OFAD80: Customer Retention Strategies

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Questions and Answers

What is a critical success factor for businesses in customer retention?

High switching costs

Increasing product prices

Developing and retaining customers (correct)

Limiting customer service access

Which of the following is a common trend among businesses to improve customer retention?

Increasing customer switching costs

Reducing customer communication

Implementing innovative measures (correct)

Decreasing customer satisfaction

What is one negative aspect of customer retention mentioned?

Adding value to customer offerings

High switching costs (correct)

Building commitment

Creating social bonds

Which strategy is commonly used by airlines to enhance customer loyalty?

Frequent flyer programs Signup and view all the answers

How have businesses improved operational performance to retain customers?

Through financial restructuring Signup and view all the answers

What do telecom service operators provide to their heaviest users as a retention strategy?

Customized services Signup and view all the answers

What approach has been taken to manage production costs effectively?

Total Quality Management (TQM) Signup and view all the answers

Which of the following is NOT typically a consequence of high customer defection rates?

Lower operational costs Signup and view all the answers

What reflects a trend for large internationally oriented companies in managing their accounts?

Global Account Management Programs Signup and view all the answers

Which concept emphasizes closer relationships with fewer suppliers rather than multiple vendors?

Supply Chain Management Signup and view all the answers

What is a key prerequisite for Effective Customer Relationship Management?

Knowledge about customers Signup and view all the answers

Customer satisfaction results from comparing what two elements?

Pre-purchase expectations and actual performance Signup and view all the answers

What increasing factor promotes cross-selling and up-selling effectively?

Customer loyalty and commitment Signup and view all the answers

What has significantly changed consumer expectations in recent years?

The emergence of new technology Signup and view all the answers

What is a critical component that KAM requires from vendors?

National contracts and master agreements Signup and view all the answers

What is the primary focus of a customer-centric approach to marketing?

Re-engaging lost customers Signup and view all the answers

What does Knowledge Management in CRM focus on analyzing?

Customer's cognitive, effective behavior, and attributes Signup and view all the answers

Which of the following best defines customer retention?

Activities aimed at reducing customer defection Signup and view all the answers

How does an organization enhance its ability to retain customers?

By engaging in relationship building Signup and view all the answers

What do customers primarily seek from a business?

Customer benefits from the business Signup and view all the answers

What aspect of a company's approach is crucial for managing customer expectations?

Thoroughly researching customer needs Signup and view all the answers

In a competitive market, the main marketing activity organizations should focus on is:

Building customer relationships Signup and view all the answers

Successful customer retention starts with which phase of customer interaction?

The first contact with the customer Signup and view all the answers

What is an important outcome of effective customer retention for a business?

Enhanced company reputation in the market Signup and view all the answers

What does fulfilment of an expectation indicate?

Confirmation Signup and view all the answers

Which factor is key to achieving customer loyalty over time?

Emotional bonding Signup and view all the answers

What role does trust play in customer relationships?

It reduces uncertainty Signup and view all the answers

How do consumers typically prefer to manage their choices?

By limiting options to a few familiar brands Signup and view all the answers

Which component has a significant influence on a customer's habitual responses?

History with the company Signup and view all the answers

What is the importance of a positive corporate image in customer loyalty?

It creates habitual responses to the company Signup and view all the answers

Which of the following is NOT a component of customer loyalty mentioned in the content?

Budget management Signup and view all the answers

What results from a disconfirmation of expectations?

Dissatisfaction among customers Signup and view all the answers

How does a company's historical image affect customer behavior?

It influences customer loyalty and likelihood to buy. Signup and view all the answers

What differentiates lead users from average users in product development?

Lead users provide ideas for solutions, while average users only provide needs. Signup and view all the answers

Which of the following customer characteristics positively impacts new product success?

Both B and C Signup and view all the answers

What is the primary focus of a CRM system?

Customer's actual purchasing history. Signup and view all the answers

Why might technically attractive customers mislead a company?

Their needs differ from those of the general market. Signup and view all the answers

What is a key component of customer acquisition?

Understanding potential customers' strengths and weaknesses. Signup and view all the answers

In slow-moving industrial markets, which type of customers may provide satisfactory input?

Average users. Signup and view all the answers

What does the lead user process collect information about?

Both needs and solutions. Signup and view all the answers

What is indicated by a customer purchasing a product different from the ones offered?

New data on customer/product combinations can be collected. Signup and view all the answers

What is the first step in a typical acquisition marketing campaign?

Building a prospect list. Signup and view all the answers

What is necessary before creating predictive models for customer acquisition?

