CUSTOMER VALUE:

MEANING AND DEFINITIONS

Once the new customers acquired, the organization must estimate the value of its customers.

Customer Value refers to the sum of benefits that an organization promises to customer if he/she

purchases the product or service. It may be defined as the sum of advantages that an organization

commits to provide to its customers when they purchase a product or avail a service. In terms of

CRM, value can be defined as the difference between advantages (benefits) received from a product

or service and the sacrifices made to have those advantages. Organizations offering better value to its

customers are able to have competitive edge over its competitors Of course, the customers will prefer

the organization that will offer better customer value

Customer value is directly related to customer satisfaction that a product or service delivers in return

to the price charged from a customer. Numerous strategies can be adopted to deliver customer value

and the best way is to offer quality products along with excellent customer service. Besides that taking

customer feedback, offering solutions to their problems, resolving their queries etc. can further

enhance value manifold for organizational customers.

Calculation of Customer Value depends upon costs associated, quality, services, price, demand and

availability of product or service. Based on the customer value, the organizations differentiate their

products or services from that of competitors. It may be quite challenging for the organization to

calculate customer value, as it is a qualitative concept

Following definitions would further define the term 'Customer Value' in precise terms:

In the words of Mohanbir Sawhney, "Customer value is the perceived worth of the set of benefits

received by a customer in exchange for the total cost of the offering, taking into consideration

available competitive offerings and pricings."

Woodruff defines customer value as, "Customer's perceived preference for an evaluation of those

product attributes, attribute performances and consequences arising from use that facilitate achieving

the customer's goals and purposes in use situations."

From the above definitions following crucial points can be summed up:

 Organizations can differentiate themselves from competitors by offering better customer

value.

 Focus can be diverted to the acquisition and retention of the most valuable customers.

 Organizations must understand customer requirements and offer the product accordingly to

create value.

It is quite challenging task for an organization to offer desired value to customer and

maintaining long term relationships.

 Organizations must know and understand the difference between desired and real value.

 Employees must be involved for contributing to customer value.

SOURCES OF CREATING CUSTOMER VALUE

Organizations promise to deliver value in terms of product advantages to their customen through a
business statement, known as Customer Value Proposition (CVP). Organizations can crem value via

different sources such as:

To be very precise, value can be generated from following components:

1. Operational Excellence: Excellence in operations is the most widely used strategy for creating

customer value. Operational excellence is a philosophy of making continuous improvements in the

organizational operations/processes by focusing on the customer needs and expectations.

2. Product Leadership: Offering quality products and services is another most accepted way of

creating and delivering customer value. This requires continuous research and development, product

innovation and customer feedback collection.

3. Customer Intimacy: Understanding and fulfilling customer requirements is a creative source of

delivering customer value. Organizations have to conduct in-depth market analysis to know and

understand what customer wants. Effective customer interactions can help in collecting data.

4. Service: Organizations can create value by delivering excellent customer service via help desks,

service centers, customer care numbers etc.

CUSTOMER VALUE MODELLING (CVM) AND PROPOSITION (CVP)

Value creation process includes:

 Defining the value

 Developing the value

 Delivering the value

Value Modelling involves predicting the value of organizational customers over a given time period.

It deals with the value of customer's other features like ability to bring in more profitable customers or

potential to be a more profitable customer. Customer Value Model includes estimation of customer

costs, customer revenue, risk and attrition to drive a value for each customer. Value Modelling is only

as accurate as the customer's data is rich.

In other words, customer value model is a data driven representation of the worth, in monetary terms,

of what a company is doing or could do for its customers. This model is a tool, where the choice of a

given product, service or offering is based primarily upon the amount of customer value created.

Following are the key points in Value Modelling:

 CVM is the quantified statement of value and benefits for a customer.

 Product features and capabilities are also transformed into dollars.

 There are multiple methods and approaches used to create customer value models. These

approaches depend upon substantial customer interaction and onsite interviews and

observations of customers' challenges related to products and services.

Customer Value Proposition is widely used in contemporary business organizations. It may be defined

as a business statement that describes why a customer should purchase a specific product. It is the

summary of advantages that a customer would experience after purchasing and using organizational

product. It is a crucial tool that an organization publicizes to know how its product would be valued

by its customers. CVP should describe the key aspects of product and must be revised from time to

time.

CUSTOMER VALUE FRAMEWORK (CVF)

Customer value framework involves the identification of customer requirements for creating value, so

that customers can be retained for long. It is necessary for an organization to know customer

requirements by conducting surveys. CVF is based on two key dimensions of Customer and Supplier

Organization, which are:

(i) How well customers know what they want

(ii) How well supplier know what customer wants

Four scenarios of Customer Value Framework are as follows:

1. Delivery Quality: This box represents the clarity of needs to customer as well as the organization.

Here the focus is on delivering the quality. The key needs of customers are well understood by both

parties. Customer value is measured and reflected in delivery quality, making the service efficient,

robust and timely. Here, the customer value can be enhanced by building a congenial relationship with

the customer through all customer touch points. Here, unique experience is created for customers.

2. Customer Intimacy: This box depicts that customer needs are unknown to the organization Supplier
must discover what the customer needs by customer intimacy i.e. getting to know customer better.

Customers' needs must be observed, examined and recognized through trust and confidenceNeeds

must be captured through multiple interactions and touch points.

3. Orchestrated Customer Learning: Customer is made aware about the solutions that organization

knows through informative workshops, interactions, experiences, discussions etc. Supplier has to

make the customer learn through Orchestrated customer learning. Customer's hidden needs are

revealed and they are convinced/guided through diplomatic skills of the supplier.

4. Value Net Deep Drive: Here, both parties don't know needs and maximum synergy and value can

be co-created. Net deep drive is a model of creating and discovering value. Parties may not know

needs due to ignorance.

CUSTOMER'S PERCEIVED VALUE (CPV)

Customers' perceptions are the beliefs shaped by the consumers regarding a product. Customer

Perceived Value is the value that a customer perceives about a product or service based on his

expectations and perception regarding its performance and all the costs of an offering. CPV is based

on the difference between what customer expects to get and what he/she expects to pay Customer

satisfaction depends upon the customers' expectations prior to purchase or use a product/service and

customer's relative perception of the performance of that product after using it

Customer's Perceived Value (Perceived Performance + Customer's Expectations) - Total costs

incurred on purchase
CUSTOMER EXPECTATIONS

Customer expectations relate to how a consumer anticipates the product to perform. The customers

may have variety of expectations regarding the value a product/service will offer. Expectations are

crucial, as actual results are compared with the expected performance

Expectations include:

 Expectations about the cost

 Expectations about the nature of product

Efforts in obtaining benefits

 Expectations of social values

 Emotional expectations

Customer expectations are shaped due to various determinants such as:

1. Past Performance: When the consumer has already used/availed the product or service, his

expectations are shaped according to the experience he got from the previous purchase.

2. Word of Mouth: Consumers may get feedback about the product or service from their peer groups,
friends or any other associates, who have already used the same productPositive feedback increases

the level of customer expectations.

3. Reviews: The reviews related to a particular product or service can be seen from social networking

sites, magazines or other publications of consumer associations. These reviews also have a major

impact on customer expectations.

4. Competitor's Views: Competitors' view about the product is a very informative source to know

about a product, as it provides a critical idea about the working and utility of a product or service.

5. Seller's Promise: Customer expectations are also shaped by the claims made by seller regarding a

product/service. If the seller doesn't fulfill the promises made, a consumer can file a suit in the

appropriate forum or commission

CUSTOMER LIFETIME VALUE (CLV)

Customers are the greatest assets for any business, as they are the reason of firm's existence. The

current customers, who are loyal and will remain future customers as well, are the most important

ones. Organizations utilize the customers' information to maximize their lifetime value. CLV offers a

lifetime view of customer and gives a clear idea about whom company is targeting. To be very

specific, CLV depicts how much each customer is worth in monetary terms.

CLV is the marketing metric that projects the value of a customer over the entire history of that

customer's relationship with the organization. It is the current value of likely future income flow

generated by an individual customer. In simple terms, CLV is the present value of future profits.

According to Wikipedia, "Customer Lifetime Value is the prediction of net profit attributed to the

entire future relationship with a customer."

Another definition states that CLV is the net present value of total profits that a company could

realise with the average new customer within a given customer segment during a given number of

years. It is the true value of a customer that can be considered as the most appropriate measurement of
how much an organization would/should be willing to invest to acquire or retain that customer. For an

organization, a profitable customer is the one that overtime will fetch a revenue that exceeds by an

expected amount of organizational costs (in terms of attracting, selling, servicing and retaining the

customer over time). Such customers recommend the organizational offering to their friends, relatives

and others and have higher CLV

Objectives of CLV

Customer lifetime value is not just a number, but a way of thinking and doing business. This concept

is applied with the following objectives:

 The concept of CLV transforms a business' perspective to a great extent, as organization can

estimate the current value of all of its customers.

 It helps in analyzing the customer's behavior, which further assists in maximizing

organizational profits.

 Organization can identify the customers with greatest potential (highest CLV) over time.

 By calculating the current value of customers, organizations can segment them in different

categories on the basis of their lifetime values and can target the customer with higher CLV.

It helps the organization to concentrate on more profitable customers.

 Different marketing strategies can be envisaged for different customers segmented on CLV

criteria e.g. any complains made by the customers with more CLV can be solved at a faster

pace as compared to others.

 Special strategies can be designed for customers with less profitability, so that they get

converted into more loyal and more profitable customers.

