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mcr2e_chapter_6_slides.pptxManaging Customer Relationships: A Strategic Framework
Chapter 6
Differentiating Customers by Their Needs
Course Title Instructor
Managing Customer Relationships: A Strategic Framework, Second Edition
Don Peppers and Martha Rogers
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Chapter 6 Preview
Managing Customer Relationships: A Strategic Framework, Second Edition
Don Peppers and Martha Rogers
Review IDIC Framework: Differentiate
Definitions
Differentiating Customers by Needs
Understanding Needs and Behaviors
Categorizing Customers by Needs
Characteristics of Customer Needs
Community Knowledge
Using Needs Differentiation to Build Customer Value
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Action
Analysis
…customers as unique addressable individuals
…by value, behavior and needs
…more cost -efficiently and effectively
…some aspect of the company’s behavior, offerings, or communications
Identify
Differentiate
Interact
Customize
Review: IDIC Framework
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Definitions
Managing Customer Relationships: A Strategic Framework, Second Edition
Don Peppers and Martha Rogers
Needs: The “why” behind the behavior – what a customer wants or prefers from an enterprise
Customer: End user, retailer, etc.
Product benefits: Advantage from the use of the product – but not equivalent to customer needs
Product attributes: Physical features of the product
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Differentiating Customers by Needs
Managing Customer Relationships: A Strategic Framework, Second Edition
Don Peppers and Martha Rogers
Customers may find different uses for the same product:
Legos used in make-believe role
Legos used as step-by-step building project
Legos used to create a child’s own configuration (not on the box)
Defining customer needs, rather than product benefits or attributes, allows company to develop and offer other products that also meet this need
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Understanding Needs and Behaviors
Managing Customer Relationships: A Strategic Framework, Second Edition
Don Peppers and Martha Rogers
Needs are the “why”; behaviors are the “what”
Three different types of customer profiles:
1. Demographic (static)
2. Behavior-based (dynamic; the “what”)
3. Need-based (dynamic; the “why”)
Needs drive behaviors; behaviors drive value
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Categorizing Customers by Needs
Customer needs are unique, but too costly to create a need profile unique to every customer
To take action, customers need to be grouped, ideally according to need:
Market segment: customers with a similar attribute (women over age 45 with household incomes over $50,000)
Customer portfolio: customers with similar needs (women who value friendships and like to entertain)
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Characteristics of Customer Needs
Managing Customer Relationships: A Strategic Framework, Second Edition
Don Peppers and Martha Rogers
Situational
Dynamic
Different intensities
Often correlate with customer value
Most fundamental are psychological
Some shared, some unique
No single best way to differentiate by needs
Whatever way most effectively changes customer behavior to increase value for company
Even in B2B, customers are still individuals
Not just a homogeneous company, but purchasing agents, end users, etc., with specific needs)
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Community Knowledge
Managing Customer Relationships: A Strategic Framework, Second Edition
Don Peppers and Martha Rogers
Community knowledge is the accumulation of information about the preferences of a community of customers, allowing an enterprise to anticipate what a customer will need.
Fueled by collaborative filtering software, a matching engine that can serve up products and services based on what other customers with similar preferences have preferred
Most beneficial for companies that have:
Routine, cost-effective, interactive communications with customers
Customers highly differentiated by needs
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Using Needs Differentiation to Build Customer Value
Managing Customer Relationships: A Strategic Framework, Second Edition
Don Peppers and Martha Rogers
Accumulate information about customer needs in the context of a Learning Relationship
Share this information, within the bounds of privacy protection, with everyone at the enterprise who will interact with the customer
Use this information to treat different customers differently
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