How To Win Over Customer

Group-6
• From focus on gaining Market Share to a focus
on building Customer Share.
– Cross- Selling
– Up- Selling
• From focusing on profitable transactions to
focusing on customer lifetime value.
 Customer Lifetime Value[CLV]
• Customer lifetime value describes the Net Present Value(NPV) of
the stream of future profit expected over the Customer’s
Lifetime Purchases.
• The specific calculation depends on the nature of the customer
relationship. Customer relationships are often divided into two
categories.
– In contractual or retention situations, customers who do not renew
are considered "lost for good". Magazine subscriptions and car
insurance are examples of customer retention situations.
– The other category is referred to as customer migrations situations. In
customer migration situations, a customer who does not buy (in a
given period or from a given catalog) is still considered a customer of
the firm because she may very well buy at some point in the future.
• In customer retention situations, the firm knows when the
relationship is over.
 Measuring Customer Lifetime Value[CLV]
CLV Estimate:
A. Company analyze its new customer acquisition
cost:
• Cost of Average Sales Call (including salary, commission,
benefits and expenses)=Rs. 3,000

B. Company’s estimate of average customer’s

lifetime:
• Average customer revenue=Rs. 500
• Average no. of loyal years=20
• Company profit margin=20%
• Cutomer lifetime value=Rs. 500x20x0.20=Rs. 2,000
 Conducting Customer Profitability Analysis[cpa]
• Pareto “Rule of 20:80” says that the top 20% of the
customer may generate as much as 80% of
company’s profit.
• Identifying these 20%---> ABC (Activity Based
Costing) Technique.
• (Revenue – Cost)=Customer1
• (Revenue – Cost)=Customer2
•: : : : :
•: : : : :
• (Revenue – Cost)=Customer N & so on.
 Connecting with Customer
• Understand how best create value for its
chosen target customer.
• Need to develop strong, profitable long-term
relationship with customer.
• Value increases with quality, services and
decreased prices.
 Shaping the market offering
• 1st market offering is Product, must be shaped
to offer good quality, design features &
improved packaging.
• To provide competitive advantage to the firm
support services like easy finance, home
delivery, repair & training etc should be
provided.
 Sample Customer Performance Scorecard
Measures
• % of new customer to average number of
customers
• % of lost customers to average number of
customers
• % of win back customers to average number of
customers
• % of customers falling into very dissatisfied,
dissatisfied, neutral, satisfied & very satisfied
• % of the customers who say the word purchase
the product again
 Sample Customer Performance Scorecard
Measures
• % of customers who say they would recommend the
product to others
• % of target customers who have brand awareness or
recall
• % of customers who say that the company’s product is
most preferred in its category
• % of customers who correctly identify brands intended
positioning and differentiation.
• Average % of company’s product quality related to
chief competitor
 Changing the traditional organization chart to
modern customer oriented organizational chart

• Such organization will have a manager at

every level who will be personally involved in
knowing, meeting and serving customer
 Approach to ENHANCING VALUE THROUGH
Customers...
1. Build a strong customer database
2. Interact with individual customer to improve
your knowledge about their individual need
3. Give a share of voice to customer
4. Practice the concept
5. Day in Life of Customer
6. Focus on building relationship
7. Enhancing growth potential of each customer though share of wallets
 Ex 1: Maruti Dealership.
 Ex 2: Bharat Petroleum.

8. Forming strong customer bonds

Also called retention building approach.

 Financial benefit:

 Frequency program (FP)

 Club membership program (CMP)
 Everyday low price (ELP)
 Social benefits
By providing 24*7*52 access facility.

 Adding structural ties:

o Charging less
o Free gift
THANK YOU