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Managing The Customer Lifecycle: Customer Development and Retention

This document discusses strategies for customer development and retention. It outlines approaches for customer development like integrated marketing, events, customization, and cross-selling. It then discusses metrics for measuring customer retention rates based on customers retained from year to year or purchase to purchase. It also distinguishes between customer retention and value retention, noting the importance of retaining high value customers. Finally, it presents strategies for positively and negatively influencing customer retention through rewards, penalties, and addressing customer satisfaction.

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95 views

Managing The Customer Lifecycle: Customer Development and Retention

This document discusses strategies for customer development and retention. It outlines approaches for customer development like integrated marketing, events, customization, and cross-selling. It then discusses metrics for measuring customer retention rates based on customers retained from year to year or purchase to purchase. It also distinguishes between customer retention and value retention, noting the importance of retaining high value customers. Finally, it presents strategies for positively and negatively influencing customer retention through rewards, penalties, and addressing customer satisfaction.

Uploaded by

Shamayita
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Managing the Customer Lifecycle:

Customer Development and


Retention
Strategies for Customer
Development

Integrated marketing communication

Event based marketing

Customization

Up-selling and cross-selling

Channel integration

Marketing optimization using cost-


effectiveness models
Customer Retention

Customer retention for FMCG or FMCS


= (customers at the end of financial year) / (active
customers at the beginning of the year)

The above is modified for consumer durables by


considering repurchase or replacement cycle

Identifying 'customer' through


Product purchase
Intermediaries
Functions (after-sales service)
Using aggregates and averages
Customer Retention

Measures of retention:
Raw CR rate = (no. of customers doing business at the
end of the year) / (active customers at the beginning of
the year)
Sales adjusted CR rate = (sales received from
retained customers) / (sales achieved form all
customers at the beginning of the period)
Profit adjusted retention rate = (profit earned from
retained customers) / (profit earned from all customers
at the beginning of the period)
Customer Retention vs Value
Retention

Consider:
A retail outlet having 1000 customers
contributing a total Rs 50 lakhs revenue per
month
50 customers defect; revenue comes down to
Rs 40 lakhs

5% reduction in customers resulting in 20%


reduction in revenue

CRM initiatives should aim at maintaining


relationships with value adding customers
Economics of Customer Retension

Incresed purchases over time

Lower customer management over time


(particularly with respect of B2B)

Customer refferral advantage

Opportunities for premium prices (up-selling)


Strategies for Customer Retension

Negative strategy

Positive strategy
Strategies for Customer Retension

Negative strategy:
Penalize their exit from the relationship
Swtching costs compells customers to remain
though not satisfied
May result in negative WOM
Strategies for Customer Retension

Positive strategy:
Reward customer for remaining in relationship
Customer delight
Occur when perceptions > expectations
Kano's Customer Delight model
Basic/linear/attractive qualities
Methods to add customer perceived values:
B2C: Loyalty schemes; Customer clubs; Sales
promotions
B2B: Social and structural bonds (financial, legal,
technological, geographic, process, equity)
Impact of Context on Customer
Retension

Number of competitors

Corporate culture

Channel configurations

Purchasing practices

Corporate (ownership) expectations

Ethical conerns
Performance Indicators of Customer
Retention Programmes

Raw customer retention rate in each customer


segment

Sales-adjusted retention rate in each customer


segment

Profit adjusted retention rate in each customer


segment

Cost of customer retention

Share of wallet of retained customer segment

Customer churn rate per product category, sales


region or channel
Signals for Customer Churns

Reduced RFM score

Incresed dissatisfaction during customer handling

Company changes customer touch points

Customer changes address

Reduced share of customers

Increased queries from customers on the same issue


Strategies for Terminating Customer
Development

Raise prices

Unbundle the offer

Re-specify the product

Introduce ABC class of services

Reorganize sales and service

Tough terms and conditions

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