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Archive for the ‘Customer Retention’ Category« Previous Entries Next Entries »Increasing Sales In Challenging Times, part 1 of 3Tuesday, March 31st, 2009
The American Marketing Association’s flagship publication, Marketing News, recently ran an article entitled ‘Look Farther Afield, which described how research should answer certain questions for marketers hoping to expand into new markets. This feature was contributed by B2B International’s very own Julia Cupman. Julia’s full original article is serialized over our next 3 blog entries: The recent economic turmoil involving long established financial pillars has had a resounding impact on business. Many companies have experienced declining sales and confidence in the economy is dwindling. Numerous economists are claiming that it is the worst financial crisis since the Great Depression, but while the seriousness and consequences of the problem cannot be denied, it is only an economic stymie if businesses allow themselves to lose confidence and focus. The fear invoked by the Wall Street tremors has led to a fierce slashing of budgets, in particular marketing budgets. Why are marketers feeling the pinch with decreased spending power when it is such a crucial time to understand customers’ requirements and meet their needs before they potentially defect? Indeed, just a 5% reduction in the rate of customer churn can increase profits by as much as 85%. Given that most businesses lose around half of their customers every five years, it is frightening to think how many customers have been lost in the past few months alone as a result of the faltering economy. The case is already clear: do nothing, and suffer. The drive towards lower costs and consequently lower prices is increasingly resulting in the substitution of value with low price – an area where not everyone can compete as profit margins are squeezed dry. In fact, a company that seeks refuge in cutting its prices may fatally delineate its own downfall as it could devalue its offering and denigrate its brand. It is thus paramount that in times of a weak economy, businesses seek proactive means of remaining competitive, and cutting prices may not be the answer. This begs the question as to what companies – especially their marketers – can do to give their business a welcome lift in times when the only direction appears to be downward. Sell moreThis may seem absurd when it is challenging to simply retain customers and to ensure that turnover and profits do not slip. So how can selling more be possible, and in what way is it a panacea? It is necessary to think outside the box. With sell more, think sell elsewhere, think sell farther afield, think new opportunities. Of course entering new markets is not appropriate for all companies, but it is an option that many companies could consider, particularly if they are faced with stagnating demand domestically. Thus, if growth is not occurring locally, chase it internationally. The growth forecast for China next year, for example, stands at 9.5%, contrary to 1.8% for the EU. Indeed the BRIC countries (Brazil, Russia, India and China) offer a plethora of opportunities as labor is often cheap and readily available, investment is increasing and the prospects look good. Consider Russia and the helicopter industry, for instance. AgustaWestland is currently researching the opportunities in Russia, and Textron Bell has just signed up a new sales representative (Jet Transfer) in Russia which has committed to sales valued at over US$10 million. These two players have recognized an unmet need and a clear opportunity, as only half of Russia’s civil helicopters are in flyable condition and domestic production is limited. This article, which goes on to describe many of the questions that marketers should ask in order to explore, scope and define market expansion opportunities, continues tomorrow. Customer satisfaction – is there an ultimate question?Wednesday, January 7th, 2009
Following on from blog article – Keep it short, keep it focused we felt it appropriate to continue the discussion around keeping things simple when asking customer satisfaction questions. This article puts forward the argument that there is no such thing as the ‘ultimate question’. With customer satisfaction surveys increasing in length, the marketing industry will always be seduced by statements such as ‘this is the single most reliable indicator of a company’s ability to grow’. However, is the Net Promoter Score (NPS) concept oversimplifying things and losing sight of what customer satisfaction and loyalty studies really aim to deliver? The fundamentals of the Net Promoter Score are that every company’s customers can be divided into three categories: Promoters, Passives, and Detractors. By asking — How likely is it that you would you recommend us to a friend or colleague? you can find out how likely a brand is to be recommended, and it will provide a good indicator of how well it will grow. Customers respond on a 0-to-10 point rating scale and are categorized as follows:
To calculate your company’s Net Promoter Score (NPS), take the percentage of customers who are Promoters and subtract the percentage who are Detractors.