 Organizational resources can be allocated on the criteria of customer lifetime value.

 CLV also assists in retaining the existing customers. As it has been researched that acquiring

a new customer costs a lot more than retaining the existing ones, therefore, it is advisable to

get their feedback and know their satisfaction level. Satisfied customers will be more loyal,

they will buy more and would be less sensitive to competitive offerings.

Customer lifetime value can be increased by increasing profits generated from those customers.

Following strategies can be used for enhancing CLV:

 Reducing the rates of customer defection

 Delivering them personalized services

 Upsell or Cross sell to the same customer

 Motivating existing customer to buy more and buy only from the same organization

 Making the customer satisfied, so that he/she recommends the organizational offering to

his/her friends, family, neighbors and others, which will further increase their lifetime value

Challenges in Calculating CLV

CLV is an abstract concept as it measures how much each customer has a worth in monetary terms

and how much the organization should be willing to spend to acquire each customer. This calculation

would depend upon the nature of customer relationship programme. Therefore, there can be

challenges such as:

 New Organization: Calculating the customer worth may be a huge challenge for newly

established organizations, as they don't have any past data which can show the customer

value.

 Lost Customers: There may be some customers who were loyal, but due to certain conditions

they got disconnected from the organizations. The challenge would be whether the include

them in analysis or not.

 Selection of Formula: There may be various formulae to reach at CLV. Whether to include

certain components or not can be an issue e.g. value of referrals to be included or not, whether

to include gross revenue or net revenue, will there be a need for customer segmentation or not
etc.

 Unavailability of Data: Data may be insufficient or unsuitable for the calculation of accurate

CLV.

CUSTOMER EXPERIENCE

Customers purchase various products and services from an organization. Experience is the total

impression that he/she gets after having exposure to products, services, people, processes and other

organizational aspectsIt is the combined experience that a customer perceives about organization's

offerings and processesExperience largely depends upon the products attributes delivered to a

customer. In simper terms, Customer experience is the overall impact that a customer has from all

interactions with an organization.

Positive experiences lead to satisfaction which in turn results in customer loyalty towards an

organization. Customer experience is indispensable component of CRM, an organization must focus

on delivering high level of customer experience. Positive experience can be given by various ways

such as:

 Offering effective customer interactions

 Giving quality goods and services

 Having differentiated offerings for that of competitors

3D Approach of Customer Experience

To deliver effective experience to customers, organizations make use of 3D approach:

1. Designing: The organization must have primary focus on designing the right offer for its customers.

The product that has to delivered to customers must be right in terms of quality, quantity, price,

service, safety etc.

2. Delivering: Delivering value to the customers must be at the priority list at every stage of product

design. Value must be enhanced by offering various customer advantages such as after sale services,

easy installments, feedback, excellent customer support etc.

3. Developing: Organizations must consider the aspect of developing its own potential, which means

continuous improvements must be done in the products and services. Standards must be designed as
benchmarks and customer feedback should be welcomed to transform offerings.

CUSTOMER EXPERIENCE MANAGEMENT (CEM)

Managing the customer experiences is very vital for any organization irrespective of its size and

nature. CEM has emerged as a domain of CRM, which deals with managing every customer

interaction optimally that he/she has with the organization. It includes collection of processes used by

an organization to record, analyze, and organize every experience of customer.

Aspects of CEM

Customer experience Management includes three crucial aspects:

1. Touch Points: These are the points when a customer comes into contact with the organization

through its products, services, people, processes, places, channels, communications etc. It must be

ensured that customer has similar experience at all touch points

2. Moments of Truth: There are certain special moments or events that create a deep impression about

the organization in the mind of a customer. The moment of truth occurs when a customer interacts

with the organization through touch points. It is experience in moment of truth that shapes the

direction of customer's opinion about the organization

3. Engagement: Engagement with the customer at crucial times helps in developing a long term

connect. Intimacy with customers, listening to their complaints, offering them solutions is must to

offer unforgettable experience.

METHODS OF KNOWING CUSTOMER EXPERIENCE

Organizations make use of numerous methods to know what experience a customer has got from

offerings, which have been discussed here:

1. Mystery Shopping: In this method, organizations hire some individuals who behave like customers.

They observe the actual customers and record their shopping experience with the organization.

Mystery shopping is a tool used in marketing research to understand the experience of customers. The
hired individuals may be asked to make audio or video recordings of actual customers, so that

organizational officials can analyze them later and work on delivering better customer experience in

the future.

2. Process Mapping: This method deals with the graphic presentation of processes to be performed for

developing better customer service. Organizational experts refine the process of excellent service and

a graphical presentation of the same is designed to offer a better understanding.

3. Experience Mapping: It is a method under which organization makes use of sophisticated tools to

have in-depth understanding of customer experience and customer touch points. Generally used

methods to learn about customer experience include:

 Focus group method

 Executive meetings

 Interviews

 Telephonic interviews

Once the customer experience is understood, organization finds ways to know the gap between actual

customer experience and desired customer experience. And then strategies for closing these gaps are

envisaged.

4. Observation Method: Organizational staff directly or indirectly interacts with customers to know

their experience with products and services

5. Customer Activity Cycle: Customer undergoes various stages while taking a purchase decision

such as information search, analysis of options, making purchase decision, post purchase reaction. In

this method, organizations record customer experience at every stage of customer activity cycle and

work on the methods to further improve this experience at every stage.

IMPROVING CUSTOMER EXPERIENCE

1. Regular Communication: To enrich the customers' experience, organizations must communicate

with their customers on regular basis. Communications can be made via SMS, emails, annual reports,

advertisements, brochures etc.

2. Unique Product Features: The best way to enhance customer experience is by giving them the

product, which offers unique features and is better than the competitors in clear terms. Variations can
be introduced in product size, product shape, quality, quantity, packing, distribution strategies,

product availability etc.

3. After Sale Service: By adding the feature of unique services, organizations can enhance customers'

experience manifold. Listening to their complaints, offering them reasonable solutions, making the

company representatives available, assisting in installation and replacement etc. all these services can

create an emotional connect between the customers and organization.

4. Customer Centric Training: Besides, product features and services, customer experience is largely

influenced by the way a customer is dealt by the service provider/representative. The quality of sales

representatives, how they greet the customers and their behavior have a deep impact on the customer

experience.

5. Electronic Media: Organizations must make use of internet and other technological advancements

to improve customer experience.

Electronic media can assist in discharging many responsibilities, such as:

 Promotion of the products and services worldwide

 Virtual view of offerings

 Easy payment terms

 Saving in time and effort

 Attractive organizational profile display

 All these strategies assist in enhanced customer experience

CUSTOMER SATISFACTION:

MEANING AND DEFINITIONS

The organizations need to know the level of satisfaction they are offering to their consumers.

Measuring customer satisfaction provides an indication regarding how successful the organization is

at providing products and/or services according to the needs of customers.

The following are some of the widely accepted definitions of the term 'Customer Satisfaction':

According to Accounting Dictionary, "Customer Satisfaction indicates the fulfillment that customers

derive from doing business with a firmIn other words, it is how happy the customers are with the
transaction and overall experience with the company."

According to Paul Farristhe number of customers or the percentage of total customers, whose reported

experience with the firmits products and its services exceeds specified satisfaction goals. In the words

of Philip Kotler, Customer Satisfaction is a person's feeling of pleasure or disappointment which

resulted from comparing a product's perceived performance or outcome against his/her expectations.

CHARACTERISTICS OF CUSTOMER SATISFACTION

1. Individual Focus: Customer satisfaction is measured at the individual level, but it is always reported

at an aggregate level. It is measured along various dimensions.

2. Subjective: The state of satisfaction depends on a number of psychological and physical factors

which becomes evident with the behaviors such as return and recommendation to others. It will vary

from person to person and from product (service) to product (service).

3. Abstract: Customer satisfaction is an abstract concept which varies from customer to customer, but

businessmen can assign numbers to it. Customer satisfaction may be defined as the number of

customers or percentage of total customers, whose reported experience with a firm, its products or its

services exceeds specified satisfaction goals.

4. Goal Oriented: The level of satisfaction depends upon the satisfaction goals set by consumers. They

judge a product on a set of norms and attributes. Customers may set any goals or expectations for

themselves before they buy any product. These goals will vary among different products and services

and among different customers.

5. Indicator of Loyalty: Customer satisfaction is a key indicator of customer's future purchase

intentions and loyalty.

6. Measure of Organizational Success: Customer Satisfaction is a measure of how far products and

services sold by a company meet the customer expectations. It is a key term used in managing and
monitoring a business. Therefore, a company should continually seek to get true customer feedback to

assess consumer satisfaction.

7. Time Period: In some products, customer satisfaction may be created over time e.g. in case of

durables. Customer satisfaction can evolve over time, as a product is used or service is availed many

times.

MODEL OF CUSTOMER SATISFACTION

Following concepts design a model of customer satisfaction:

1. Customer's Perceived Value (CPV): It is the value that a customer perceives about a product or

service based on his expectations and perception regarding its performance and all the costs of an

offering. CPV is based on the difference between what customer expects to get and what he/she

expects to pay.

Customer's Perceived Value =(Perceived Performance + Customer's Expectations) -Total costs

incurred on purchase

Therefore, the determinants of Customer Satisfaction are:

(i) Perceived Performance: Customers may have different types of perceptions/opinions about the

product such as:

 Ideal: The product or service may prove to be an ideal alternative for satisfying a specific

consumer need.

