer spends $50 per visit and comes in an average of once every two weeks (26 times per year) over a seven-year relationship. The grocer can find its CLV by multiplying those three numbers \u2014 50 x 26 x 7 \u2014 for a value of $9,100. But why does that number matter? We\u2019ll dig into the details in the next section. Why Is Customer Lifetime Value Important to Businesses? Why Does It Matter? In the example above, we figured out the average lifetime value of a customer for a grocery store. But why do businesses care about CLV? Here are a few key reasons to track and use CLV: You Can\u2019t Improve What You Don\u2019t Measure: Once you start measuring customer lifetime value and breaking down the various components, you can employ specific strategies around pricing, sales, advertising and customer retention with a goal of continuously reducing costs and increasing profit. Make Better Decisions on Customer Acquisition Costs: When you know what you will earn from a typical customer, you can increase or decrease spending to ensure you maximize profitability and continue to attract the right types of customers. Improved Forecasting: CLV forecasts help you make forward-looking decisions around inventory, staffing, production capacity and other costs. Without a forecast, you could unknowingly overspend and waste money or underspend and put yours7elf in a bind where you struggle to keep up with demand. 5","Advantages of Customer Lifetime Value Improve Customer Retention: One of the biggest factors in addressing CLV is improving customer retention and avoiding customer attrition. Tracking these details with accurate segmentation can help you identify your best customers and determine what\u2019s working well. Drive Repeat Sales: Some retailers, tech companies, restaurant chains and other businesses have loyal customer bases that come back again and again. You can use CLV to track the average number of visits per year or over the customer lifetime and use that data to strategize ways to increase repeat business. Encourage Higher-Value Sales: Netflix is an example of a business that improved CLV through higher pricing but learned years ago that increasing costs too quickly may scare off long-time customers. The right balance is key to success here. Increase Profitability: Overall, a higher CLV should lead to bigger profits. By keeping customers longer and building a business that encourages them to spend more, you should see the benefit show up on your bottom line. Challenges of Customer Lifetime Value It Can Be Hard to Measure: If you don\u2019t have quality tracking systems in place, calculating CLV can be difficult. An enterprise resource planning (ERP) or customer relationship management (CRM) system can make this information easily available on an automated dashboard that tracks KPIs. High-Level Results May Be Misleading: Looking at a business\u2019s total CLV can be a helpful data point, but it can also cover up problems in certain customer segments. Breaking down the data by customer size, location and other segments may provide more useful data. How to Measure Customer Lifetime Value 7 6","Businesses with ERP systems don\u2019t have to worry about the math behind CLV. The system does all of the calculations for you. If you\u2019re looking to measure customer lifetime value manually, however, you can follow the steps and formula below. 3 Steps to Measure Customer Lifetime Value This graphic shows how customer lifetime value can be calculated through average order value, number of transaction, and customer retention rates. Determine Your Average Order Value: Start by finding the value of the average sale. If you have not been tracking this data for long, consider looking at a one- or three-month period as a proxy for the full year. Calculate the Average Number of Transactions Per Period: Do customers come in several times a week, which might be common with a coffee shop, or only once every few years, which could be the case at a car dealership? The frequency of visits is a major driver of CLV. Measure Your Customer Retention: Finally, you\u2019ll need to figure out how long the average customer sticks with your brand. Some brands, like technology and car brands, inspire lifelong loyalty. Others, like gas stations or retail chains, may have much less loyal customers. Calculate Customer Lifetime Value: 7 7","Now you have the inputs. It's time to multiply the three numbers together to calculate CLV per the formula below. Customer Lifetime Value Formula Here is the formula for customer lifetime value: CLV = Average Transaction Size x Number of Transactions x Retention Period Each of these inputs acts as a lever you can pull to grow your CLV. However, every move your business makes may have unintended consequences that impact CLV. For example, a price increase may improve your average transaction size, but it could push customers to shop less often or look for lower-cost alternatives. Experienced marketers familiar with the four Ps of marketing \u2014 product, place, price and promotion \u2014 have a strong understanding of how marketing efforts directly influence customer lifetime value. Customer Lifetime Value Examples The best way to understand CLV is through examples. Here are examples from three very different industries to better demonstrate how customer lifetime value may impact your company: Coffee shop A coffee shop is a perfect starting example for CLV, as it is easy to understand even if you don\u2019t have an extensive business background. Let\u2019s say a local coffee chain with three locations has an average sale of $4. The typical customer is a local worker who visits two times per week, 50 weeks per year, over an average of five years. CLV = $4 (average sale) x 100 (annual