The document discusses building a customer-focused organization and how customer satisfaction drives profits. It provides strategies for understanding customer needs through voice of the customer programs, measuring customer performance metrics, training employees, and handling complaints to increase customer retention and loyalty. Customer relationship management programs use customer databases and data mining to personalize interactions and improve relationships over time. While requiring significant investment, CRM can provide a competitive advantage when properly implemented based on a customer strategy.

1. Market-Based Management
Copyright Roger J. Best, 2012

2. Customer Focus, Customer
Performance, and Profit Impact
Satisfied is not good enough. Completely satisfied—that’s a big deal. A completely satisfied
customer is at least three times more likely to return than one who’s just satisfied.
―Andrew Taylor, CEO, Enterprise Rent-A-Car
Very Satisfied Customers Drive Profits
Chapter 1 Objectives
 Building a customer
focused organization
MBM6
Chapter 1
Copyright Roger J. Best, 2012

3. Customer Focus, Customer
Performance, and Profit Impact
Building a Customer-
Focused Organization
MBM6
Chapter 1
Copyright Roger J. Best, 2012
In this section we will look at how customer-focused
organizations not only outperform their competition over
the long term by consistently delivering higher levels of
customer satisfaction, they also realize higher profits
over the short run.

4. Underwhelming Customers
Little or no customer focus translates into an unfocused competitive position and
minimal customer satisfaction. The result is a vicious circle of poor performance.
Copyright Roger J. Best, 2012
MBM6
Chapter 1

5. Top Performers Produce Higher
Investor Returns
Apple, Southwest Airlines, and Clorox would be a part of the top performers in the
graph above..
Copyright Roger J. Best, 2012
MBM6
Chapter 1

6. How to build a customer focus
organization?

7. Voice of the Customer
Customer
Experiences
Every interaction
with the
customer is
considered an
opportunity to
better
understand the
customers needs
& wants
Customer
Solutions
Every customer
is different so
organization
tend to focus on
customized
solutions
Customer
Complaints
Organization
seeks comments
from dissatisfied
customers &
address their
complaints to
retain the
customers

8. Customer Performance
Customer
Matrix
Customer
Performance
Metrics are
calculated
e.g.
CSI,CLI,CLV
etc.
Customer
Profile
Managers &
employees
understand
target
customers’
profiles
Customer
Intelligence
Managers
encourage
employees to
share consumers
insights within
the organization

9. Customer Focused Leadership
Senior
Management
Leadership
Managers
are
passionate
about
customers &
regularly
visit them to
better
understand
their needs
Employee
Customer
Training
New &
existing
employees
receive
proper
training on
customer
satisfaction
Customer
Involvement
Customer
feedback is
shared across
the
organization
to identify the
problem areas
& to improve
product/servi
ces/process

10. Benchmarking Customer Satisfaction
ACSI studies have shown that Customer Satisfaction is a leading indicator of company
financial performance. The ACSI database reports all companies by industry.
American Customer Satisfaction Index - University of Michigan (www.theACSI.org)
Copyright Roger J. Best, 2012
MBM6
Chapter 1

11. Profitability of Satisfied Customers
Copyright Roger J. Best, 2012
MBM6
Chapter 1
When we chart customer profitability against customer satisfaction,
we see that the “very satisfied” customers are the ones who
drive profitability.

12. Copyright © 2009 Pearson
Education, Inc. Publishing as
Prentice Hall
5-12
Measuring Satisfaction
Periodic Surveys
Customer Loss Rate
Mystery Shoppers
Monitor Competitive
Performance

13. Complaint Behavior and Retention
Copyright Roger J. Best, 2012
Each year, the business above loses $22,400 customers who are
dissatisfied, but do not complain.
Dissatisfied customers often do not complain, but they do walk and they do talk.
Marketing
Performance
Tool 1.2

14. Customer Dissatisfaction and
the Use of Social Media
Facebook as an Outlet for Customer Dissatisfaction
• An individual’s car was towed despite being legally parked with
a valid parking sticker. The individual created a Facebook page
to express his dissatisfaction with the towing company.
• More than 10,000 supporters, some using other social media,
also expressed their dissatisfaction with the towing company.
• Many related their own bad experiences, and 20 formal
complaints were filed over a 3-year period as a result .
Copyright Roger J. Best, 2012
MBM6
Chapter 1

