RETURN ON CUSTOMER SURVEY:
What steps does your company take related to ROC?
Does your company primarily focus on short-term or long-term decision-making?
Do you proactively have measures in place to build customer trust?
J. Dyche, The CRM Handbook, A Business Guide to Customer Relationship Management (Kaspars)
Web-based Self-Service
From my opinion it is very important service to company because you can find all necessary information at companies homepage. Company where I work, they use this service all the time because it is convenient to customer to check the information by himself just putting the right information where it is needed. Everything is created very simple and easy to understand. Other thing is that customers can see promotions or other interesting information nearby the thing he is doing that moment. Very big companies usually can’t provide good call-center service and other thing is that often customers are asking the same questions over and over again, so at your website you can create FAQ (Frequently Asked Questions) which customer can easily find. Some companies create even top 5 of them. In company where I work, they use the same system. You can find FAQ section and see the main questions. We have 24-hour helpline in case of problems and reservation telephone. These 2 are very important issues at my company.
People are willing to find any contacts in homepage if they have any questions or problems. That is very important that they can find it easily.
Some companies are providing person to person – electronic support like online chat. In my company we don’t have such things and we don’t need it. You can contact our company through e-mail and I think that it is enough. If you have some more important question, you can always find our telephone at homepage and call, but usually we solve client problems through e-mail.
2 Comments
Peppers & Rogers Group Insight (Re: Return on Customer)- (VW)
October 28, 2008, 2:34 pm
Filed under: Theory
Filed under: Theory
What’s the difference between ROI and ROC?
If we measure return on investment accurately, isn¹t that just as good as Return on Customer? In a word: no. ROI is based on the premise that money is your scarcest resource.
But customers are, quite literally, scarcer than money. If you have a customer you can almost always get the capital you need to serve him. On the other hand, even when you have money, you can¹t always get customers. There are only a limited number of customers, and a business needs to create the most value possible from each one. ROI measures the efficiency with which a business creates value from the capital available, while ROC measures the efficiency with which it creates value from the customers available.
To take a simple example, suppose a company is considering two treatments for its customers, to improve their LTV. Treatment A is a voucher that improves LTV and also returns a profit to the business. That is, every time a customer accepts this offer, the firm not only increases that customer¹s LTV, but also earns more money than the voucher cost. It is a self-liquidating promotion. Treatment B generates a higher LTV increase, but incurs a cost on execution. The decision-maker who treats capital as the scarce resource thinks Treatment A is better because it is completely self-liquidating. He reasons that all he needs to do to create more value with A than with B is to run A over and over and over again creating value every time, at no cost to the firm. But the manager who recognizes that customers are the scarce resource knows it is impossible to run any treatment ³over and over² again, because customers are limited in number.
His task is to create the most value with the customers available. He will probably choose Treatment B. Return on Customer is not a magic formula; it is simply a calculation based on the premise that customers are your scarcest value-creating resource. Acknowledging this fact will allow you to balance your actions so as to create a more solid and robust business‹one that not only returns current earnings, but is more likely to continue as a valuable enterprise long into the future.
How do I balance short and long term?
Some executives tell us that while ROC is a nice concept, how does it help a firm make a profit, today? It¹s important to remember that the Return on Customer argument does not imply that increases in lifetime values are any more important than cash. Far from it. LTV, by its very nature, is already a diminished version of cash, because it is based on discounted future cash flows. Nevertheless, short-term results are more important to some businesses than others. The right way to quantify the intensity of your company¹s preference for the short term is simply to raise your discount rate. The more important the short term is, or the more risky it is to wait for long-term results, the higher discount rate you should use. Our problem is that because they completely ignore long-term value creation (i.e., changes in LTV), most businesses are in effect using an unnaturally high discount rate some even use a rate greater than 100 percent.
How can I predict changes in customer lifetime value?
This is of course the crux of the ROC idea. To calculate the long-term customer value created by its actions, a firm must be capable of somehow predicting today that a customer lifetime value will increase or decrease. We¹ve identified four types of ³leading indicators² of changes in lifetime value-variables that can be measured today and indicate a likely change in the future behavior of a customer or customer group. Lifestyle changes include events like marriage, pregnancy, retirement, or divorce, which can obviously change a customer¹s future behavior. Then there are the drivers of a company¹s LTV equation itself‹customer-churn rate, repeat purchase frequency, and so forth. Third are behavioral cues. Customers who change their purchase patterns, frequency of contact, or their payment frequency are giving you a clue to their future behavior. The fourth leading indicator is attitude.
Attitudes precede behavior, so changes in customer satisfaction levels, willingness to recommend, or other such attitudes are all signals that communicate likely changes in the future behavior of customers.
Attitudes precede behavior, so changes in customer satisfaction levels, willingness to recommend, or other such attitudes are all signals that communicate likely changes in the future behavior of customers.
Return On Customer
“Without Customers, You Don’t Have a Business.
You Have a Hobby.”