Expected: The product or service may perform as expected by the consumer for a satisfying a

specific need

 Minimum tolerable: The product or service may atleast satisfy the basic need for which it had

been bought.

 Desirable: The product may be desirable for consumers to a certain extent.

(ii) Customers' Expectations about the Product: Customer expectations relate to how a consumer

anticipates the product to perform(refer to topic Customer Expectation in chapter 3).

(iii) Total Customer Cost: It is the perceived bundle of costs that customers expect to incur in

evaluating, using and disposing of the product/service. It includes various costs such as monetary

costs, time cost, energy cost and psychological costs. In simple terms, customers' perceptions are the

beliefs shaped by the consumers regarding a product.

2. Product Purchase: On the basis of perceived value, customer takes a decision to buy a product or

avail a service.

3. Outcomes: Purchase decision of the customers leads them towards certain outcomes. These

outcomes or results can be known by taking feedback from the customers. It would help the seller in

knowing the level of customer satisfaction. In addition to obtaining spontaneous feedback, listening to

the voice of the customer is essential. The feedback on outcomes can be taken through the following

ways on a valid and reliable scale:

 Interviewing the customers

 Observing the customers in store

 Sending them questionnaires

 Telephonic interviews

 Telling them to rate the organization

4. Customer Satisfaction vs Dissatisfaction: The feedback would reveal whether the customer is

satisfied or dissatisfied with the purchase decision, which will shape his/her future purchase decisions.

(a) Customer Satisfaction: Customer satisfaction is a leading indicator of purchase intentions and

customer loyalty. Satisfaction may lie in any of the following levels:

 Satisfaction: It is the level of satisfaction where the product attributes are sufficient enough to

satisfy an expectation.

 Customer Delight: It is the level of satisfaction that goes above and beyond customer

expectation to satisfy a desire. In terms of market research, a satisfied customer's contentment

lies somewhere between their expectations and the desired results. A delighted customer,

however, will feel that the desired results have not only been met, but also exceeded.
 Loyalty: The product or service has satisfied the customers so much that they will prefer the

organization's product over any competitor.

(b) Customer Dissatisfaction: Dissatisfied customers may file complaints against the company or its

products in legal courts/forums. Some may also choose to handle the complaint privately

METHODS OF MEASURING CUSTOMER SATISFACTION

1. Survey Mails: Survey mailing is the primary method used by organizations to measure the

customer satisfaction. Customers are mailed certain messages to check the level of their satisfaction

such as sending emojis to see their reactions or asking them to rate their experience on 5 point scale.

2. Questionnaire Method: Detailed questionnaires are designed which are personalized according to

individual customers or customer segments. Customers answer the questions and their satisfaction is

measured by quantifying their responses.

3. Customer Reviews: Customers post their reviews on company websites related to their experience.

These responses are recorded in customer data base through their profiles. These reviews are collected

and analyzed by the organizations. Some organizations (e.g. Airtel) ask customers to share the 'happy

code' after satisfactory service is received

4. Tracking Customers: It deals with keeping the track on customer actions e.g. whether the customer

purchases the organizational product again or shifts to the competitors' products. It clearly shows the

satisfaction of customers from organizational dealings.

5. Pop Up Surveys: E-businesses make use of pop-up surveys to know various aspects such as:

 From where customers got information about organization's web site?

 What attracted them to revisit the web site?

 What made them take a decision to purchase or not purchase the product/service?

 What they feel about connecting the company for long?

WAYS TO IMPROVE CUSTOMER SATISFACTION

1. Customer Focus: The customer must be at the focus in every stage of sale and distribution. Right
from planning about the design of the product, deciding the 4 Ps (Product, Price, Place, Promotion),

till the full commercialization of the product, customer needs must be kept in mind.

2. Handling Grievances: Customers' grievances must be handled economically and in a speedy

manner. Complaints must be sought out at priority and view point of customers must be heard to

improve their satisfaction level.

3. Regular Feedback: Customer feedback plays a crucial role in improving their satisfaction level.

Feedback can be taken by interviewing the customers or by observing them buying at the company

store.

4. Keep Promises: The customers must be delivered what and when has been promised. The quality

and quantity of products/services must be the same on which contract has been created. The delivery

should be made in time and in manner specified by the customers.

5. Understanding Specific Needs: Every customer is crucial, and can lead to new business by his

positive word of mouth. Therefore, the needs of each one of them must be known and well met. Some

customers may have specific needs, which the company must understand and fulfill.

CUSTOMER ACQUISITION:

MEANING

A customer is like an 'Opportunity of Business' for the organization. Managing present and potential

customers is one of the most crucial factors to run a business successfully. The use of CRM is not

only for the existing customers but is also beneficial in acquiring new customers. The term 'Customer

Acquisition' refers to the process of finding, qualifying and securing new clients/ customers. It is a

process of locating the prospects, attracting them and converting them into actual customers.

Customer Acquisition involves various steps and measures taken by an organization to acquire or gain

customers. It is the process of acquiring new customers/clients for an organization or converting

prospects into actual customers. Organizations must adopt a systematic and sustainable Customer

Acquisition strategy to tap suitable leads. They need to know and understand Customers' needs and

expectations and offer products/services accordingly. Defining and offering maximum customer value

assists in acquiring potential customers and retaining existing ones.

MEANING OF A NEW CUSTOMER

Customers are the individuals or groups who purchase the organization's products or services. But

when a customer purchases the organization's product for the first time, that customer is known as a

'New Customer' for the organization. Therefore, a new customer is the one who has never made any

order to the same organization earlier. A new customer is the one who belongs to any one of the

following categories:

(i) Customer New to the Organization: This category includes the prospects who never dealt with the

organization and are entirely new to it. These customers might be purchasing the similar

product/services earlier from competitors. These customers may not be loyal as they may switch to

other organizations if they get better offers. Organizations have to invest on rigorous promotion and

communication tools if they want to attract these new customers

(ii) Customer New to A Product Category: Some customers buy the organization's products but it may

be their first experience for a new product category. Therefore, these customers are existing customers

for the organization but would be called a 'New Customer' for a specific product category. Demand

for new product category arise because customers may identify a new need or they opt for finding

new solution to the existing need. For example, a customer is already using Xiaomi mobile phones but

is going to buy Mi laptop for the first time.

CHARACTERISTICS OF CUSTOMER ACQUISITION

Customer Acquisition involves identifying processes and procedures to find, identify and win new

customers. Acquiring new customers is a need of all organizations irrespective of their size and

nature. Following are certain characteristics of New Customer acquisition:

 It requires a systematic approach to acquire new customers by the sellers.

 Acquisition is a continuous process.

 Process of customer acquisition is more challenging and expensive as compared to retaining

an existing customer.
 New customer is an added source of revenue for an organization.

 For making the process of customer acquisition successful, the organization must focus on the

needs and expectations of the prospects. A good rapport must be established with customers.

METHODS OF NEW CUSTOMERS ACQUISITION

1 Advertising:

In this ad world, advertising is advocacy. In the words of Britannica Encyclopedia, 'advertising is a

form of communication intended to promote the sale of the product or service to influence public

opinion, gain political support or to advance a particular product. According to American Marketing

Association "Advertising is any paid form of non-personal presentation of ideas, goods or services by

an identified sponsor." Advertising is one of the widely used methods to attract new customers, which

are geographically spread. It leaves long term impression in the minds of existing and potential

customers.

FEATURES OF ADVERTISING

Advertising reaches the prospects faster than any other method. It has the following features:

 Mass Communication Process: Organizations use advertising to communicate the message to

the large target audience. Advertisements reach masses in no time. It has been researched that

within a fraction of minute, or few seconds, a manufacturer can draw attention of 850 million

people on national network advertising program.

 Informative: Every advertisement is a piece of information to the listeners, readers and

potential customers. An effective advertisement announces the arrival of a new product to

existing customers or same products/services to new customers. It also talks about special

features and explains the best use of the products/services. Therefore, advertising helps the

hesitant and undecided prospects to make the final decision to buy or not.

 Persuasive: Persuasion is the power of advertising. Advertising, by its very nature, is

influential. Major function of advertising is to convince the potential buyers. A logical

process of persuasion known as A-I-D-A (Attention, Interest, Desire, Action) formula is

followed in advertising.
 Competitive: Advertising is a successful strategy in today's world of competition. There are

numerous organizations offering similar products and services. Advertising assists them in

pushing their products to new customers and fetching profits through customer satisfaction.

 Paid Form: Advertising is a paid form of promotion. If it is not paid for, it may be publicity,

or propaganda or rumor. Advertising as an act of persuasion is deliberate and planned one.

Cost involved in advertisement is generally very high but cost per exposure come out to be

quite reasonable.

Identified Sponsor. Every advertisement is sponsored by a manufacturer or dealers on behalf

of manufacturers and the identity of sponsor is always known. The advertisers don't hide their

existence and build their corporate image.

 Image: Customers take advertised products positively. It builds brand image of an

organization and its products in the eyes of prospective customers. It helps the organization to

attain competitive advantage through higher sales and profit image.

 Impersonal: In the words of Philip Kotler "advertising is an impersonal presentation and

promotion of ideas, goods or services by an identified sponsor".

 One Way Communication: Advertising is a form of one-way promotion. The content is

advertised via various advertising media and customer's feedback can't be taken on the spot.

However, the effect of advertising can be noticed through increased level of consumer

awareness, changing attitudes and opinions or trend of product sales.