Many large consumer brands have integrated the NPS into their customer loyalty programmes from Amazon, Apple and eBay through to Harley-Davidson, Google and Dell. However, despite its popularity amongst large corporates, research by Hayes (2008), "The True Test of Loyalty," Quality Progress, June 2008, shows that the "likelihood to recommend" question is no better predictor of business growth compared to other customer loyalty questions used over time e.g., overall satisfaction, likelihood to purchase again. The attraction to the Net Promoter Score is its simplicity in that it requires just one question, it is easy to benchmark and implement across individual divisions or organisations as a whole. However the real driver of its ubiquitous use has been its claim that it is the only question you need to ask that tells you everything you need to know and this is where the problem lies. Word of mouth does not always boost sales and distribution and pricing can mitigate effects too. In conclusion, there is no single question that can be used to monitor customer loyalty and satisfaction. NPS is a useful measure enabling changes over time to be tracked but a customer survey needs more elements to it to facilitate the changes to take place. Customer loyalty and recommendation behaviour are products of satisfaction with the total customer relationship from the product and service, they cannot be fully understood by one question. The key to any customer satisfaction and loyalty survey is about understanding how satisfied customers are, why they think the way they do and how change can take place to increase satisfaction and loyalty in the long-term. The Net Promoter Score has been around for over 5 years now and was announced as the ‘ultimate question’. Tracking a number over time is only a marked indicator and does have its values but the real work is understanding what makes customers satisfied and loyal and then delivering that through change management. Making Amends & Developing Customer LoyaltyWednesday, December 17th, 2008
Customer loyalty is of paramount importance in today’s economic climate. We have many opportunities to satisfy our customers but what if on the one occasion we don’t reach the dizzy heights we have set ourselves and a customer wishes to make a complaint! New research conducted by Charter UK within the contact centre industry supports the theory that companies who manage their customer complaints well are more likely to retain their customers than those who don’t. According to the research:
A quick glance at the website of the New South Wales Government’s Office of Fair Trading gives more weight to the argument that customer complaints should be thoroughly analysed and handled with care: It may be hard to believe, but customer complaints are one of the best opportunities you have for keeping your customers loyal. Your most dissatisfied customers can actually become your best ambassadors – if their complaints are handled properly. At some time or another, you have probably experienced a problem with a business. When they dealt with your complaint reasonably, it felt good. You were taken seriously. A balanced, reasonable response to customer complaints builds customer loyalty. Some interesting facts:
Yet if you can handle a complaint well:
From all the customer satisfaction and loyalty research we carry out at B2B International, what we do know is that you’re unlikely to be able to satisfy all your customers all of the time. By being proactive and understanding what customers are complaining about, it not only gives you a second chance to rectify a negative situation but it also allows you to take the necessary steps to go beyond the call of duty and maybe even delight the customer by doing something that is out of the ordinary. Make sure your company focuses on turning customer complaints into a positive experience and you never know, it could be the first step in rescuing a customer and gaining their undivided loyalty. Of course, there is another school of thought – one which would suggest trying to avoid customer complaints altogether. Why put the emphasis on handling customer complaints well, instead of on trying to reduce the complaints in the first place? In their recently published book, "The Best Service Is No Service", Bill Price and David Jaffe argue that, in gauging their effectiveness in terms of the number of customer calls they handle, most customer service operations have got it wrong. Price and Jaffe contend that many customers simply want to purchase your products and services; their only reason for going through to the customer service department is because something is wrong or unclear about the company’s offer. If you can eliminate the need for a customer service department, you can congratulate yourself on having got to the root of the problem. Customer Satisfaction on the WaneTuesday, December 16th, 2008
A small third-quarter deterioration (0.1%) in aggregate customer satisfaction continues a decline that began in 2007, according to the American Customer Satisfaction Index (ACSI) The ACSI is a national economic indicator of customer evaluations of the quality of products and services available to household consumers in the United States, which is updated quarterly. The recently-reported decline in buyer satisfaction has precipitated a softening of consumer demand, with household spending actually falling in the third quarter for the first time in 17 years. Yet in spite of the overall fall, a lot of companies have actually been working hard to improve their customer relationships. Professor Claes Fornell, who is the founder of the ACSI and author of The Satisfied Customer notes: For individual companies, customer satisfaction actually matters even more in a recession. Now is the time to make sure customers don’t leave and that margins don’t evaporate. Firms without strongly satisfied customers will face a very difficult challenge. To find out more about how B2B International can help you to measure and improve your customer satisfaction levels, click here. Companies in the dark about their customersTuesday, November 11th, 2008
According to frankly disturbing new market research three quarters of UK businesses are confident about their futures – yet have no idea what their customers really think. Market research company Shape the Future looked at the customer satisfaction measurement strategies of UK based companies. The statistics show that while 70.3 Businesses that rely on unsolicited customer feedback are not getting the information they need. Of those that do measure customer satisfaction, 55.7 percent are only Peter Martin, managing director at Shape the Future said: The research also indicated that the larger the company, the more likely it is that customer satisfaction will be measured formally. Among companies of 50 employees or Source – Gems Europe GmbH « Previous Entries Next Entries » |
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