In their new book Return on Customersm, bestselling authors and renowned consultants Don Peppers and Martha Rogers, Ph.D. address today’s most crucial business question: How do companies strike the right balance between maximizing current-period profits and building long-term enterprise value. The foundation of their findings is a customer-based value proposition that provides a practical and sound business metric to better manage your business – this quarter, this fiscal year, and for the foreseeable future.
You Have a Hobby.”
In their new book Return on Customersm, bestselling authors and renowned consultants Don Peppers and Martha Rogers, Ph.D. address today’s most crucial business question: How do companies strike the right balance between maximizing current-period profits and building long-term enterprise value. The foundation of their findings is a customer-based value proposition that provides a practical and sound business metric to better manage your business – this quarter, this fiscal year, and for the foreseeable future.
Peppers and Rogers present a compelling case that long-term customer equity is an enterprise’s single most valuable asset. In Return on Customer the authors provide a deceptively simple formula for measuring customer profitability and provide the tools for analyzing what the proper balance of customer attraction, retention, and in some cases loss, is for your company. Determining how best to create long-term customer value is central to any successful business strategy.
In addition to offering a unique growth strategy, Return on Customer can improve your company’s everyday practices and provide a means to measure the results of those efforts. Peppers and Rogers offer insights from many of today’s brightest business success stories to illustrate that understanding how individuals within your customer base differ in terms of needs and values, and that creating learning relationships along with other customer-focused efforts, has led Best Buy, Amazon.com, Southwest Airlines, and Costco to profitability.
Simply put: To maximize the value of what their customers do for them, these successful companies have placed maximum value on their customers. In turn, we can see that maximizing the value of the customer base is equal to maximizing the value of the enterprise.
Why Return on Customersm
After writing the successful and highly influential One to One book series, Don Peppers and Martha Rogers, Ph.D. had a somewhat radical idea. They started thinking about how customers can help businesses. They wanted to break away from previous theories and business strategies. In talking with many business leaders they realized that not everyone was thinking like they were. When they asked executives what the primary source of their revenue is, most answered that it is sales of their product. Too few realized that the ultimate source of their revenue is their customers—today and in the future. Don and Martha charged themselves with the mission to let executives know that every function across an enterprise, from hiring, training, accountability, etc. should revolve around their most valuable resource—customers.
Larry Kudlow, Host of CNBC’s “Kudlow and Company,” has offered highest praise for Return on Customer: “Finally! A business metric that can drive better management and a higher stock price. I predict soon you’ll be hard pressed to find a company that isn’t tracking ROCsm.”
Read more industry praise for Return on Customersm
Knowledge Management (C.G.)
October 28, 2008, 2:10 pm
Filed under: Theory
Filed under: Theory
Knowledge Management (KM) comprises a range of practices used in an organisation to identify, create, represent, distribute and enable adoption of what it knows, and how it knows it. It has been an established discipline since 1995 [1] with a body of university courses and both professional and academic journals dedicated to it. Many large companies have resources dedicated to Knowledge Management, often as a part of ‘Information Technology‘, ‘Human Resource Management‘ or Business strategy departments. Knowledge Management is a multi-billion dollar world-wide market[citation needed].
Knowledge Management programs are typically tied to organisational objectives such as improved performance, competitive advantage, innovation, developmental processes, lessons learnt transfer (for example between projects) and the general development of collaborative practices. Knowledge Management is frequently linked and related to what has become known as the learning organisation, lifelong learning and continuous improvement. Knowledge Management may be distinguished from Organisational Learning by a greater focus on the management of knowledge as an asset and the development and cultivation of the channels through which knowledge, information and signal flow.
There is a broad range of thought on Knowledge Management with no unanimous definition. The approaches vary by author and school. Knowledge Management may be viewed from each of the following perspectives:
- Techno-centric: A focus on technology, ideally those that enhance knowledge sharing/growth.
- Organisational: How does the organisation need to be designed to facilitate knowledge processes? Which organisations work best with what processes?
- Ecological: Seeing the interaction of people, identity, knowledge and environmental factors as a complex adaptive system.
In addition, as the discipline is maturing, there is an increasing presence of academic debates within epistemology emerging in both the theory and practice of knowledge management. British and Australian standards bodies both have produced documents that attempt to bound and scope the field, but these have received limited acceptance or awareness.
Knowledge Management has always existed in one form or another. Examples include on-the-job peer discussions, formal apprenticeship, discussion forums, corporate libraries, professional training and mentoring programs. However, with computers becoming more widespread in the second half of the 20th century, specific adaptations of technology such as knowledge bases, expert systems, and knowledge repositories have been introduced to further enhance the process.
The emergence of Knowledge Management has also generated new roles and responsibilities in organisations, an early example of which was the Chief Knowledge Officer. In recent years, Personal knowledge management (PKM) practice has arisen in which individuals apply KM practice to themselves, their roles and their career development.