15. Strategies for Complaint Handling
Set up a 7-day, 24-hour toll-free
hotline (by phone, fax, or e-mail)
to receive and act on
customer complaints.
Contact the complaining customer
as quickly as possible. The slower
the company is to
respond, the more dissatisfaction
may grow and lead to negative
word of mouth.
Accept responsibility for the
customer’s disappointment; don’t
blame the customer.
Use customer service people who
are empathic.
Resolve the complaint swiftly and
to the customer’s satisfaction.

16. Estimating Customer Retention
Copyright Roger J. Best, 2012
MBM6
Chapter 1
To estimate retention rates, businesses can use a customer survey as outlined above.
How likely are you to buy this product or brand
again on your next purchase?

17. What is Loyalty?
Loyalty is a deeply held commitment to re-buy
or re-patronize a preferred product or service
in the future, despite situational influences
and marketing efforts.

18. Managing Customer Loyalty
Top
Performers:
Advocates
Loyalists
High
Potentials
Big Spenders
Underachievers
New
Opportunities
Win Back
Customers
New Potentials
Non-profits
Misfits
Spinners
Manage
Selection
CRM Loyalty
Promotions
Critical
Care
Strategies to manage each type of customers
Crown
Jewels
Rough Cut
Diamonds
Unpolished
Gems
Profit Drain

19. Customer Satisfaction
Customer Loyalty
Company’s Profit

20. What is Customer Relationship Management?
CRM is the process of carefully managing
detailed information about individual
customers and all customer touch points
to maximize customer loyalty.

21. Framework for CRM
Identify prospects and customers
Differentiate customers by needs
and value to company
Interact to improve knowledge
Customize for each customer

22. CRM Strategies
Reduce the rate of defection
Enhance “share of wallet”
Terminate low-profit
customers
Focus more effort on high-
profit customers

23. Database Marketing
It is the process of building , maintaining, and using
customer databases and other databases (products,
suppliers, resellers) to contact, transact, and build
customer relationships.

24. Customer database VS Mailing list
A customer mailing list is simply
a set of names, addresses, and
telephone numbers
A customer database contains
much more information,
accumulated through customer
transactions, registration
information, telephone queries,
cookies, and every customer
contact
Many companies confuse a customer mailing list with a customer database.
Ideally, a customer database also contains the consumer’s past purchases, demographics
(age, income, family members, birthdays), psychographics (activities, interests, and opinions),
Media graphics (preferred media), and other useful information. The catalog company
Fingerhut possesses some 1,400 pieces of information about each of the 30 million households
in its massive customer database.

25. Data warehouse
• Banks and credit card companies, telephone companies, catalog
marketers, and many other companies have a great deal of
information about their customers, including not only addresses and
phone numbers, but also transactions and enhanced data on age,
family size, income, and other demographic information
• These data are collected by the company’s contact center and
organized into a data warehouse where marketers can capture, query,
and analyze them to draw inferences about an individual customer’s
needs and responses.
• Telemarketers can respond to customer inquiries based on a complete
picture of the customer relationship, and customized marketing
activities can be directed to individual customers.

26. Data Mining
Through data mining, marketing statisticians can extract
from the mass of data useful information about individuals,
trends, and segments. Data mining uses sophisticated
statistical and mathematical techniques such as cluster
analysis, predictive modeling etc. Some observers believe a
properly developed database can provide a company with a
significant competitive advantage.

27. Using the Database
To identify prospects
To target offers
To deepen loyalty
To reactivate customers

28. Wrong Planning
• Implementing CRM before creating a customer strategy
Some situations are just not conducive to
database management.
• The product is a once-in-a-lifetime purchase
• Customers show little loyalty to a brand
• The Unit sale is very small (a candy bar) so CLV is low
• There is no direct contact between the seller and ultimate
buyer.
CRM requires high investment
• Building and maintaining a customer database requires a
large, well-placed investment in computer hardware,
database software, analytical programs, communication
links, and skilled staff.