AACSB: Analytical thinking
90) The aim of customer relationship management is to create not just customer satisfaction, but customer delight as well. Explain.
Answer: Customer satisfaction cannot be taken for granted. Since brand loyalty is dependent upon strong customer satisfaction, companies strive to retain, satisfy, and even delight current customers. Firms create customer delight by promising only what they can deliver and then delivering more than what they promise. They also create emotional relationships with key customers. Delighted customers make repeated purchases and become customers for life. More importantly, they also essentially become an unpaid sales force for the firm as "customer evangelists" who tell other potential customers about their positive experiences with a product.
Diff: 2
LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.
AACSB: Analytical thinking
91) Explain, with examples, the different types of relationships that a company can build with its customers.
Answer: At one extreme, a company with many low-margin customers may seek to develop basic relationships with them. For example, Proctor & Gamble's Tide does not phone or call on all of its consumers to get to know them personally. Instead, it creates relationships through brand-building advertising, public relations, and social media presence. At the other extreme, in markets with few customers and high margins, sellers want to create full partnerships with key customers. For example, P&G sales representatives work closely with Walmart, Kroger, and other large retailers that sell Tide. In between these two extremes, other levels of customer relationships are appropriate. Beyond offering consistently high value and satisfaction, marketers can use specific marketing tools to develop stronger bonds with customers. For example, many companies offer frequency marketing programs that reward customers who buy frequently or in large amounts. Airlines offer frequent-flyer programs, hotels give room upgrades to their frequent guests, and supermarkets give patronage discounts to "very important customers." Other companies sponsor club marketing programs that offer members special benefits and create member communities.
Diff: 2
LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.
AACSB: Analytical thinking
92) Compare and contrast customer-managed relationships and consumer-generated marketing.
Answer: Today's consumers have more information about brands than ever before, and they have a wealth of platforms for airing and sharing their brand views with other consumers. Thus, the marketing world is now embracing not only customer relationship management, but also customer-managed relationships. Greater consumer control means that companies can no longer rely on marketing by intrusion. Instead, marketers must practice marketing by attraction – creating market offerings and messages that involve consumers rather than interrupt them. Hence, most marketers now augment their mass-media marketing efforts with a rich mix of direct marketing approaches that promote brand-consumer interaction. For example, many brands are creating dialogues with consumers via their own or existing online social networks.
A growing part of the new customer dialogue is consumer-generated marketing, by which consumers themselves are playing a bigger role in shaping their own brand experiences and those of others. This might happen through uninvited consumer-to-consumer exchanges in blogs, video-sharing sites, and other digital forums. Increasingly, companies are also inviting consumers to play a more active role in shaping products and brand messages. One drawback of this process is that harnessing consumer-generated content can be time-consuming and expensive.
Diff: 2
LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.
AACSB: Analytical thinking
93) Define customer equity, and explain why it is important to a company.
Answer: Customer equity is the sum of the lifetime values of all the current and potential customers of a company. Customer equity is dependent upon customer loyalty from a firm's profitable customers. Because customer equity is a reflection of a company's future, companies must manage it carefully, viewing customers as assets that need to be maximized. It is important that companies not only acquire customers but also keep and grow them. When companies create profitable customers, they earn a greater share of their purchases, and capture their customer lifetime value.