Collecting data from previous campaigns. Signup and view all the answers

During a test campaign, what do you need to track after sending out campaign offers?

The threshold for customer responses. Signup and view all the answers

What characterizes the nature of response collection after a campaign is launched?

Responses tend to be sporadic over time. Signup and view all the answers

How should the granularity of predictive models reflect the data?

It should reflect the kinds of offers you can make. Signup and view all the answers

What happens to customers who do not respond by the established threshold?

They are labeled as non-responses. Signup and view all the answers

Which aspect plays a key role in collecting data for mining customer response behavior?

Tracking specific types of behavior. Signup and view all the answers

Study Notes

OFAD80: Customer Relations

Course Goal: The course prepares students to interact with people from all backgrounds and adapt to various situations within a corporate environment.

Unit 7: Customer Retention, Acquisition, and Expectations

Learning Objectives: Students will be able to discuss customer retention, understand its mechanisms, identify customer expectations, analyze its importance, and explain how to manage and deliver on those expectations.
Topic Discussion: Customers are the lifeblood of a business. Customer retention is crucial, as losing customers is a detriment to business success. A customer-centric approach to marketing focuses on understanding customer needs and tailoring strategies to meet them. The goal is to bridge the gap between customer expectations and company delivery.
Customer Retention Strategies: Customer delight goes beyond basic service; it involves exceeding expectations to foster positive experiences with the product or brand. This involves identifying and meeting customer needs beyond the initial interactions.

Kano Model

Satisfaction Categories: The Kano model categorizes product features into three types:
- Satisfied: Basic expectations that, when met, satisfy the customer.
- Dissatisfied: Must-be attributes; missing these generates dissatisfaction.
- Excited/Delighted: Features that go beyond expectations and delight customers.
Importance: Understanding these categories helps organizations prioritize areas for improvement.

Customer Retention Trends

Innovative Measures: Businesses are employing various approaches across different industries to boost customer retention. Some tactics include:
- Frequent flyer programs (airlines)
- Bonus points (credit cards)
- Personalized services (banks, telecom)
Improved Operations: Focus on reduced costs through various operational enhancements:
- Reengineering business processes
- Automation
- Downsizing
- Efficient Supply Chain Management (SCM)

Keys for Customer Retention

Sales Force Automation (SFA): CRM utilizes SFA functionality to streamline sales processes, improve productivity, and cultivate stronger customer relationships.
Total Quality Management (TQM): This approach involves improving quality and reducing costs by engaging both customers and suppliers throughout the value chain.
Systems Selling Approach (SSA): Businesses should integrate products, services, and support to create comprehensive customer solutions.
Key Account Management (KAM): Companies focus on critical accounts to maintain and strengthen business relationships.
Global Account Management (GAMP): Aimed at expanding global market reach.

Customer Characteristics Affecting Retention

Customer History: Understanding a customer's past interactions/purchasing history can be crucial for successful CRM.
Demographic Information: Knowledge of the customer’s population and age groups is needed to correctly target those who have a real need.
Customer Expectations: Anticipating and meeting customer expectations is key to enhancing loyalty.

Customer Acquisition

Defining 'New' Customer: A key concept to consider when targeting and engaging new customers, especially in existing segments or communities.
Test Campaigns: Using test campaigns allows for gathering initial data and to measure the response rate.
Building Data Mining Models: Using the collected data, the organization can build predictive models of response behavior for future customer engagements.

Customer Acquisition Funnel

Awareness, Interest, Consideration, Intent, Evaluation, and Purchase: This is the traditional customer journey mapped out. Understanding the different stages allows better engagement and conversion strategies.

Expectations and Experience

Customer Expectations: These are the customer's beliefs about the service experience. Companies need to find the gap between the expectation and the real experience.
Zone of Tolerance: The range of acceptable variation in service delivery.
Expectation Management Strategies: Organizations employ various strategies in managing their expectations such as Intro-Reactive, Co-Reactive, Intro-Proactive, and Extro-Proactive to achieve customer satisfaction.

General Types of Response Behavior

Binary Response Behavior: The customer responds in 'yes' or 'no' format.
Categorical Response Behavior: Multiple options are available based on the situation (customizable)

Customer Acquisition Cost (CAC)

Calculation: The cost to acquire a new customer is calculated by dividing total sales and marketing expenses by the number of new customers.

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Description

This quiz focuses on Unit 7 of the Customer Relations course, emphasizing customer retention, acquisition, and expectations. Students will discuss the importance of understanding customer needs and how to exceed their expectations effectively. Explore key strategies that contribute to achieving long-term customer loyalty in a corporate setting.