visits) x 5 (years) = $2,000 Car dealership 7 8","A car dealership has a much higher average sale amount with a lower purchase volume. In this example, we'll assume someone buys a new car every five years for $30,000. Customers are loyal to this brand and tend to keep buying from it for 15 years. CLV = $30,000 (average sale) x .2 (annual purchases) x 15 (years) = $90,000 Software as a Service (SaaS) subscription For the last example, let\u2019s assume an online video streaming service has multiple price plans, but the average customer spends $17 per month. Customers typically subscribe for three and a half years and use automatic monthly payments. CLV = $17 (average sale) x 12 (annual purchases) x 3.5 (years) = $714 14 ays to Improve CLV There are many different strategies companies can adopt to boost their CLV. Here are 14 ideas to consider if you\u2019re trying to earn more revenue from the typical customer: Customer Loyalty or Rewards Programs Customer loyalty programs keep customers engaged and reward frequent purchases. Airline frequent flyer programs and restaurant punch cards are popular examples. Incentivizing customers to return can increase purchase frequency and the amount of time a customer buys from a brand. Customer Experience Your website, storefront, call center and other touchpoints are all part of the customer experience. If customers enjoy a smooth, low-stress shopping experience every time, they are more likely to return for repeat b79usiness.","Improve Customer Onboarding Some customers buy a product or service from a business and don't know what to do next. Successful businesses chart a path for their customer relationships over time. Turning a one-time customer into a source of recurring revenue is essential for growth in many industries. Customer Engagement Businesses that actively monitor all interactions between the company and their customers can identify ways to improve the customer experience and customer loyalty. This should span channels like advertising, customer support and sales. Improved Customer Service Bad customer service is a quick way to see your CLV quickly fall, as customers leave for competitors. Focusing on making every customer service interaction a positive one will further enhance customer loyalty. CRM systems and dedicated customer service platforms bring these interactions to one central location for streamlined management. Customer Relationship Management Businesses need to understand their relationships and communication history with customers across sales, customer service and marketing. ERP and CRM systems help track and enhance these relationships over time by creating a seamless flow of information across the entire customer lifecycle \u2014 from lead all the way through opportunity, sales order, fulfillment, renewal, upsell and support. Customer Feedback Loop If a customer does have a bad experience, it shouldn't go unresolved. In addition to relying on customer service to fix the issue, businesses should continuously solicit customer feedback to enhance the customer experience. Regular product or service iterations and fixes can resolve problem areas, helping to improve customer satisfaction. Invest in Technology & Software Technology can automate processes and track and centralize much of your business data. Some companies rely on basic tools like email, spreadsheets and contact databases to manage all this information, but it\u2019s much easier to use proven, packaged software suites to handle these functions. Your customers will notice the difference. Upsell and Cross-Sell 8 0","It's often easier to reengage or upsell an existing customer than bring in a new one. Upselling and cross-selling are strategies designed to encourage customers to buy more expensive or multiple products or services at once instead of a lower-cost option. Increase Pricing When done correctly, a price increase can directly increase CLV. Just take care to avoid scaring off customers with dramatic price increases. Also, consider competitor pricing when determining your own. By focusing on value and giving customers something they can\u2019t get elsewhere, you may be able to increase pricing without losing customers. Social Media One of the best places to get your customers' attention is to reach them in places where they already spend time. Social media platforms like Facebook, Instagram, Twitter and TikTok are meaningful channels to both advertise and interact with customers. Simple Purchasing Experiences Cart abandonment rate is a metric used by online businesses to track how many customers start shopping but leave before completing the checkout process. This can also extend to in-person buying experiences where excessive options and packaging can turn customers off. Building a simple purchase experience will help you capture every possible sale. Forward-looking businesses use strategies like A\/B testing to find out what works best. Make Returns Easy When a customer isn\u2019t happy with their product or service, making returns and exchanges difficult may cost you a customer for good. A painless returns process makes it more likely a customer will come back and give your product or service another try. Targeted Content Content marketing is a strategy used to educate or entertain your target customers, usually designed to build up brand trust and loyalty. Blog posts, e-books videos, podcasts and other media are popular forms of targeted content that can speak to particular segments of your audience. 