ROLE OF ADVERTISING

Advertising, as a powerful technique of promotion has been doing wonders in the domain of tapping

widespread customers. Ads are quite capable of influencing the course of consumption, process of

production, enlarging the exchange and diversifying the distribution. Role of advertising can be seen

under following points:

 Advertising updates the target market (potential and actual customers) about new products.

 It maintains the existing customer market and helps in exploring new ones.

 It assists the customers to know about new uses of an existing product.

 It controls product price and also informs the customers about any changes in price.
 The ultimate aim of advertising is to satisfy the needs of consumers by transferring the

benefits of productive efficiency to the final users.

 It reminds the potential customers about the product again and again.

 It acts as a silent salesman who guides potential consumers.

 It creates a colorful background to attract the potential customers. Sometimes the attractive

functions of product are also made part of advertisements.

 Advertising reduces fear in the minds of potential customers. It instills confidence and

initiative. It also rectifies the false impressions in the minds of customers.

 It acts as driving force in decision making for potential customers. It reduces the confusions

and assists the customer to switch over to the desired brand.

 Advertising ensures better quality products at reasonable prices. It also facilitates retail price

maintenance.

 It saves good deal of time for consumers. Customers are made aware about the place where

they can buy the products.

2 Sales Promotion:

Promotion has been defined as "any identifiable effort on the part of the seller to persuade potential

buyers to accept the seller's information and store it in retrievable form". Sales Promotion tools tend

to stimulate new attitudes towards the promoted product or service through the lure of getting

something for nothing.

According to Philip Kotler, "Sales promotion refers to a variety of short-term incentives to encourage

trial or purchase of a product or service."

According to AMA, Sales Promotion includes, "marketing activities other than personal selling,

advertising and publicity that stimulate consumer purchasing and dealer effectiveness such as display,

shows and exhibitions, demonstrations and various non-recurrent selling effort in the ordinary

routine."

In the words of W.J. Stanton, "Sales Promotion includes all the promotional activities (other than

advertising, personal selling and publicity) that are intended to stimulate customer's demand and to

improve middlemen's marketing performance".

Organizations use various sales promotional tools such as contests, premiums, coupon draw, free

samples etc. The aim of these short-term incentives is to boost up the sales and inspire the customers

to respond.

CHARACTERISTICS OF SALES PROMOTION

1. Irregular and Non-Recurring Activity. Sales promotion is an irregular and non-recurring activity to

improve the sales volume of the firm. It does not involve the routine marketing activities like

advertising, personal salesmanship and publicity. It is occasionally used by the company in certain

specific conditions like fall of demand, decline in profits, stiff competition in the market or to

introduce the new product. New customers can be acquired easily with these sales promotional

activities.

2. Scope: Sales promotion plays a supportive role to promote the product. It is supplementary activity

to advertising and personal selling.

3. Motivation: The basic object of sales promotion is to motivate the new customers to opt for

organizational offer. Sales promotion offers attract the attention of potential buyers.

4. Variety of Tools: Sales promotion includes various tools to bring the customers at the point of sale

such as the display, shows and exhibitions, demonstrations, price-off, free samples, coupons,

premiums and prizes etc.

5. Speedy Response: Sales promotion tools are meant to stimulate speedy response.

6. Objectives: The prime objective of sales promotion is to bridge the gap between advertising and

personal salesmanship. It helps to establish a better coordination between these two wings of

promotion.

7. Short-Period Effect: It is a technique which has a short period effect on the buyers. But it is an

objective oriented technique to get increased sales during that short time period.

8. Personal and Impersonal Nature: Sales promotion includes both personal and impersonal activities.

Personal activities include premium, samples, demonstration, training, repairing etc. On the other

hand, impersonal tools include sales contests, trade fairs and exhibitions.

ROLE OF SALES PROMOTION

Sales promotion activities are undertaken to achieve the following objectives:

 Sales promotion helps in gaining attention of new customers by communicating variety of

short-term incentives such as free samples and discounts.

 New customers are motivated to switch over to the organizational products rather than using

competitor's products.

 Sales promotion tools are most often used to induce the existing customers of a firm to buy

more e.g.offering three products at the cost of two.

 Products having seasonal demand may be sold through promotions to stabilize their demand

throughout the year.

 A promotion can be a way to reach a new segment of the market.

 Sales promotion can help in introducing a new product to the marketplace.

 Promotional incentives tie the buyer to a seller. Retailers can encourage stores loyalty through

special sales offers.

 It is through the sales promotion that the consumers get number of incentives- both cash and

non-cash.

 It build brand loyalty.

3. Public Relations (PR):

In the words of Philip Kotler, "Public relations refers to the variety of programs designed to promote

or protect an organization's image or its individual products." Public relation is an efficient tool in

building awareness regarding organization's products/services among public by generating stories in

media. Once the story is in circulation, PR can establish credibility and create a sense of enigma

among sales people as well as dealers to boost enthusiasm. It is much more cost-effective tool than

other promotional activities.

FEATURES OF PUBLIC RELATIONS

Public Relations has the following characteristics:

(i) Non-Personal Communication: Public relations is a non-personal communication technique that

promotes organization's image in the eyes of public

(ii) Non-paid: This is a non-paid form of promotion. Generally, this promotion is in the form of news

or journalistic comments regarding an organizational product or service.

(iii) Directed at Large Number: This technique is meant to reach out to a great extent of people. i.e.
public. Public relation reaches a large number of prospects.

(iv) Image Building: Public relations assists the organization in building strong image by building

good relations with public through favorable publicity. It also helps in handling unfavorable gossips,

stories and rumors.

(v) Dramatization: Public relations presents a specific pre-designed image of a company or product in

the market.

ROLE OF PUBLIC RELATIONS

 Public Relation plays the following roles for an organization:

 It reaches large number of customers that may not be connected with advertising and public

relations.

 Public relations is an authentic way of promotion. Customers take this promotion method to

be more authentic and credible, as information travels via news, stories etc.

 It is a powerful tool to portray the image of an organization and its products/services

positively.

4 Personal Selling:

According to J. R. Evans and B. Berman, "Personal selling is the part of promotion that involves an

oral presentation in a conversation with one or more prospective buyers for the purpose of making a

sale." In the words of E.G. Belch and A.M. Belch, "Personal selling is a form of person -to-person

communication in which a seller attempts to assist and/or persuade prospective buyers to purchase the

company's product or service."

FEATURES OF PERSONAL SELLING

It has the following features:

(i) Two-Way Communication: Personal selling involves two-way communication. It encompasses

face-to-face interaction in which sales person representing a company tries to persuade the potential

buyer to buy. The potential buyer puts forth his queries, clarifications and views regarding the product

or service.

(ii) Process: Personal selling is a process of interaction, persuasion, exchange, negotiation between

salesperson and prospect. It involves series of steps from identifying the prospective buyer,
understanding his needs, communicating with him, providing information in pre-sale phase, follow

up, after sale services and building relationships.

(iii) Promotional Technique: Personal selling is one of the promotional techniques used by the

organizations to increase their customer base. It is a promotional method like advertising, sales

promotion and public relations.

(iv) Success: The success of personal selling largely depends upon the qualities of a sales person who

represents the company. Salesperson uses his experience and skills for engaging buyer in an exchange

from where both will derive value.

(v) Positive Process: Process of personal selling is positive in nature. It is not a manipulation

technique, as salesperson can't pressurize the prospect to buy. He can only encourage, stimulate,

persuade and influence the prospective buyer.

(vi) Wider Application: In the era of information technology, personal selling is done through

telephones, video conferencing and internet. Therefore, buyers all around the world can be tapped.

ROLE OF PERSONAL SELLING

 Personal selling focuses on personal interaction with the customers. They are provided first

hand information about the product being offered.

 There is an interactive dialogue between both parties. Both can see each other's reactions and

can collect right feedback.

 Personal selling offers instant information about a product or service to the prospective

buyers. Salesmen describe the prospect about attributes, features, benefits, and values from

the deal.

Salespersons answer queries of prospective customers and clarify their doubts. Therefore, it

assists the prospective buyers in taking buying decision. Personal selling creates and increases

awareness, desire, and interest of potential buyer.

 It focuses on building long term cordial relations with the buyers, so that they talk positive

about the organization.

 Building and sustaining long tern relations with the customers is another objective of personal

selling.
5. Events and Experiences:

According to Marketing Guru (Philip Kotler), "events are defined as the occurrences designed to

communicate particular messages to target audience." Events and experiences leave log lasting

impression in the minds of audiences. Organizing a perfectly synchronized, well planned, well

conducted and memorable event results in attracting new prospects towards the organization and its

products. Successful events and experiences involve the following:

 The organizers must conduct in depth study of the subject matter of event e.g. brand in case of

corporate events.

 The event must be directed on the audiences. Event managers must collect information about

the target audiences.

 There must be strong event concept and theme.

 The planning and coordination are crucial for successful events.

 When a fool proof plan is ready, then only the event should be launched

FEATURES/CHARACTERISTICS OF EVENTS AND EXPERIENCES

Events are planned with due care, as they carry some unique characteristics. The organizations must

know and understand these characteristics, as they are always expected to do everything right in

events. Events generally exhibit the following characteristics:

 Unique: Every event is unique in itself and is remembered by the host forever.

 Expensive: Events are generally expensive to stage. From planning to execution phase, events

involve commitment of funds, people, and time etc. It is very important to analyze the

feasibility of events in initial stages, as the outcomes should overweigh the investments made.

