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alloysWhat would you do?
Carol insisted that bringing the new client on board was going to be great for business. Rosa disagreed. The client was notorious for getting bargain rates from one supplier and then jumping ship when the next big deal came along. Rosa was convinced the new client wouldn't stick around long enough to become profitable. To make matters wor, Rosa knew that Carol's strategy for wooing this client involved moving resources from the older, more profitable accounts to this new one. How could she prove to Carol that, at the very least, they should do everything possible to keep their loyal, profitable customers happy?
What would you do?
Rosa needs to show Carol that, while making individual sales is important, real profit comes from nourishing a relationship with a customer and watching it grow. She might sit down wit
h Carol and explain the concept of the "lifetime value" of a customer and actually calculate the lifetime value of one of their clients. She could demonstrate how cultivating an ongoing relationship with a customer creates a steady revenue stream that requires less marketing. Loyal customers tend to buy related products, as well as generate additional revenue through positive referrals. Rosa might then help Carol calculate the potential revenue streams from an existing loyal client and from the new one.
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In this topic, you will learn about the lifetime value of a customer, and why it makes n to build loyalty among your target customers.
Closing individual sales, in most business, is not enough for success. Success depends on developing profitable lifetime relationships with customers. But gaining customer loyalty requires hard work, care, and attentiveness.
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Topic Objectives
This topic contains information about how to:郑州培训公司
Understand the rvice-profit chain—and in particular the interrelationships among customer satisfaction, customer loyalty, employee capability, and company profitability
Build and refine a process for delivering extraordinary value to the key customers
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About the Mentor
James L. Heskett
James L. Heskett has published extensively on customers, rvice, customer retention, employee capability, and profitability. He is Professor Emeritus at Harvard Business Scho
ol, where he has taught cours in rvice management, business policy, marketing, business logistics, and general management since 1965. He is a co-author of The Service-Profit Chain and Service Breakthroughs: Changing the Rules of the Game and a CD-ROM for managers titled Service Success.
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Facts about Customers and Loyalty
The three Rs
Customer loyalty creates profit in three ways. Each of the ways requires little investment of sales and marketing dollars from your company.
Key Idea
Studies show that the longer customers are loyal, the more profitable they become. Why? The answer has to do with what are known as the three Rs of customer loyalty.
The first R of customer loyalty is retention. An ongoing relationship with a customer creates a steady stream of revenue over time as the customer continues to buy products. The costs associated with marketing decline, and, in many cas, so do the costs of actually rving the customer who becomes familiar with the company, its product lines, and its procedures.
Loyal customers also generate related sales, the cond R. The profit generated by lling new products and rvices to existing customers is greater than it is for lling to new customers. The forward-thinking company develops new products by listening to its loyal customers. Loyal customers are therefore more likely to buy becau the new product has been designed to meet their needs, and becau they have a degree of faith in the company already.
加减乘除英文In fact, the original product may generate a minor profit compared to related sales over ti
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me. New sales to existing customers are less costly, becau they require less marketing, no new credit checks, less paperwork, and less time. Furthermore, loyal customers are often less nsitive to price than new customers.
Positive referrals, the third R, are the best kind of marketing—and they're free! Positive customer referrals are vital to profit and growth. Rearch suggests that satisfied customers are likely to tell five other people about a good experience, while dissatisfied customers are likely to tell eleven other people about a bad one. From your own experience, you know that personal referrals carry much more weight than traditional marketing.
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Internal customers
The three Rs also come into play when your job involves rving internal customers—other individuals, groups, or teams within the organization. The longer a positive relations
hip lasts with an internal customer, the more you both accomplish together. As a long-term relationship with internal customers grows, the relationship becomes more and more effective, which in turn affects the company's profitability. In a truly effective internal relationship, a synergy forms. Two groups within an organization can work together to develop new products or rve a customer in increasingly innovative and creative ways. What's more, you don't have to work exclusively with external customers to know that favorable reports about your group create goodwill and positive expectations. A bad reputation creates negative expectations, decread credibility, and ongoing friction with other groups. Free marketing or bad press? The choice you make is the key to your reputation and your bottom line.
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Misguided marketing
Various estimates place the cost to attract new customers at five or more times the cost of retaining existing ones.
—James L. Heskett
The illustration below reprents a typical marketing budget. As you can e, only a small fraction of the entire budget is devoted to maintaining loyal customers.
Most companies today don't work very hard at developing a relationship with a long-term customer. They focus nearly all their energy and money on getting new customers. They promi low, introductory rates and sign-up incentives, and, of cour, they spend millions on marketing and advertising and lo money on bad debts.
The reward structure within the company is geared almost exclusively to luring new customers. The biggest incentives often go to employees who bring in new customers, not to tho employees who work hard at keeping loyal internal and external customers satisfied.
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