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Building Customer Equity in a Digital World Jainita Khatri 083 414 9796 @PranaBusCons
Why are we in business?
Core to all successful business is Sales Profit Mastering the relationship Market Share Innovation Competitive Advantage
The Power of Brands
Brand Value in 2014 $118 billion Intebrand Oct 2014
Brands are important, but consumers have changed Business Ethics Information generation More Awareness Knowledge driven economy Communication More Exposure
Brand Equity Customer Equity Value endowed to products and services (as built in the past) Value endowed to people who are buying the products and services (as they will in the future)
Customer Equity The sum of the customers lifetime values to the organisation Blattberg and Deighton
Customer Equity Purpose Purpose is to maximize value that can be gained from managing customers better, to deliver a better customer centric organisation To drive a direct relationship with the consumer, to ensure continued support and loyalty
Customer Acquisition To move the customer from knowing a product to purchasing a product Customer Retention To keep the customer buying the product over and over again
What is CRM Customer Relationship Management a holistic process of identifying, attracting, differentiating and retaining customers Involves all members of a company culture of relationship building Results in higher profits through a firm s customer base
Most companies treat sales like an art, but they are discovering that the sales process needs to become more of a science. Bain, 2012
The science of building Customer Equity
What s been the major change in the past few years, driving the shift?
Digital Media Shifting the Economy 3 Billion Internet users 91 % access Internet through Laptop 80% access on a Smart Phone 41% Reach through direct marketing B2C content marketing 76% videos SEO Top rated Digital Channels
Africa is yet untapped, and will boom
The consumer decision tree
Is shifting introducing: The Zero Moment of Truth
Zero Moment of Truth
Challenges in CA and CR Customer Acquisition Customer Retention Costly Competitive market place The environment is changing Customer behaviour is changing Millenial Mum Online purchase Zero moment of truth Price-Check Loyalty clubs are commonplace It s hard to create and retain loyal Customers complain loudly
There is a shift in the consumption of media
There is a shift in the consumer mindset
It s pretty hard to create and maintain customer loyalty, Accenture
The brand is owned by the customer
Building Customer Equity in a Digital World: A Step by Step Guide
Steps to build customer equity 1. Assess where your business is Customer Acquisition Strategy Customer Retention Strategy 2. Segment the customer base Understand what drives purchase and loyalty 3. Implement Segmentation Focus on the most important segment Communicate as appropriate with each segment If you can be personal If you can t be personal, don t pretend 4. Understand what drives switching
Steps to build customer equity 1. Assess where your business is Customer Acquisition Strategy Customer Retention Strategy 2. Segment the customer base Understand what drives purchase and loyalty 3. Implement Segmentation Focus on the most important segment Communicate as appropriate with each segment If you can be personal If you can t be personal, don t pretend 4. Understand what drives switching
Assess where you are Who: New Business Customer Acquisition Channels based on business type Mass media/web/target audience based on demographics/partners Word of Mouth Focus areas Newness/Fashion Product or service excellence Delivering on promises Who: Established Business Customer Retention Channels - already exist Focus areas Service Acknowledgement and gratitude Value
Who What Where When Why How
Steps to build customer equity 1. Define where your business is Customer Acquisition Strategy Customer Retention Strategy 2. Segment the customer base Understand what drives purchase and loyalty 3. Implement Segmentation Focus on the most important segment Communicate as appropriate with each segment If you can be personal If you can t be personal, don t pretend 4. Understand what drives switching
Segmentation Traditional segmentation Geographic Demographic Behavioural Psychographic More in depth Based on the specific sector and factors influencing purchase
Customer Segmentation (B2B) Targeted leaders Strategic Partners Level of collaboration Transactional customers Targeted partners Income generation
Customer Equity The sum of the customers lifetime values to the organisation Blattberg and Deighton
Sales and Profit Customer Equity Value Equity Brand Equity Retention Equity The Drivers of Customer Equity
Drivers of Customer Equity Value Equity Brand Equity Retention Equity Quality Price Convenience Brand awareness Attitude towards brand Perceptions of brand ethics Sales and Profit Loyalty programs Special recognition Affinity programs Community building programs Knowledge building programs Customer Equity Value Equity Brand Equity Retention Equity
What is the key driver of customer equity for the soft drink industry? Value Equity Brand Equity Retention Equity
Choose what works for you Value Equity Brand Equity Retention Equity Quality Price Convenience Brand awareness Attitude towards brand Perceptions of brand ethics Loyalty programs Special recognition Affinity programs Community building programs Knowledge building programs
What is the key driver of customer equity for Woolworths? Value Equity Brand Equity Retention Equity
the difference Value Equity Brand Equity Retention Equity Quality Price Convenience Brand awareness Attitude towards brand Perceptions of brand ethics Loyalty programs Special recognition Affinity programs Community building programs Knowledge building programs
South African Bank Getting it Right Strong on Customer Acquisition Even Stronger on Customer Retention High Conversion High Customer Lifetime Value Value Equity Brand Equity Retention Equity Quality Price Convenience Brand awareness Attitude towards brand Perceptions of brand ethics Loyalty programs Special recognition Affinity programs Community building programs Knowledge building programs
Customer centered FNB is an ideas bank that is ideals and values centered. This sets the stage for an intimate conversation with our customers and attracts attention from non-users. We are pleased to achieve this ranking as it is testament that our brand, more than just selling stuff, is building enduring and rewarding relationships with customers that in turn, continue to grow the business, says Bernice Samuels, FNB Chief Marketing Officer.