 Intangible: Like the services, events are intangible, which means that the events can be seen,

and even experienced, but can't be touched.

 Perishability: Events have to be conducted only at specific times. Once that special time has

passed, the event may lose its importance e.g. the day of 50th marriage anniversary.

 Personal Interactions: The actions and reactions of the participants are critical aspects of the

event. The people participating in the event interact with each other and directly with the

organizational representatives. If the prospective customers, for whom event is designed, do

not enjoy it, the event is considered a flop or a failure.

 Real Time Experience: Events provide real time experience to the customers. The event is to

be conducted completely at one place. Different facilities are organized under one roof for the

convenience and active participation of audiences.

To make the events successful, the organization must come up with creative ideas and manage the

flow of event optimally. Effective events promote the product and help in indirect selling.

6. Direct Marketing:

The promotion and communication established through a direct channel without using any

intermediaries is referred to as direct marketing. It can be used to deliver message or service to

prospects. This promotion method has shown tremendous growth in recent years. The internet has

played major part in this growth story. Direct marketing saves time, makes an experience personal and

pleasant. It also reduces cost for the organization. Face to face selling direct mail, catalog marketing,

telemarketing, TV and kiosks are media for direct marketing.

FEATURES OF DIRECT MARKETING

Direct marketing depicts the following characteristics

1. No Middlemen: Here the organization directly deals with the target audiences without the

involvement of any third party.

2. Instant Feedback: The responses of the prospective customers can be gathered instantly without any

delays.

3. Forms: There are various ways to directly market the products and services to potential consumers

such as via telephone, internet, face to face, direct mail, fax etc.

4. Interaction: Direct marketing involves direct interaction between the prospect and organization.

5. Flexible: Companies can customize their interaction with the prospective buyers according to the

situation and tastes of customers. They need not depend upon middlemen to design their interaction

patterns.

6. Long-Term Relations: Direct marketing helps in developing and maintaining long lasting

relationships with the customers. Every individual is approached personally and the issues are
instantly solved. Such interactions lead to healthy relations.

BENEFITS OF DIRECT MARKETING

Direct Marketing offers the following benefits:

 Personal interaction with the prospective buyers

 No involvement of middlemen

 Inexpensive method

 Quick response to customers

 Long term relationship building

7. Referral Marketing or Word of Mouth:

It is the communication regarding an organization or its products from satisfied/loyal customer to

prospective customer. Most people rely on 'Word of Mouth' the most than any other means of

communication and promotion. Organizations can't force their existing customers to refer their

products to peers but they can offer unique experiences to them, so that existing customers talk

positive about the company.

FEATURES OF REFERRAL MARKETING

Following are the characteristics of Referral Marketing:

(i) Forms: This communication may be oral or written, offline or online, face to face or electronic.

(ii) Experiences: Previous experiences of people are shared with other people regarding an

organization or its product. Such experiences may be positive or negative.

(iii) Speed: Word of mouth travels faster than any other mode of communication.

(iv) Reliability: Word of mouth is considered to be the most reliable source by prospective buyers.

(v) Personal Touch: Word of mouth involves a concern and warm dialogue from one person to

another.

(vi) Subjective: The communication is all about attitudes, experiences, tastes etc.

Generally, organizations make use of above discussed methods to acquire new customers. In the

modern world, offering information through social media channels, websites, blogs, online ads on
other websites are also used to reach the audiences.

PROCESS OF CUSTOMER ACQUISITION

Acquiring new customers requires a systematic process. The steps of generally applied customer

acquisition process are as follows:

1. Designing the Right Offer. The first and foremost step in customer acquisition is to design a right

offer for the prospective customers. All other marketing and promotional efforts would be fruitful

only when a right product or service is planned and created. Customer is going to deal with the

organization for the first time and this interaction may be converted into repeated buying only when a

'good offering' is proposed. Good offering refers to the one that delivers maximum possible attributes

of a product to the target customers

A right offer includes:

 Customer value i.e, more benefits than costs

 Availability at the right time

Easily accessible

 Support services

2. Situation Analysis: Situation analysis involves the analysis of company's existing customer base.

Under situation analysis existing customers are classified on different criteria such as sales, profit

margin, potential, size etc. The tastes, needs and expectations of existing customers are thoroughly

analyzed.

3. Customer Planning: Based on the number of existing customers, companies go for estimating the

number or proportion of fresh customers, they wish to acquire. Then the expected new customers are

classified and segmented according to the business objectives,

4. Competitor Analysis: Organizations would analyze the strategies adopted by their competitors to

attract new customers, which may be cost leadership or product differentiation. To be successful in

the process of customer acquisition, organization must have a strong competitive advantage over

others.

5. Designing Marketing Initiatives: Initial stages were the planning phases of customer acquisition

process, while in this stage companies come up with certain marketing initiatives. This stage is also
known as Action plan phase. Various tools for attracting customers have already been discussed.

Selection, assessment and use of appropriate marketing tool is quite crucial to attract new customers.

6. Tapping the New Customers: Finally, the organization would tap the potential customers by

securitizing them on certain criteria. The further efforts would be focused on the leads which seem to

be promising.

This process is dynamic in nature and depends upon various organizational issues such as cost

involved, number of customers to be acquired, nature of customers to be acquired, reach of marketing

channel expected etc.

ACQUIRING CUSTOMER DATA CUSTOMERS USING

Organizations can acquire new customers from data collected from various sources. Customer data

can be collected from the following sources:

(1) Primary Customer Data: Primary data is the first hand data, which is collected for the first time. It

is collected directly from respondents. This data is generally considered to be more reliable than

secondary customer data. Following are some of the methods to collect primary data for customer

acquisition:

(a) Questionnaire Method: In this method, a written form (questionnaire) is circulated among

respondents. Questions are in quantitative from, while qualitative aspects are also transformed in

numeric terms. Organizations can send the questionnaires through mail or post to the respondents,

who fill the same and are sent back to the organization. Questionnaires are the most effective source

of prospective customer data.

(b) Schedule Method: In this method, a set of questions is designed. Schedules are accompanied by

specially appointed enumerators, who fill the same while meeting the respondents personally. This

method is generally used by research institutions and public agencies.

(c) Interview Method: Interviewer takes the personal interview of respondents (a group of individuals)

on a specific topic. Views, attitudes and opinions of potential customers are recordedIt is a

challenging task for the interviewer to take the information out from respondents, as they may be

hesitant in opening up.

(d) Observation Method: Here the potential customers are observed to find certain facts e.g. how they
react to a specific product or brand. Reactions and discussion of potential customers are recorded and

reasons behind their reactions are also analysed.

(ii) Secondary Customer Data: Secondary data refers to the data collected by someone before, but is

utilized by some other person later on. Following are some of the methods of secondary data

collection:

(a) Internet: Internet is a great source of secondary data. Organizations can collect information

regarding prospective customers from earlier researches available on internet.

(b) Organizational Records: Organizational P&L account and Balance Sheets are also the source of

secondary data, on which various analysis can be performed. Organizations can observe trends, forecast
future demand and see the growth rates. These records guide the organization about customer

acquisition strategies to be followed.

(c) Print Media: Print media includes newspapers, business journals, magazines, books, research

reports etc. This source provides relevant information regarding prospective customers in the market

Acquiring new customers is a need of all organizations irrespective of their size and nature.

Organizations make use of varied tools to acquire new customers and enhance their customer base to

have increased revenue.

CUSTOMER RETENTION:

MEANING

Customer acquisition is a crucial source of growth and revenue for the organization, but retaining the

existing customer base is far more important. Acquiring new customer is a costly affair as compared

to retaining the existing ones, as investment has to be made in advertising, sales promotion, direct

marketing and positive brand image. Besides that, a newly acquired customer may not be loyal and

promising. Revenue of an organization is a function of number of customers who buy organization's

product and amount of money they spent to buy. Therefore, existing loyal customer base is the

foundation for organizational success.

Customer Retention is a strategy adopted by the organizations to retain the existing customers. It

involves company's effort to turn customers into repeat buyers and prevent them from switching to

any competitor. It leads to long term relationships with the customers. Retention is a challenging task

as organizations have to continuously look for keeping their customers satisfied. The defections need

to be minimized as far as possible by focusing on customer needs and expectations. According to

Investopedia, it costs five to ten times more to acquire a new customer than to retain an existing one

CHARACTERISTICS OF CUSTOMER RETENTION

1. Lifetime Commitment: Retention is a challenging task that continues throughout the lifetime of a

relationship between organization and customers. Companies can't take this strategy lightly at any

stage, as competitors will gulp these customers in no time.

2. Establishing Rapport: Organizations need to give full confidence to the customers that their needs

and emotions will be taken care of. Retention begins with establishing a rapport with the customers.

3. Pre-Requisites: Customer retention largely depends upon the quality of products offered to the

existing customers along with the after sale support services. Brand image of the organization and its

products, listening to customers' complaints, incorporating their feedback are some other pre-

requisites for long lasting relations and customer retention.

4. Regular Feedback: Customer retention rates can be enhanced tremendously by taking regular

feedback of existing customers. When the customers know that they are being heard, they feel

connected with the organization.

5. Target Customers: Retention is a challenging task. The organization can't retain all of its customers.

Therefore, it must identify the customers to be retainedCustomers with higher customer value and

commitment levels may be focused.

