I'm looking for someone to write my Individual Application paper for my Customer relations in Business class.
i23homeworkhelpq21
mcr2e_chapter_11_slides.pptxManaging Customer Relationships: A Strategic Framework
Chapter 11
Optimizing around the Customer:
Measuring the Success of Customer-Based Initiatives
Course Title Instructor
Managing Customer Relationships: A Strategic Framework, Second Edition
Don Peppers and Martha Rogers
1
Chapter 11 Preview
Managing Customer Relationships: A Strategic Framework, Second Edition
Don Peppers and Martha Rogers
Measuring Customer Value
Customer Equity
Customer Loyalty and Customer Equity
Factors in Customer Equity
Return on Customer
Creating, Harvesting, and Destroying Value
Measuring Return on Customer
Predictive Modeling
Leading Indicators of LTV Change
2
Measuring Customer Value
Managing Customer Relationships: A Strategic Framework, Second Edition
Don Peppers and Martha Rogers
Short-term: immediate sales
Long-term: changes in customer’s predisposition toward company
Balance required
Too aggressively pursuing short-term sales threatens long-term value
Investing too much in great service threatens short-term value (i.e., funds required to produce that great service)
To strike a balance, measure customer equity, or customer lifetime value
3
Customer Equity
Managing Customer Relationships: A Strategic Framework, Second Edition
Don Peppers and Martha Rogers
The principal economic asset
The sum of all current and future customers’ LTV = firm’s total economic value
Describes effectiveness of customer strategies and implementation
However, most companies look at quarterly balance sheets as the primary measure of economic assets – which only measures short-term value
Prospects, as well as current customers, are included in customer lifetime value (or equity)
4
Customer Equity and Customer Loyalty
Managing Customer Relationships: A Strategic Framework, Second Edition
Don Peppers and Martha Rogers
Difficult to measure customer loyalty/customer retention
Defining retention:
A progressive variable – a volume dial, not an on-off switch
A multifaceted variable – one possibly composed of multiple relationships across business units
Distinguish customer attrition and customer defection
Attrition: results from circumstance outside company’s control (retirement, moves out of area)
Defection: customer chooses to move business to the competition
5
Factors in Customer Equity
Acquire more customers
Acquire customers who are more valuable
Increase profit per customer
Reduce servicing costs per customer; sell customers additional products or services
Increase the propensity of customers to refer other customers
Reduce the rate of customer attrition
6
Return on Customer
Managing Customer Relationships: A Strategic Framework, Second Edition
Don Peppers and Martha Rogers
Measures how well an enterprise is using customers to create value – both short term and long term
Analogous to return on investment (which measures how efficiently an enterprise uses capital to create value)
Return on Customer = Total Shareholder Return
Just as with TSR, if ROC is less than cost of capital, it’s not worth the investment
7
Creating, Harvesting, and Destroying Value
Managing Customer Relationships: A Strategic Framework, Second Edition
Don Peppers and Martha Rogers
Value creators
Combination of short-term and long-term value created by customers is greater than cost of capital
Future earnings likely to grow
Value harvesters
Harvesting customer profits from customer equity they already have, but are not increasing customer equity
Future earnings likely to decline
Value destroyers
ROC is below zero – likely showing a profit by offering deep discounts
Future earnings will certainly decline
8
Measuring ROC
Managing Customer Relationships: A Strategic Framework, Second Edition
Don Peppers and Martha Rogers
Two major steps:
Measure the marketing activities and analyze their effect on customer acquisition, retention, and growth
Estimate customer LTV and total equity of all customers at a certain time point
9
Predictive Modeling
Managing Customer Relationships: A Strategic Framework, Second Edition
Don Peppers and Martha Rogers
Devise an equation for LTV that includes any data on measurable behaviors
Identify the most predictive variables currently available
Generate a second equation for LTV to predict individual customer’s LTV rather than using data to calculate it retrospectively
10
Leading Indicators for LTV Change
Managing Customer Relationships: A Strategic Framework, Second Edition
Don Peppers and Martha Rogers
Lifetime value drivers
Cross-selling rate, share of customer, influence on other customers
Lifestyle changes
Professional/career moves, address changes, marital status changes, children added to household, education level, health
Business and consumer
Behavioral cues
Signing up for different plan, buying product upgrades, signing up for an e-mail newsletter
Customer attitudes
Surveys, market research, RSx tool
11
(
)
)
1
t
(
)
1
t
(
)
t
(
)
t
(
CE
CE
CE
P
ROC
-
-
-
+
=