8 1","5.5 SUMMARY It is a known fact that one of the variables which hit\u2019s the bottom line of all established companies hard is the customer defection rate. The customer defection rate is the rate at which existing customers leave the brand and switch over to a competitor. It is possible that the customer has stopped using this type of product altogether. Or the more likely scenario is that the customer has switched over to a competitor. Companies looking to increase their share have a few options. They can look to marketing and advertising to attract new customers, develop new products for the market, lower prices to undercut the competition, or attempt to expand the size of their target market by appealing to new demographics. Innovation and disruption are also great ways of increasing market penetration. After all, offering a new technology \u2014 one that competitors do not have access to \u2014 is a highly effective way of convincing users to migrate to your product or service. Market share is used to give you an idea of how large, powerful or important your business is within its particular sector. You can calculate your share by taking your total sales and dividing the figure by the total sales of the entire sector or market you are selling in. A company that maintains its share over time is growing its revenues in line with its competitors. But an increase shows a speedier, market-leading, boost in revenue. Customer lifetime value (CLV) is a business metric that measures how much a business can plan to earn from the average customer over the course of the relationship. Differences in products, costs, purchase frequencies and purchase volumes can make customer lifetime value calculations complex. However, with the right tools, you can find customer lifetime value in just a few clicks 5.6 KEYWORDS Market share is used to give you an idea of how large, powerful or important your business is within its particular sector. You can calculate your share by taking your total sales and dividing the figure by the total sales of the entire sector or market you are selling in. Share of customer: It is the portion of the customer\u2019s purchasing that a company gets in its product. Customer lifetime value (CLV) is a business metric that measures how much a business can plan to earn from the average customer over the course of the relationship. Differences in products, costs, purchase frequencies and purchase volumes can make customer lifetime value calculations complex. However, with the right tools, you can find customer lifetime value in just a few clicks 5.7 LEARNING ACTIVITY 8 1 Define Market share. 2","___________________________________________________________________________ ___________________________________________________________________________ 2. Define life time value of customer. ___________________________________________________________________________ ___________________________________________________________________________ 5.8 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. Describe reducing customer defection. 2. What Is Customer Lifetime Value (CLV)? 3. How to gain market share? 4. Discuss about the Advantages of Customer Lifetime Value. 5. List the challenges of Customer Lifetime Value. Long Questions 1. Explain the Strategies to Prevent Defection and Recover Customers. 2. Why is market share important? 3. Explain how to increase market share 4. How to Measure Customer Lifetime Value. B. Multiple Choice Questions 1. The ___ feature of CRM deals with communication between companies and their customers. a. Collaborative b. Operational c. Analytical d. Automation 2. What is the other name of the CRM engine? a. Data repository b. Data mart c. Data warehouse d. All of the above 3. ___ are important to develop and evaluate the results of marketing interactions. a. Campaign management tools b. Interfaces c. Analytical tools d. Data warehouses 4. CRM system generates ___ throughout interactions on different channels. a. 340-degree customer view 8 b. 350-degree customer view 3","c. 360-degree customer view d. 370-degree customer view 5. TSAPI stands for a. Telephony Services Application Programming Interface b. Transaction Services Application Programming Interface c. Transmission Services Application Programming Interface d. None of the above Answers 1-a, 2-d, 3-a. 4-c, 5-a 5.9REFERENCES References book \uf0b7 Aswathappa, K. (2002). Customer Relationship Management.New Delhi: Tata McGraw-Hill. \uf0b7 Dessler, G. (2012). Customer Relationship Management.New Delhi: Prentice-Hall of India. 8 4","UNIT \u2013 6 CRM CYCLE STRUCTURE 6.0 Learning Objectives 6.1 Introduction 6.2 The CRM cycle 6.3 Phases of CRM 6.4 Modules in CRM 6.5 Summary 6.6 Keywords 6.7 Learning Activity 6.8 Unit End Questions 6.9 References 6.0 LEARNING OBJECTIVES After studying this unit, you will be able to: \uf0b7 Describe nature of customer relationship management \uf0b7 Identify phases of customer relationship management \uf0b7 State the modules in customer relationship management \uf0b7 List the CRM cycle 6.1 INTRODUCTION It is a known fact that every software application is intended to accomplish certain business goals. Customer Relationship Management or CRM is no different. Business owners expect that through CRM application they will be able to discern: \u2022Who are their customers? \u2022What kind of marketing campaign is suitable for cu8stomers? 