6. Data Base: Organizations have to keep up-to-date customers information in their data base to apply

various retention strategies. They can collect data about their customers from various sources such as

primary and secondary. The customers whom organization wants to retain for long may be offered

exclusive benefits e.g. Club membership can be given to selected customers to provide them value

added benefits where customers can avail extended benefits. Organizations can make use of customer
information from registrations as well

DANGERS TO CUSTOMER RETENTION

Following are some of the reasons due to which customer retention may be in danger:

1. Unreasonable Price: If the organization charges unfair high prices for the existing products,

customers may prefer to switch over competitor's brand. The additional price charged must be

justified with the benefits offered.

2. Deficient Services: Customers can't tolerate deficiency in services. Organizations must provide the

best support even after sale along with quality products.

3. Better Alternatives: If customer finds better products/services available in the market, they won't

take much time in taking switch over decisions. Competitors may lure the organizational customers

with attractive discounts and startling offers.

4. Change in Earnings: Change in the economic status of customer (e.g. increase in salary) may be

another danger for customer retention for a specific organization, as customers may shift to better

brands.

5. Peer Pressure: Referral groups may motivate the existing customers to give a trial to other options

available in the market.

6. New Attractions: Advertisements and promotional techniques of competitor's brand may leave a

long-lasting impression in the minds of existing customers.

7. Ethical Issues: Unethical practices such as fraud and misrepresentations by an employee may lead

to bad organizational image and company may lose its loyal customers.

STRATEGIES FOR CUSTOMER RETENTION

1. Customer Engagement: Customers can be engaged in various organizational activities to make

them feel emotionally connected. When the customers have sense of belongingness with the

organization, they can't be influenced by competitor's attractions. Customers can be engaged in

various ways:

 Making them judges in various contests

 Asking their suggestions for upcoming products or services

 Offering them free samples during test marketing stage of new products development
 Incorporating their feedback in the new offerings

 Arranging social gatherings for their family

 Offering tour packages

2. Customer Delight: Customer expectations denote how a consumer anticipates the product to

perform. The customers may have variety of expectations regarding the value a product/service will

offer. Expectations are crucial, as customers compare actual results with the expected performance.

Satisfaction is a leading indicator of purchase intentions and customer loyalty. Customer delight is the

level of satisfaction that goes above and beyond customer expectation to satisfy a desire. In terms of

market research, a satisfied customer's contentment lies somewhere between their expectations and

the desired results. A delighted customer, however, will feel that the desired results have not only

been met, but also exceeded. A delighted customer will be connected with the organization for long

period of time. Organizations can offer this delight by giving special offers and free tour packages to

their gold customers.

3. Understanding Customer Perceived Value: Customers may have different types of

perceptions/opinions about the product such as:

 Ideal: The product or service may prove to be an ideal alternative for satisfying a specific

consumer need.

 Expected: The product or service may perform as expected by the consumer for satisfying a

specific need.

 Minimum Tolerable: The product or service may at least satisfy the basic need for which it

had been bought.

 Desirable: The product may be desirable for consumers to a certain extent.

4. Handling Grievances: Customers' grievances must be handled economically and in a speedy

manner to retain them a long term. Complaints must be sought out at priority and view point of

customers must be heard to improve their satisfaction level.

5. Regular Feedback: Customer feedback plays a crucial role in improving their satisfaction level and
retention rate. Feedback can be taken by interviewing the customers or by observing them buying at

the company store.

6. Keep the Promises: Retention is also affected by what has been promised and what has been

actually delivered. The customers must be delivered what and when has been promised. The quality

and quantity of products/services must be the same, as specified in the contract. The delivery should

be in time and in manner as defined by the customers.

7. Understanding Specific Needs: Every customer is crucial, and can lead to new customers by his

positive word of mouth. Therefore, the needs of each one of them must be known and well met. Some

customers may have specific needs, which the company must understand and fulfill. When the

specific needs are taken care of, customer feel connected with the organization and can be retained for

long.

8. Rewarding Loyal Customers: Customers can be made feel special by rewarding them depending

upon the purchases they made from the organization. More purchase, more reward and vice versa.

Rewards can relate to any of the following categories:

 Price cuts for repeated buyers/hard core loyals

 Discounts and rebates

 Gifts and vouchers

 Offering membership of various clubs

 Free shopping at specified outlets

 Cash back

 Self-liquidating premium

These rewards help the organization in increasing retention rates and are a great way to acknowledge

customers for their support and loyalty.

9. Remembering Special Days: Customers may be wished or gifted on special occasions of their lives

e.g. birthdays, anniversaries, wedding etc. Making customers days special helps the organization in
positioning its image in their minds forever and retaining them for long

CUSTOMER LOYALTY:

MEANING AND DEFINITIONS

Customer loyalty is the foundation for creating and maintaining long term relationship. In this 21

century competitive world, getting loyal customers is a real blessing for the organization, as

numerous options are available and customers have valid reasons to switch over the competitive

brands. These loyal customers are the assets for any organization and having the strong loyal

customer base offer numerous benefits. In fact, having loyal customers offer the organizations a

distinctive competitive advantage over others. Therefore, creating and sustaining loyal customers

must be at the top of organization aim list. Following are certain well accepted definitions of the term

'Customer Loyalty':

Dick and Basu (1994) stated that "Loyalty is a customer's commitment to the brand or approach to the

brand."

Accounting dictionary states, "Customer loyalty indicates the extent to which customers are devoted

to a company's products or services and how strong is their tendency to select one brand over the

competition."

CHARACTERISTICS OF CUSTOMER LOYALTY

1. Loyalty and Price: Loyalty has nothing to do with price of product. Loyal customers are not much

affected by fluctuations in price. Apple is a brand with high customer loyalty and its products are

quite expensive. It is common for the customers to queue up all night just to get the chance to spend

hundreds of pounds on a new iPhone.

2. Satisfaction Designs Loyalty: Customer satisfaction is positively related to loyalty, as happy

customers consistently favour the brand that meet their needs and expectations, Satisfaction occurs

when a product or service meets the expectations of customer.

3. Satisfaction Doesn't Guarantee Loyalty: Satisfied customers may or may not be loyal towards the
organization. Some customers feel satisfied with a product but they always have the curiosity to try

other brands. Therefore, satisfaction leads to loyalty but doesn't guarantee it.

4. Result of Consistent Efforts: Brand loyalty stems out of firm's consistent efforts to deliver the same

product and quality every time. The best example of consistent organizational efforts is of the

Starbucks. The company has managed not only to retain its customers but also to expand its customer

base through exemplary loyalty programs. The company seeks to enhance the experience every time a

customer visits their coffee store. Besides that, the company also offers 'My Starbucks Rewards'

customer loyalty program for its loyal customers.

5. Effect of Competitors' Offerings: Loyal customers are not influenced by the competitor's

promotional appeals. It doesn't mean that the organization need not put in efforts to improve their

offerings. Suggestions of loyal customers must be incorporated seriously from time to time to make

these customers hard core loyals.

6. Intangible: Loyalty is something which can't be touched or seen, as it is intangible, but its presence

can be felt in various aspects, some of which are:

 Nature of referrals that customers make to their relatives, peer group, friends and family.

 Number of visits a customer makes to the store

 Validity of feedback given to the organization for updating products and services.

7. Cross Selling: Loyalty leads to sales of existing products and also of the other products offered by

organizations from time to time. When the organization introduces other related products, it is the

loyal customer base who first tries the same.

8. Feedback: Loyal customers offer a genuine feedback to the organization about how to improve the

product functioning.

9. Trust in the Organization: Even in case of any organizational issues or negative publicity, the loyal
customer stand by the organization and maintain high level of trust.

IMPORTANCE OF CUSTOMER LOYALTY

1. High Conversion Rates: Loyal customer leads to higher conversion rates than new customers.

2. Increased Profits: Every organization works for higher levels of profits and revenue. Loyalty boosts

the profits and revenue of the organization. These loyal customers don't switch over easily to other

brands.

3. Reduced Cost: Research has shown that retaining the existing customers is far cheaper than

acquiring the new ones. It takes three times more efforts to attract a new customer than retaining the

existing ones and it costs six to seven time more for attracting new customers

4. Enhanced BusinessLoyal customers bring a large business to the organization by spreading positive

word of mouth among their family and friends. Repeat and loyal customers spend more than first time

buyers, as they trust the organization and its offerings.

5. Easy to Convince: First time buyers are difficult to convince, but loyal customers can be convinced

easily to buy other related organizational products.

6. Genuine FeedbackLoyal customers offer genuine feedback to the organization for transforming

their offerings.

7. Cross Selling and UpsellingThe loyal customers don't hesitate in buying the related products of

same organization and high end products also can be sold to them.

FACTORS AFFECTING CUSTOMER LOYALTY

1. Customer Satisfaction: The loyalty towards an organization is directly influenced by the level of

satisfaction a customer gets from an organizational offering. Customers visit a store with certain

predefined expectations. When the expectations are met, customer gets satisfaction and that is the first

step towards long term loyalty.

Customer satisfaction is a post-purchase evaluation that results from a comparison between customer's

pre-purchase expectations and actual performance of product/service. When the organization doesn't

meet the customers' expectations, it leads to dissatisfaction and the dissatisfied customers may resort
to complain or never purchase the same product again

Therefore, the organizations focus on measuring and managing customer satisfaction in every

customer interaction. Successful organizations try to understand the degree of satisfaction gap when

they fail to meet expectations.

2. Emotional Bond: Once the customer gets satisfaction from organizational offering, this relationship

must be nourished with emotional bond. Over time customer loyalty requires emotional bonding.

