Customer Relationships

Customer Relationships - The communication and marketing strategies used to build connections with customers through the entire customer life cycle. Customer relationships are established and maintained with each Customer Segment.

A company should clarify the type of relationship it wants to establish with each Customer Segment. Relationship can range from personal to automated. Customer relationships may be driven by the following motivations:

• Get Customers
• Keep Customers
• Grow Customers

Awareness, interest, and consideration in the physical channel are primarily driven by two types of communication tactics: earned (or free) media and paid media.

• Earned (free) Media
  • Earned media is the free exposure a company generates. In the physical channel, it includes press releases, product reviews, editorial features and a range of "guerrilla marketing" tactics such as handing out fliers at trade shows where the company doesn't buy a booth. These tactics are often favored by startups because they're far less expensive than paid media efforts. Many consumer products find their first customers through free sample or trial programs or by handing out samples or discount coupons on street corners.
• Paid Media
  • Paid media is exactly what it sounds like: media exposure that's purchased on TV, blimps, direct mail or the web. This kind of activity can cost literally millions of dollars when rolled out, so customer discovery employs small-scale tests to see which tactic will deliver the best results. What does this mean? Test you marketing with small groups to see who responds best. Then implement the effective campaign more broadly.

Getting customers, or demand creation, has four distinct stages in the physical channel: awareness, interest, consideration and purchase.

1. Awareness lets potential customers know about your product or service (think TV commercials shouting "new airline" or radio ads saying, "Now you can fly cheaper"). It gets people thinking about the product or service.
2. Interest means the message is not longer being ignored even if the prospect isn't ready to act. Think of people saying, "I should try one of those low-cost airlines sometime," as a result of the initial awareness effort. One more push could move this propect to the consideration step.
3. Consideration follows when the message is powerful enough or contains a convincing offer that might lead to the thought, "Why don't I take JetBlue on my trip to Florida next month?" Consideration may take the form of a free trial where it's offered.
4. Purchase follows consideration. It's clearly the desired result of "get" activities.

As the "Get" customers exercise clearly illustrates, getting a new customer is an expensive process. Thus it's important to think now about how the company will keep, or retain, customers it's worked so hard to get. When customers cancel a subscription, never return to a supermarket, or close a corporate purchasing account, it's called "churn" or "attrition" (the opposite of retention!).

For any customer retention strategy to work, first the company must deliver on all its promises that got the customers to buy in the first place. Customers need to love the product or service, and every customer-facing aspect of the business model has to perform exceptionally, from customer service and support to complaint-handling, delivery, billing, and more. First, a steady stream of product upgrades and enhancements should always keep the product ahead of competition. By their nature, these are core-value-creation activities and should be addressed in the value proposition hypothesis.

---It's 5-10x cheaper to keep a customer than to acquire one.---

Simple "Keep Customers" Tactics to Consider:

• Loyalty Programs: How you will use loyalty programs to retain customers.
• Customer check-in calls: Put together a plan to call every customer, or every fifth customer, once a month or once a quarter simply to thank them for their business and see how they like the product.
• Launch a customer satisfaction survey: Whether on the web or by mail or e-mail, plan to check with customers about their use of and satisfaction with the product or service.
• Send product update bulletins: Create simple tip sheets or user notes on how customers are making the most of the product. (Send them to all users, and offer a prize for users whose tips are published or used later.)
• Monitor customer service issues: Customers who complain frequently are most likely to churn or leave. (Get proactive with these customers, fix their problems, and make them happy. Far fewer complainers should leave if they've had their problems addressed.)
• Customer lock-in/high switching costs. If it's relatively easy for your customer to switch from your products to your competitors', you'll probably have a higher churn rate. You may want to consider tactics for "locking in" customers to your product or solution (through long-term contracts, unique technology, or data that can't be easily transferred).

Longer-Term Customer Retention

Customer retention is effective only when the customers self-identify so they can be contacted by the salesperson, channel partner, or company representative charged with keeping them happy and coming back to buy more. As you learn more about individual customers over time, retention becomes increasingly individualized and targeted based on the observed and measured customer behavior.

Retention programs live or die by a close monitoring of customer behavior to learn who's staying and who's leaving and why.

Once a company has a customer, why not sell them more, since it costs less than acquiring new customers? Most startups think about the revenue they receive in their first sale to a customer, but smart companies think about increasing the lifetime sales from that customer. Measuring the lifetime value can be important when computing a startup's potential.

Your grow strategy will have two key components:

• get the customers you have to buy more
• get them to refer other customers to you.

In addition to this, "grow" tactics can include:

• "Upsell" offers such as "spend $25 more and get free shipping"
• In-pack promotional mailers of offers, coupons, and samples
• Specials or premiums only available to customers who meet with a sales rep

Vocabulary

• Customer Relationship

Additional Reading

• Pizza Hut's Triple Play
  • Pizza Facts
• Boogie Wipes
  • http://adage.com/article/cmo-strategy/nehemiah-blends-purpose-competition/301361/

Student Activity

For either Ikea or Patagonia, detail their strategy for Getting. Keeping. Growing customers.

• Explain the strategy and show visually how you would
  • Get
  • Keep
  • Grow