5","\u2022How to efficiently maintain the Account and Contact database? \u2022How to track leads, and convert them into Opportunity? \u2022How to effectively resolve customer issues? \u2022How to provide better customer service? Customer Relationship Management accomplishes the complete set of activities ranging from customer acquisition and retention to service. This cycle of customer-related activities is termed as CRM cycle, and Deskera CRM comprehensively covers the entire set of it. The CRM cycle basically consists of four stages \u2013 Marketing, Sales, Product, and Support. \u2022Marketing Stage \u2013 In this stage of CRM cycle, the basic focus is to identify customers by running various marketing campaigns (such as emails, blogs, advertisements, and more), create the database for Account (pertaining to Organization) and Contacts (pertaining to individuals), and finally generate leads by analyzing the gathered customer data. \u2022Sales Stage \u2013In the Sales stage, basic focus remains on leads. They are the individuals who have expressed some kind of interest in your product offering. \u2018Leads\u2019 are further categorized into Open, Contacted, Qualified and Un-qualified. Deskera CRM offers a functionality to convert \u2018leads\u2019 into \u2018opportunity\u2019 for carrying out further sales activities. \u2022Product Stage \u2013 In this stage of CRM cycle, the basic focus is on delivery of product. Deskera CRM offers Product Management functionality that captures details about the product price, vendor, and description, among others. \u2022Support Stage \u2013 During Support Stage, the primary focus remains on resolving customer issues and providing customer support. In CRM terminology, this function is known as Case Management. To understand the steps in the CRM process, you have to understand the customer life cycle. It is one of the first concepts that you learn as a sales rep to understand how a person becomes a loyal customer. 6.2 THE CRM CYCLE The CRM cycle involves marketing, customer service and sales activities. It starts with outreach and customer acquisition and ideally leads to customer loyalty. There are five key stages in the CRM cycle: 1. Reaching a potential customer 8 2. Customer acquisition 6","3. Conversion 4. Customer retention 5. Customer loyalty The CRM process is that concept in action. It is the tangible steps that an organisation must take to help drive consumers through the cycle of learning about your brand and ultimately becoming loyal (and repeat) customers. 8 7","According to the customer life cycle, we know that the first step in the CRM process is maximising reach with leads. In practice, reach is using your CRM to generate brand awareness via targeted marketing campaigns. Every stage in the customer life cycle corresponds to an actionable step in the CRM process. The key is knowing what those steps are and how to execute them. What are the steps in the CRM process? The five steps in the CRM process are a collaborative effort between Marketing, Sales and Support departments. To help you understand how each team works together, we will go through how each step works in practice. We will cover not only how each part of the process can be completed with a CRM tool but also who is responsible for each step. 1. Generate brand awareness The first step in acquiring new customers is to introduce them to your business. The Marketing team generally takes on this task using a number of measures: 1. Learning about your target audience: Marketers will conduct research to identify their audience\u2019s target demographics, interests, preferred channels of communication, what messaging they respond most to and what they care about. 2. Segmenting your target audience: Audience personas are created to segment a brand\u2019s target audience into similar groups based on similar interests or demographics. This helps marketers identify which types of people are most likely to become customers and who their campaigns should target. 3. Creating marketing campaigns that speak to the target demographics: A\/B tests and marketing automation can be used to identify what works and what does not, to create unique campaigns for unique customer segments such as on social media or email and to create strategies for lead acquisition. When it comes to completing these steps, CRM software contains a wealth of information. The tool can show patterns in past leads and customers to give marketing teams a clear picture of their target audience. Beyond understanding similarities in demographics, marketers can also analyse sales notes in their CRM technology to understand what led to conversions in the past. By understanding what resonated with leads, marketers are better equipped to create effective campaigns. 2. Acquire leads Introducing your brand to a potential customer is just the beginning of the CRM process. From there, you have to encourage them to lear8n more about your business and engage with it. 8","Depending on how your company is structured, this lead acquisition step could be a marketing or sales team responsibility \u2014 or both. Your marketing team, for example, might encourage website visitors to share their email with a newsletter signup CTA or a social media giveaway. Sales, on the other hand, could use their CRM system to set up live chat on your site. With this feature, your team can proactively reach out to potential customers who land on your website. If your CRM technology comes equipped with a lead enrichment tool, like Reach, lead acquisition is unbelievably simple. All the tool needs is a lead\u2019s email address to instantly reveal detailed information about the person. With customer data, you can personalise your outreach with the lead to start the relationship off on the right note. Not to mention, you can save tons of time by not needing to research leads yourself. 3. Convert leads into customers You have successfully engaged with your leads and they are interested. Now it is time to turn those leads into customers. To do so, sales reps must first be skilled at identifying how interested leads are and, specifically, whether they are interested enough to make a purchase. A CRM is very helpful here. The historical data from past successful sales can be used to identify lead-qualification criteria. These criteria can be added as \u201cattributes\u201d to your CRM\u2019s lead-scoring tool to help reps identify opportunities with the highest probability of a sale. If leads do seem likely to make a purchase, reps must then be able to nurture them further and build their trust enough to convert. One way to do this is for reps to send leads case studies, white papers and other resources that may sway their decision.