Customers must feel an affinity, comfort and attachment with the brand, which denotes that they have

connect with the organization. Some companies know how to connect emotionally with their

customers while others may face difficulty in accomplishing this level of commitment. Organizations

must strive to establish feeling of closeness, affection, and trust, as true emotional bonding is often

based on the same.

3. Trust: Trust means having confidence that one can rely on the other party. Trust can be defined as

the willingness of the customer to rely on the organization or brand to perform its stated function. It

means a customer believes that the company and its offerings are reliable.

Higher the level of trust in the organization, stronger will be the loyalty from customers' side. Trust

reduces uncertainty/risk in the minds of customers. Therefore, a customer must have confidence that

the organization is honest, fair and responsible and the organizational promises can be relied on.

Organizations must establish trust by maintaining open and honest communication and by keeping

their promises with integrity.

4. Past Experience: Customer loyalty is also affected by customer's past experience with the

organization. A positive past experience has a favourable impact on customer loyalty. One bad

experience with an organization may cost the organization a loyal customer forever and many other

connected. Therefore, the organizations need to focus on enriching every customer interaction with

the organization.
5. Historic Image of Company: Perceptions of the company's historical image can impact customer

intentions, loyalty and likelihood of buying. Companies like Proctor and Gamble, MDH, Hindustan

Unilever have a positive historic image and customers purchase their products since many years

without any doubts.

6. Peer Groups: Customers loyalty is largely affected by the discussions with friends, family,

colleagues, and peer groups. A negative experience with any of these connected people may lead to

negative image of the organizational products in the minds of loyal customers.

CUSTOMER LOYALTY LADDER

Customer loyalty is not designed in one day, it has to pass through many positive experiences. This

process of building loyalty is known as climbing the 'loyalty ladder'. Therefore, ladder of loyalty

shows different stages through which a prospect passes to become a customer, a client and finally a

partner of the organization. Following are the generally discussed stages of customer loyalty ladder

1. Suspect: The customers daily look at the advertisements in newspapers, magazines, hoardings,

vehicles etc. Anyone who reads or hears any information, looks at a brochure or encounters some

other type of promotion of an organization is known as the suspect. This suspect may or may not be a

prospect for organization.

2. Prospect: Prospect is an individual in market (or an organization in the business market) who fulfils

the requirement of the marketer's definition of target customer. Prospect can be anyone who pays

attention to the organizational promotion and fulfills all the requirements/criteria of being an

organizational customer.

3. Customer. The prospect becomes a customer when he/she gets attracted towards the offering of the

organization and purchases the product/service.

4. Client: A customer becomes a client when he/she purchases the product or service more than once.

In simple terms, client is the one who purchases the organizational product for at least a second time.

A customer may make the initial purchase as a trial or test, while the client is one who does a repeat

purchase due to satisfaction from previous purchase(s). There is a higher probability that the first

purchase/trial was a satisfactory experience for the client. In many situations, customers become

clients due to the nature of the product or service e.g. if a customer purchases Dell laptop, he/she is

bound to become a client due to the associated services. Same is the case with the purchase of any

durable product like television, washing machine, water purifier or car etc., as here the customer

becomes a client of the associated services like servicing.

5. Advocate: An advocate is a supporter who, in addition to referrals the loyalty ladder gives

increased sales, proactively works with the organization to improve its product and services. Advocate

gives unpaid advertisement to the product, which enhances its acceptability in market. Here the

interaction between the advocate and the company is at a higher level, as vital information is shared.

Besides that, the comfort level as well as the confidence between the parties is high. For example,

software companies regularly depend on the feedback from the lead users of their clients, whenever

they want to come up with new products. These companies set up the protocol of client's premises for

usage and feedback, which helps in improvement.

CUSTOMER CENTRICITY

Customer centricity or Client centricity is a business strategy that is based on putting the customer

first and at the core of business in order to provide positive experience and build long term

relationships. In the words of Craig Bailey and Kurt Jensen, customer centricity involves aligning

organizational resources for effectively responding to ever changing needs of customers, while

building mutually profitable relationships. It is a way of doing business with customers, so that

customers are given positive experience at any stage of sales process in order to have repeat business,

increased profits and customer loyalty. Customer centricity gives a company competitive edge over its

competitors, who don't offer similar experience to customers. Such firms can differentiate themselves

in the eyes of customers by having customer centricity positioning.

When the customer is placed at the core of business, all decisions are taken by keeping customer at

priority and all this is combined with CRM, this gives 360-degree view of customer. CRM utilizes

information to improve customer experience. Therefore, the aim of customer centricity is to give

better experience to customer at the point of sale or after the sale.

Process of Customer Centricity

1. Central Database: A centralized data base is the key for successful customer centric organizations.

Keeping all customer data at a centralized place helps all the departments to have access to similar

data without wastage of time. It also helps in retrieving the information from all customer touch

points.

2. Behaviour Prediction: Based on the past customer data, predicting the customer behaviour is the

next stage. The analysts and business units must cooperate with each other to effectively predict

future customer behaviour. Various prediction models can be used by the organizations for this task

and interventions are introduced to alter the behaviours during experimentation. Then results are

measured with and without interventions and then campaigns are deigned based on results.

3. Update Customer Data: The company must update customer information constantly. When the

customers are asked about their needs, it gives clear idea to the company regarding what customer

expects. Therefore, collecting updates from existing customers must be done quite often. It gives clear

direction what changes are required and which things are to be kept the same.

4. Obtaining the Customer Pulse: The process of customer centricity requires the organization to

know customer requirements and needs. Customer may need product/service for himself, family or

may be just a purchaser. Organizations can obtain customer pulse by the following ways:

 Conducting consumer survey

 Interviewing the customer

 Getting information from the sales force directly dealing with customer

 Observing the actions or behaviors of customers

 Mystery or Ghost shopping

When the customers are heard, they feel more connected with the organization. It leads to customer

satisfaction and loyalty.

5. Facilitating the Communication Process: The communication process between the company and its

customers must be direct and easy. Modern companies are coming up with creative solutions to

facilitate the direct communication process such as customer satisfaction surveys, and posting of

reviews on websites.

6. Involving the Customer: Customers feel connected with the firm, when they are involved in

business decision making. Following strategies can be used for customer involvement:

 Focus Group: It involves discussion within a small group may be of 8-10 people.

 Customer Board of Advisors: Inviting senior people from customers' data base for periodic

meetings.

7. Analyzing Information or Reviewing the Feedback: Just collection of feedbackwill not solve the

purpose, rather company has to work upon the suggestions. This stage includes the analysis of

feedback and queries received form customers. There must be recurring meetings with strategic team,

where the crucial issues are reviewed and constructive solutions are brain stormed for better customer

service. When the customer issues are discussed on regular intervals and their solutions are found, it

helps in keeping customer at the priority list of entire team members. It also gives information about

the upcoming market trends through customer suggestions and help in making their offerings better.

8. Socialize Results: The results obtained must be reported by the top management within and outside

the organization. The reports can be made in comprehensive format for sectional and departmental

planning.

9. Implement Customer Focused Changes: After analysis, the weak areas are identified and customer

focused changes can be introduced. It will require the following steps:

 Getting management commitment

 Conducting cross functional reviews

 Voice of customer tracking and reviews

 Forecasting

10. Respond to the Customer: Customers must be given response for their queries, which can be

immediate or delayed response. Companies can design 'Immediacy' teams, which will offer quick

response to emergency issues, while some critical issues may take time and require senior managers

advice, as they have ore customer experience,

11. Encouraging Customer Centric Culture: Best brands who value their customers have made

customer the cornerstone of their company culture. Top management can make policies which spread

a customer centric culture among various organizational departments. A customer centric culture

requires cross team commitment and make everyone feel that they have played their role in the

process of customer satisfaction. It can be achieved by the following strategies:

 Putting the employees in customers' shoes

 Putting the employees in shoes of particular colleague

 Be evaluated in a 360 degree approach by colleagues who is close to employee

Strategies to Encourage Customer Centricity

1. Rewarding Customer Centric Behaviour: Organizational staff should keep customer in their minds

while taking any decision. Rewarding and recognizing customer centric behavior in the organizations

can motivate employees to adopt the same.

2. Giving Training to Staff: Customer centricity must be enriched via training cum internalization in

organization. Staff can be given training on various customer centricity components. Training

sessions may include following aspects:

 Communicating effectively and building rapport with customers during interactions

 Taking every touch point seriously

 Managing complex conversations with customers

 Making the communication style better

3. Decision Making: The CRM managers must ensure that organizational decision-making hinges on

customers. All decisions must keep customers at priority.

4. Measure the Progress: In every business meeting and promotion, firm's progress in customer

centricity must be highlighted.

5. Customer requests: Taking the customers' requests and feedback seriously is another way to

implement customer centricity successfully.

6. Involving customers: Loyal customers can be involved in organizational crucial decisions, where

they can keep customer viewpoint.

7. Other strategies:

 Implementing customer focused changes

 Analyzing customer information thoroughly

 Conducting customer surveys, interviews and recoding observations (mystery shopping)

 Responding to customers via emails, websites, texts

 Putting employees in customer shoes

Customer centricity is a business strategy that is based on 'putting the customer first and at the core of

business' to have positive experience and long term relationships. It demands that customer is the

focal point for all organizational decisions. Providing a positive customer experience before and after

the sale is the basic aim, which will lead to repeat business for the organization. Customer centric

company requires more than just offering good service. Amazon is the best example of customer

centric company, as it has spent years in creating a culture around the customers and their needs.
WEB BASED CUSTOMER SUPPORT

Advent of internet and advancements in technology has altogether changed the way businesses used

to be managed. Companies can collect, analyze and store massive amount of data in no time. E-

commerce is one of the most fascinating outcomes of online transactions. Today, more than half of

the customers prefer online shopping, payments via online platforms, and online services.