drives sales (and brand) Voted strongest brand in 2014 Brand Finance South African Annual Survey Voted coolest bank, by Generation Next survey for past 3 years World s most innovative bank (2012)
Drivers of Customer Equity Value Equity Brand Equity Retention Equity Quality Price Convenience Brand awareness Attitude towards brand Perceptions of brand ethics Sales and Profit Loyalty programs Special recognition Affinity programs Community building programs Knowledge building programs Customer Equity Valu e Equit y Brand Equity Retention Equity
Sales and Profit Customer Equity Value Equity Brand Equity Retention Equity
Steps to build customer equity 1. Define where your business is Customer Acquisition Strategy Customer Retention Strategy 2. Segment the customer base Understand what drives purchase and loyalty 3. Implement Segmentation Focus on the most important segment Communicate as appropriate with each segment If you can be personal If you can t be personal, don t pretend 4. Understand what drives switching
Implementation is key Require - Financial resource - Research capability - Qualified CRM personnel - CRM IT system - Analytical skill - Organisational culture of customer service - Committed employees, who all buy into the program
Segmentation Process Define segments and sub-segments Build strategies to service customers Sales follow up phone calls Customer satisfaction surveys Product or service happiness level Gifts and vouchers Communicate with the customers No mass emails Based on customer needs Measure effectiveness of communication by way of sales increase Analyse results bi-annually or annually Evaluate communication and relationship tactics Redefine as necessary
Focus on the right channels Blogging Video Marketing Social Networking Email Marketing Social Media Channels Micro blogging Discussion Forums Social Bookmarking
Online Activities Seeking Information Shopping News, magazines Keeping in touch Website Online ads and other engagement Website, with detailed localised info Facebook Twitter Pinterest Good SEO Online store, including value ad Blogs Discussion forums Strong mobile compatibility Promotional newsletters Newletters You tube
Posting / tweeting etc is not CRM Powerful means to connect with the consumer Keep social media in perspective Needs to be managed well
Using Social Media Well It s not about likes and followers, it s about engagement It s about turning fans into advocates It s about servicing complaints It s about gathering insights, and turning that information into knowledge
Builds a relationship Meaningful connection for both parties Sharing information Building better ideas Driving innovation
Social Media Matters
Steps to build customer equity 1. Define where your business is Customer Acquisition Strategy Customer Retention Strategy 2. Segment the customer base Understand what drives purchase and loyalty 3. Implement Segmentation Focus on the most important segment Communicate as appropriate with each segment If you can be personal If you can t be personal, don t pretend 4. Understand what drives switching
Globally there has been a 4% increase in switching Watch for these blindspots Nice to Meet You Missing the chance to set the right expectations at the start of a customer relationship, potentially through overpromising. You Don t Know Me Anymore Not noticing subtle changes that matter in customers need for recognition, special treatment and reward. Cheating Heart Overlooking signs that customers are itching to switch, including partial switching on some services. Are You Listening? Failing to offer consumers opportunities to engage with a provider. Trinkets Won t Save Me Relying on point solutions to satisfy and keep customers. Accenture s Global Consumer Research 2011 Surveyed 10,173 consumers in 27 countries in November 2011.
To recap: Why are we in business?
To Recap Customer Business Development Customer Relationship Management
To Recap Customer Business Development Customer Relationship Management
Customer Acquisition Strategy 1. Define the customer base 2. Focus on building connections on an emotive level 3. Use mass media or word of mouth marketing (including Phone calls, Emails and Social Media) to drive contact 4. Ensure contact is meaningful, rather than counterproductive 5. Focus on early adopters
Customer Retention Strategy 1. Understand and respect the customer (by segment and sub-segment) 2. Focus on same goals and purpose 3. Share the value proposition (and change as circumstances change) 4. Keep service oriented 5. Anticipate problems 6. Manage the issues 7. Understand the cost of losing a customer, including the growing switching mentality of the aware consumer
Maximising Customer Equity/Sales 1. Invest in the high value customers first 2. Transform product management into customer management 3. Reduce costs associated with customer acquisition 4. Track customer equity gains and losses against marketing programs 5. Relate branding to customer equity (segmentation) 6. Build separate plans for customer acquisition and customer retention
Customer relationship management at every level in the organisation 1. Every person is important 2. Build a culture of customer management 3. Internal customer management
Business is always personal
There is only one profit centre, and that is the customer Peter Drucker Jainita Khatri Mobile: +27 (0) 83 414 9796 Email: www.pranabusinessconsulting.com Twitter ID @PranaBusCons