* * Reps should also use their CRM platform to set reminders and tasks to follow up with interested leads. After all, studies have shown that \u201c63% of consumers need to hear a company\u2019s claim 3-5 times before they actually believe it.\u201d Use your CRM\u2019s dashboard to help you remember to follow up to ensure that no opportunities are missed. 4. Provide superior customer service You have successfully converted your lead into a customer. Great! But the CRM process does not end when a customer converts. In order to grow as a company, you need to retain customers. How do you keep the customer coming back? With excellent service from Support. According to Zendesk\u2019s 2020 Customer Experience Trends Report, customer service is the biggest factor that determines a consumer\u2019s loyalty to a brand. Conversely, poor customer service can cost you customers and negatively impact your reputation. Support teams must be able to deliver superior support whenever, where8ver, and however their customers expect it. 9","Forty-nine percent of customers say being able to resolve their issue quickly is the most important aspect of a good customer service experience. With CRM software, support agents can easily access the historical customer information they need to resolve a ticket quickly. Fifty-seven percent of customers expect to have a choice of channels when reaching out to customer support. CRM features allow support agents to not only provide omnichannel support but also manage those conversations in a single, unified view. With the right CRM, your agents have the customer information and resources they need to resolve a customer\u2019s issues quickly and effortlessly. This allows for a stress-free and efficient experience for both the customer and the support agent. 5. Drive upsells When we think of a returning customer, we imagine a shopper continually coming back to the same business to buy the products they know and love. But there is another key way existing customers provide value \u2014 by upgrading to more expensive products. How do you convince customers to switch products? Personalised recommendations via email are a great place to start. You can use your CRM to organize customers into smart lists based on similar purchase histories. You can then create custom email templates that send relevant product releases to entire lists of customers at once. This way, you can be sure the promotional deals or releases you send are reaching the people most likely to buy them. If your business is service-based, you may find upsell opportunities through check-in calls. Set reminders in your CRM to regularly reach out to repeat customers to ask how they are doing and whether there is any way you could improve your service. Their needs may very well have changed since the last time you spoke, and they may be ready for an upsell. With a CRM process, the customer lifecycle no longer feels abstract. The right CRM enables you to create a deliberate, personalised experience that naturally drives leads through your sales pipeline. 6.2 PHASES OF CRM The Assessment phase develops a model of the behavior of target customers, using a combination of in-house data and external demographic, psychographic, and other data. Here, marketing will explore a number of questions, including: \uf0b7 Who are the customers? What are their demographics and lifestyle? \uf0b7 Where do they live? \uf0b7 What are they worth? What is their lifetime value potential? \uf0b7 What and how do they buy? \uf0b7 What are their purchasing patterns? 9 0","\uf0b7 Is there a model of their profitability or the risk associated with doing business with them? \uf0b7 How can they be reached? \uf0b7 How have they responded to promotions in the past and through which channels do they prefer to be contacted? During the Planning Phase, marketing decides how best to approach the customers defined in the assessment stage by designing marketing campaigns and strategies. The Execution Phase of the cycle is where an organization puts all this knowledge to work, using all of the customer touchpoints available. 6.3 MODULES IN CRM Customer Relationship Management (CRM) plays a crucial role in defining your company\u2019s growth and enhancing customer relationships. Different CRM Modules constitute this capability. These modules work together to ensure seamless sales and marketing operations. Along with this, it produces a workflow that is applauded by both customers as well as critics. So let us understand CRM software and its modules in detail. It\u2019s fair to say that most CRM platforms these days do not consist of a single operational construct but are in fact collections of integra9ted modules that utilize data and influence workflows in their own unique ways. 1","Overall, of course, these platforms strive to bring cohesion and simplicity to what are usually very complex processes, primarily by tying each module to a single database. Individually, however, each module has its own objectives and internal functionality coupled with the ability to hand off projects to the next module in a usable form. But what are the key modules for an effective CRM solution? In a broad sense, the right answer is as varied as the enterprise industry itself, which is a good thing considering most modern platforms allow you to mix and match various modules