Web based customer support is designed to offer a better and real time customer experience. Besides

that, webbased solutions also help in reducing the cost both for a consumer as well as for the

organization. Customer experience largely depends upon the use of appropriate webbased customer

support technology and many organizations are quite successfully using these web based solutions.

Types of Web Based Customer Support

Web based customer support can be offered to customers by any of the following options:

1. Social Media: The use of social media platforms like Facebook, Instagram, Twitter is no longer

confined to chatting and fun. Modern businesses have identified that majority of present and potential

customers spend substantial time on social media websites. Whenever a customer faces difficulty in

product/service or wants to enquire about it, he/she will go on social media for solutions. Even when a

customer writes the query on google, it will take customers to company's social media platforms. The

company must be ready to deliver what customer expects. Therefore, conveniently available and

systematically designed social media profile can be a great source of web based customer support

from the company's side.

2. Demonstration Videos: The customers today prefer to go through the videos instead of text content.

The millions of views on you tube, and Instagram has proved that visual content is preferred, as it is

easy to understand. No doubt modern internet has been taken over the video content, which can be an

excellent method to communicate with customers. Companies and individuals are uploading various

types of videos such as product demo, customer views, previous experiences, grievance procedure and

much more.
3. Frequently Asked Questions (FAQs): FAQs section is designed by the organizations with care and

concern, as they know that many clients will have few queries in common. Generally, FAQ section is

created on the main page of company's website. When the customer visits this section, majority of

queries are ultimately resolved at this single platform. Staff of company is relieved from explaining

the same things to multiple clients and topics can be written in great depth.

4. Email Support: Website of almost every company gives the email support to customers. They can

send their queries, ask for product demonstrations, write complaints. Email of the company is daily

checked by the designated personnel and responses are sent back to customers. When customer gets

in-time reply via email, it boosts his confidence in the organization. Besides that, email works as a

permanent documentary proof with both parties. Most of the companies send customized replies. It

must be taken care that writing an email is art and how the reply is designed, makes a big difference in

how customer look at the company.

Benefits of Web Based Customer Support

1. No Pressure of Queues: Web based customer support relives the organization and its employees

from the pressure of handling long customer queues wanting to talk to customer representative. They

will have the option to pick solution mode from myriad online channels such as email or social media.

Therefore, there will be less traffic on any single medium. It will lead to better customer response, as

representatives will be able to work more efficiently.

2. Better Customer Service: Customers are able to get quick and genuine response from the web based

solutions. They need not wait in long queues; it saves their time. Therefore, companies are able to

deliver better customer experience.

3. Customer Satisfaction: As customers will get prompt response anytime and anywhere, there will be

no point left for their disappointment.

4. Better Efficiency: Web based customer solutions enhances efficiency by saving time and cost.

Tasks are allotted to customer representatives, which increases efficiency and offers the benefit of

specialization. Customers will be able to get timely responses.

Above discussed points reveal that web-based customer solutions are more effective, reliable,

efficient in terms of cost and time cutting. Organizations are able to serve their customer better if they

have presence over multiple online platforms. It can be a great source of competitive advantage over

other organizations.

ENTERPRISE MARKETING MANAGEMENT (EMM)

A new dimension of CRM emerging these days is EMM. As it has been realized that companies have

to build stronger customer relationships, so that have to create a positive impact from their marketing

operations. EMM is pioneered by UNICA with the idea of turning relationship marketing approach

into a systematic and scientific approach.

Enterprise Marketing Management (EMM) is a comprehensive strategy that helps an organization to

effectively plan, coordinate and control marketing activities across multiple channels using data and

analytics. In another words, EMM is vital technology term which means the strategies, tools and

practices adopted by an organization to effectively manage and organize its marketing efforts across

various channels such as CRM, email marketing, social media marketing, content marketing, search

engine optimization, and marketing automation etc. According to Gartner Inc., EMM encompasses

the business strategy, process automation and technologies required to operate a marketing

department effectively, align resources, execute customer centric strategies and improve marketing

performance. Therefore, EMM helps the organization to unify data from various sources, streamline

their marketing efforts, and derive insights that can be used to optimize its marketing performance.

EMM is best suited for large organizations with 50 or more people in marketing.

Enterprises are the large organizations, generally having more than 500 employees. There can be
other factors which may contribute to a company being considered as an enterprise such as revenue,

number of outlets, nature of product/service etc. As small companies grow in market, and start

emerging as enterprises, it is must that their marketing efforts also expand and grow. These marketing

efforts (across myriad channels) have to be optimally manage. Here comes the importance of EMM. It

is an evolving approach, which encapsulates the processes, technologies and methodologies that allow

businesses to manage their marketing efforts across multiple channels seamlessly. EMM may also be

considered as a component of CRM that helps in providing, maintaining and monitoring the structure

of promotional campaigns organized by an enterprise.

In the modern organizations, EMM is exercised by centralizing and unifying marketing related data

and processes related to entire organization. There are EMM software which offer multiple features

such as campaign management, customer analytics, lead management and social media tracking etc.

By employing EMM solutions, organization can

 Streamline its marketing operations

 Reduce unnecessary tasks and

 Instill coordination among marketing teams

For example: Adobe Marketing Cloud is an EMM solution that integrates multiple marketing tools

such as Adobe Analytics, Adobe Experience Manager, and Adobe Campaign to create a single

comprehensive platform for managing marketing campaigns. Adobe Marketing Cloud helps the

organization to understand needs and preferences of customers, create personalized content, deliver

consistent and targeted experience across various channels and platforms.

Characteristics of Enterprise Marketing Management

EMM is drastically different from traditional marketing practices. Traditional marketing methods help

to develop and maintain loyal customer base for small organizations, while enterprise marketing takes

the marketing tasks to next level. EMM has the following features:

1. Comprehensive Term: EMM adopts a holistic approach. It streamlines and optimizes marketing
processes by integrating data, technology and resources, so that business can target its customers more

effectively. Traditional marketing was focused on individual marketing components, while EMM is a

comprehensive idea bridging various marketing facets such as advertising, sales, product development

and customer service.

2. Suitable for Large Organizations: For the large organizations operating across myriad markets

(geographically and demographically), importance of EMM can't be overstated.

3. Integration: EMM integrates various marketing systems, platforms and tools leveraged with

customer data and analytics. It offers an integrated solution that brings together various marketing

functions and technologies such as CRM, email marketing, social media marketing, content

marketing, search engine optimization, marketing automation

analytics, and reporting. With this integration marketing professionals are able to organise more

targeted, personalized and impactful campaigns.

4. Aim/Outcome: The aim of EMM is to maximize marketing efficiency, reduce costs, and enhance

customer experience. It allows organizations to maximize customer value, high return on marketing

investment (ROI), improve brand communication and boost their overall market presence.

5. Data Driven Insights: EMM tools and strategies facilitate organizations to take data driven

decisions. Such decisions improve organization's marketing performance, foster growth and improve

competitive position.

6. Personalized Experience: EMM combines marketing, sales and customer service efforts to create

personalized experiences for customers.

7. Customer Relationship: It focuses on personalizing the customer journey and offering tailored and

relevant content to each segment of customers, which would lead towards enhancing customer

relationships.
8. Advances in EMM: As businesses are evolving and digital transformations have come, EMM is

also being attached with technology. Advanced analytics, Al and machine learning are assisting

organizations in gathering and analyzing large amount of customer data to personalize marketing

efforts.

EMM market is still not much developed, many organizations are offering comprehensive suits of

marketing applications. The ultimate aim of EMM technology is to assist the marketers in analysis,

planning, implementation and control of marketing activities, so that marketing operations can be

handled more effectively.

Strategies for Effective EMM

To make EMM effective, following strategies may be implemented:

1. Integrated Marketing Communication: To make EMM effective, all forms of marketing

communications (public relations, direct marketing, social media etc.) must be integrated. Similar

message must be disseminated to have a consistent marketing view. The marketing voice must be

unified over different channels.

2. Segmentation: Customers must be segmented on the basis of certain homogenous criteria, so that

marketing efforts can be tailored for each segment's unique needs. With the advancements in

technology, businesses can introduce micro-segmentation to target smaller groups of customers.

3. Data Driven Decision Making: In the field of EMM, data is the most crucial component. Businesses

can gain new insights about customer behaviour, demand forecasting and market trends by leveraging

data from various sources e.g. CRM systems, social media, web analytics etc. Future market trends

can be predicted with high accuracy if suitable data is available.

4. Multi-Channel Marketing: Organizations must offer consistent and personalized experience across
multiple platforms. It would assist in better and stronger customer relationships. Both offline and

online channels must give seamless customer experience.

5. Shaking Hands with Technology: The success of EMM depends upon the level of technology

adoption in the organization. Modern technologies assist the businesses to analyze large amount of

data, automate repetitive tasks, add the feature of personalization and 24*7 web support. Decisions

can be taken more quickly.

EMM is no longer a luxury for businesses, rather it has become a necessity. The future of EMM is

directly linked to the developments and adoption of new technologies. With the effective use of

EMM, businesses would be able to get deeper insights related to customer behaviors and would be

able to devise effective strategies.