The Customer Life Cycle (CLC). (I.K)
October 27, 2008, 7:25 pm
Filed under: Theory
Filed under: Theory
The Customer Life Cycle
The Customer Life Cycle (CLC) has obvious similarities with the Product Life Cycle (PLC). However, CLC focuses upon the creation of and delivery of lifetime value to the customer i.e. looks at the products or services that customers NEED throughout their lives. It is marketing orientated rather than product orientated, and embodies the marketing concept. Essentially, CLC is a summary of the key stages in a customer’s relationship with an organisation. The problem here is that every organisation’s product offering is different, which makes it impossible to draw out a single Life Cycle that is the same for every organization.
CRM is a term that is often referred to in marketing. However, there is no complete agreement upon a single definition. This is because CRM can be considered from a number of perspectives. In summary, the three perspectives are:
- Information Technology (IT) perspective
- The Customer Life Cycle (CLC) perspective
- Business Strategy perspective
From „Marketing Communications” by Jim Blythe (2000) (I.K)
October 27, 2008, 5:08 pm
Filed under: Theory
Filed under: Theory
Direct marketing
The American Direct Marketing Association defines direct marketing as follows:
Direct marketing is an interactive system of marketing which uses one or more advertising media to effect a measurable response and/or transaction at any location.
Bauer and Miglautsch (1992) offer an alternative definition, accepted by the UK’s Direct Marketing Association:
Direct marketing is a cybernetic marketing process which uses direct response advertising in prospecting, conversion and maintenance.
Direct marketing is not a mass medium: it communicates with consumers as individuals, rather than as a group of segments (Bird, 1993), and it is interactive, meaning that consumers respond directly (and measurably) to direct communications. The communications are targeted (as far as possible) only to those individuals who are likely to be interested in the offering.
Direct marketing relies on having good, up-to-date information about the individuals it seeks to approach. This implies using computer-based systems (sophisticated databases) to record information about potential customers. The other way in which computers contribute is in desktop publishing; tailored, personalised and high-quality communications can be sent out to prospects.
Key concepts of CRM (B.V.)
October 24, 2008, 5:30 pm
Filed under: Theory
Filed under: Theory
Key concepts of CRM are:
· Comprehensive strategy:
CRM at one end links itself to SCM – supply chain management and on the other hand the customer service and customer care. This makes a comprehensive strategy.
· Acquiring:
This is about. Using effective sales promotion methods, prospective buyer can be acquired. It is about developing new customer as well as converting competitor’s customers.
· Selection:
You can’t please all people at all times. You may not be able to serve and satisfy all the customers at the same time. There may be customers who may not be willing to have long time relationships with you. As a consequence you need to have selectivity in the customers as well.
· Retaining:
Once a right customer is selected, we need to provide the customer with a good product and a better service which exceeds the customer requirements. Only then can the customer be satisfied and retention of a customer can be possible.
· Partnering:
Partnership is about constantly striving to create better value for each other i.e. the buyer and the seller.
· Interactive communication:
A clearly planned and focused two way, interactive communication is a very essential ingredient of CRM. A meaningful communication will always be an Interactive Communication.
· Technology + people:
CRM is all about people and relating people to technology. This is all automation of people is all about!
· Mutually beneficial longterm relationship:
It is all about the long-term relationship of the buyer and the seller. This overall results in the mutual benefit of both resulting in a long-term relationship.
Customer delight needs to be created instead only satisfying the customer. Customer service is about giving facilities and services that the customer asks for, or delivering service that is expected in today’s competitive world. Most products require additional or long-term support from the organization. These traditional services include delivery, installation, lessons-in-usage, instruction manuals, repairs and maintenance etc. Customer care (and also customer delight) is going beyond the “expectation check list”. Customer care is being proactive in developing relationship with your customer. Always remember “Good customers are worth keeping for life”. Great services can create a great experience and customer delight.
Post Industrial Society (B.V.)
October 24, 2008, 5:06 pm
Filed under: Theory
Filed under: Theory
“Post-industrial society is a conception of late 20th century, which simply emphasizes the declining dependence of the societies on mass manufacturing industry and the increasing roles of service sector, knowledge and information technologies in production. By contrast the industrial society, which precedes post-industrial society, refers to the mass production (factory-based) as the dominant form of production. Definition regarding post-industrial era has come from Daniel Bell, who is also considered as the father of post-industrial society. He suggests that post industrial society includes the birth and growth of a knowledge class, change from goods to service sectors and change from blue-collar to white-collar occupations. For him, all of these could be based on an increasing dependence on science as a means of innovation as well as a means of technical and social change.”
crm definition
Customer Relationship Management (CRM) refers to the methodologies and tools that help businesses manage customer relationships in an organized way.
For small businesses, customer relationship management includes:
- CRM processes that help identify and target their best customers, generate quality sales leads, and plan and implement marketing campaigns with clear goals and objectives;
- CRM processes that help form individualized relationships with customers (to improve customer satisfaction) and provide the highest level of customer service to the most profitable customers;
- CRM processes that provide employees with the information they need to know their customers’ wants and needs, and build relationships between the company and its customers.
Customer relationship management tools include software and browser-based applications that collect and organize information about customers. For instance, as part of their CRM strategy, a business might use a database of customer information to help construct a customer satisfaction survey, or decide which new product their customers might be interested in.