to create highly customized solutions. As well, different configurations will appeal to some industry verticals more than others. A transportation company might lean more heavily toward logistics and GPS, while a retailer might place more emphasis on inventory and customer feedback. In general, however, five core modules should reside in all CRM solutions. Contact Management Effective contact management is the key to a successful CRM strategy. Not only does it allow you to maintain better, longer lasting relationships, but it enables deep-dive analysis into what customers want and how to streamline the process of getting it to them. This results in a higher level of personalization in customer interactions, producing greater satisfaction while reducing overhead and improving the decision-making process with more accurate data. Lead Management No matter what business you are in, the ability to forward leads to key salespeople in a timely manner is often the difference between success and failure. Of course, this becomes more difficult to do as the number of leads increases, which is why today\u2019s CRM solutions bring a wide range of intelligent and automated capabilities to creation, scoring, communication, development and other processes. High-quality leads delivered in a timely manner are a necessity. Analytics Each module will likely contain its own analytics tools, but a centralized analytics engine is considered a priority by many organizations. This level of functionality provides the smooth flow of data between processes and individuals, which otherwise would produce friction that leads to wasted time, duplication of effort, and results based on inaccurate or incomplete understanding of the data. Performance Management 9 2","In the old days, sales teams were often rated using incomplete or incompatible records that were compiled and evaluated under painstaking manual processes. Better now to utilize a fully functional performance management solution with a wide variety of Key Performance Indicators (KPIs), as well as the ability to focus on individuals, teams, products, territories and other targets. Powerful filtering tools can view results at any time according to multiple variables, such as the number of deals closed, revenue generated or lead opportunities provided. Social Media Management Whether it\u2019s Facebook, LinkedIn, Twitter or any of the dozens of other platforms, social media is becoming the primary means of communication and collaboration for businesses and consumers alike. Much of this activity centers on the exchange of information regarding products, services, brand identity and key news events. Neglect to integrate social media into your CRM strategy at this point, and you could very well create a large number of missed opportunities, if not complete failure to spot negative trend lines until they start to affect the bottom line. It goes without saying that the more modules you integrate into your CRM platform, the more complex the environment becomes. As long as the system is properly architected, however, much of this complexity should be masked under layers of automation and artificial intelligence so that knowledge workers can focus on the strategic objectives of CRM rather than the operational tedium. And ideally, with the proper configuration of tools and technology, your CRM platform will begin identifying leads and other opportunities that would have otherwise gone unnoticed \u2013 making the switch from simple business platform to a valued member of the team. 6.4 SUMMARY Customer Relationship Management accomplishes the complete set of activities ranging from customer acquisition and retention to service. This cycle of customer-related activities is termed as CRM cycle, and Deskera CRM comprehensively covers the entire set of it. The CRM cycle basically consists of four stages \u2013 Marketing, Sales, Product, and Support. \u2022Marketing Stage \u2013 In this stage of CRM cycle, the basic focus is to identify customers by running various marketing campaigns (such as emails, blogs, advertisements, and more), create the database for Account (pertaining to Organization) and Contacts (pertaining to individuals), and finally generate leads by analyzing the gathered customer data. \u2022Sales Stage \u2013In the Sales stage, basic focus remai9ns on leads. They are the individuals who have expressed some kind of interest in your product off3ering. \u2018Leads\u2019 are further categorized into Open,","Contacted, Qualified and Un-qualified. Deskera CRM offers a functionality to convert \u2018leads\u2019 into \u2018opportunity\u2019 for carrying out further sales activities. \u2022Product Stage \u2013 In this stage of CRM cycle, the basic focus is on delivery of product. Deskera CRM offers Product Management functionality that captures details about the product price, vendor, and description, among others. \u2022Support Stage \u2013 During Support Stage, the primary focus remains on resolving customer issues and providing customer support. In CRM terminology, this function is known as Case Management. Customer Relationship Management (CRM) plays a crucial role in defining your company\u2019s growth and enhancing customer relationships. Different CRM Modules constitute this capability. These modules work together to ensure seamless sales and marketing operations. Along with this, it produces a workflow that is applauded by both customers as well as critics. 6.5 KEYWORDS \u2022Marketing Stage \u2013 In this stage of CRM cycle, the basic focus is to identify customers by running various marketing campaigns (such as emails, blogs, advertisements, and more), create the database for Account (pertaining to Organization) and Contacts (pertaining to individuals), and finally generate leads by analyzing the gathered customer data. \u2022Sales Stage \u2013In the Sales stage, basic focus remains on leads. They are the individuals who have expressed some kind of interest in your product offering. \u2018Leads\u2019 are further categorized into Open, Contacted, Qualified and Un-qualified. Deskera CRM offers a functionality to convert \u2018leads\u2019 into \u2018opportunity\u2019 for carrying out further sales activities. \u2022Product Stage \u2013 In this stage of CRM cycle, the basic focus is on delivery of product. Deskera CRM offers Product Management functionality that captures details about the product price, vendor, and description, among others. \u2022Support Stage \u2013 During Support Stage, the primary focus remains on resolving customer issues and providing customer support. In CRM terminology, this function is known as Case Management. 6.6 LEARNING ACTIVITY 6. Define CRM. _______________________________________9____________________________________ _______________________________________4____________________________________","7. State the phases of CRM. ___________________________________________________________________________ ___________________________________________________________________________ 6.7 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. Define CRM? Explain five key stages in the CRM cycle. 2. Identify and discuss CRM functions? 3. Elaborate about the phases of CRM and its relevance in present scenario. 4. Critically analyse the evolution and present state of Customer Relationship Managementin India. Long Questions 1. Describe the phases of CRM with the help of diagram. 2. Describe about the modules in CRM. 3. What are the steps in the CRM process? B. Multiple Choice Questions 1. Perceived monetary value of all benefits which customers expect from a given product because of brand image is called A. total customer benefit B. total customer cost C. total economic cost D. total functional cost 2. System includes all experiences while using market offering is classified as A. customer proposition B. value delivery system C. product proposition D. distinctive proposition 3. Number of customers or potential customers who will help in company's growth is classified as A. customer base B. retailer base C. distributors base D. marketers base 4. Any occasion on which brand or product is encountered by end customers is called A. customer touch point B. company touch point C. retailers touch point 9 D. relationship touch point 5","5. Technique which tries to identify real cost of serving an individual customer is called A. activity based accounting B. cost based accounting C. price based accounting D. turnover based accounting Answers 1-a, 2-b, 3-a. 4-a, 5-a 6.8 REFERENCES References book \uf0b7 Aswathappa, K. (2002). Customer Relationship Management.New Delhi: Tata McGraw-Hill. \uf0b7 Dessler, G. (2012). Customer Relationship Management.New Delhi: Prentice-Hall of India. \uf0b7 Decenzo, A. & Robbins P Stephen. (2012). Personnel\/Customer Relationship Management.New Delhi: Prentice-Hall of India. \uf0b7 Ivancevich, M John. (2014). Customer Relationship Management.New Delhi: Tata McGraw-Hill. 9 6","UNIT - 7 STRATEGIES STRUCTURE 7.0 Learning Objectives 7.1 Introduction 7.2 4C\u2019s (Elements) of CRM Process 7.3 Customer Acquisition Strategies 7.4 Customer Retention Strategies (Zero defections) 7.5 Cross selling and up selling strategies 7.6 Summary 7.7 Keywords 7.8 Learning Activity 7.9 Unit End Questions 7.10 References 7.0 LEARNING OBJECTIVES After studying this unit, you will be able to: \uf0b7 Describe nature of Customer Acquisition Strategies \uf0b7 Identify scope Cross selling and up selling strategies \uf0b7 State the need and importance of Customer Retention Strategies \uf0b7 List the 4C\u2019s (Elements) of CRM Process 7.1 INTRODUCTION While CRM is a term that most often relates to the software by the same name (which is created to help businesses stay on top of their deals) the Customer Relationship Management process also involves such skills as attention to detail, listening, and consistency. 9 7","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. Here is an example: If a part of your businesses\u2019 CRM strategy is to use the business CRM software to manage prospects and contacts and keep track of your company\u2019s project deliverables, you can organize your contacts by their company name using this cutting-edge and intuitive business growth technology platform. On the other hand for projects, CRM is a software that can help you get notifications and calendar features integrated within the system to keep your projects on the necessary timeline. As a consequence, it is a tool that can allow businesses to grow a solid foundation with the correct stakeholders and hand over their deliverables in time, whereby by progressively streamlining the entire workflow, your easy to use CRM can strengthen customer relationships over time. Now every organization should put forethought into thinking and redefining how they will manage their CX (Customer Experience) since for retaining their customer brands and businesses need to continually create new connections, monitor and track sales opportunities, underrated the customers, and finally their team\u2019s efforts effectively. Hence your customer relationship management process will not only allow your business to take a proactive approach to understand the requirements and challenges of your prospects but it will also help to actively engage them in your sales strategies. Now regardless of your industry, each interaction with your current and future customers, once you use a CRM process, will be defined by these four C\u2019s of the customer relationship management process which includes: The 4 C\u2019s that you can use to manage your Conversation Company. These pillars work perfectly in a culture as described a few weeks ago. It they allow you to fully use the power of the people and the opportunities social media have to offer. Here are the the four pillars: \uf0b7 Customer Experience: people love t9o talk about your service and your products. It is the key driver of consumer conve8rsations.","\uf0b7 Conversation: the story of my previous book, The Conversation Manager. It is the goal to converse and not communicate. Listen, ask questions, facilitate the conversations and actively take part in them. \uf0b7 Content: give people stuff to talk about, but do it in an authentic, positive and relevant way. \uf0b7 Collaboration: involve customers in everything your company does. Let them be part of your boardroom and let them be involved in your decision making processes. WHY THESE FOUR COMPONENTS? These four new disciplines have not been chosen without careful consideration. A survey of 400 marketers has shown that companies grow more quickly than their sector rivals when they use these four components in unison. The largest portion of underused conversation potential is also to be found in association with these same four components. By managing them actively, you can optimize that potential. In their different ways, each of the four components can help us to eliminate the paradoxes that we discussed in a previous post. These four pillars will help to build a conversation lever for both your employees and your customers. And this will all take place in keeping with your company culture and company values. The first pillar, customer experience, is the most important conversation starter. If your employees and your customers feel well treated, they will talk to each other about this fact. By managing customer experience, you are investing in word-of-mouth. You are developing a focus for staff and consumer satisfaction. In this way, service will no longer be seen as a cost, but as an investment in conversations. Managing the conversations themselves is the second pillar. This involves observing, facilitating and participating in conversations. Your participation in conversations in social media will make your company seem less distant, more human. By asking and answering questions, the interaction between the company and the market will increase. In addition to the reactive answering of questions, the Conversation Company also adopts an active strategy with regard to content. This strategy is the third pillar. Your content proves that you are an expert in your field. Your company moves away from campaign-based thinking and towards the planning of impactful, conversation-generating content. The final pillar is the pillar of structural collaboration between your company and the market. The customer wants to help you and you will be happy to accept this help. The Conversation Company builds various communities of customers, which help to determine the future of the organization. 9 9","7.2 4C\u2019S (ELEMENTS) OF CRM PROCESS FOUR PILLARS: CUSTOMER EXPERIENCE, CONVERSATION, CONTENT AND COLLABORATION Customer Experience The basis of positive conversations about your company is very simple: offer strong products and a decent customer service. These two drive conversations. If you do them well: conversations will boost the business, if you\u2019re performing just a little below expectations, conversations will decrease the business. It is the foundation of a Conversation Company. Next to that, there is the challenge to integrate online and offline customer experience. There are still far too few companies that supplement their traditional offline customer service channels with the new online possibilities offered by social media. At the end of 2010 just 6.5% of companies offered online services to their customers. The Conversation Company believes in a total philosophy towards customer experience. The role of social media within this philosophy is to react in real time to people\u2019s problems and complaints. Companies like KLM and Best Buy (with Twelpforce) demonstrate perfectly how this pillar fits in to the overall picture. Other companies, such as Dell, build mission control centers. These centers are manned 24\/7 by staff who answer the online questions put by customers and prospects. No single conversation is left without a response; everyone is helped. Conversation The Conversation Company manages online conversations in three stages: observing, facilitating and participating. They start simply by listening to consumer conversations, adding a few relevant comments where necessary. At the same time, the company prepares its content in such a way that it can easily be shared with other interested parties. Clever companies combine these online conversations with their offline activities. The Heineken Champions League stunt makes clear that the effect of small offline events can be magnified many times by social media. Heineken facilitated this process by providing the right content in the right form. Some time ago Kraft had the idea of integrating customer tweets into its offline advertisements. People quickly caught on to this idea and were super-keen to get their quotes in the adverts. As a result, more than 1.5 million tweets were sent to Kraft in the course of the campaign. Content Companies should no longer be concerned with the planning of one-off advertising campaigns, but with the global planning and management of their content. Your company must learn to think like the publisher of a newspaper. The paper with the most interesting content is the paper that is read the most. Goo1d content is the ideal way to increase your reach. 0 0"]