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(A) Reassess Relationship
- To determine actual reasons for customers to be classified as unprofitable
- Management could revie information beyong profitability
(B) Educate Customers
- Provide with information customer need so that
they will not draw on company’s valuable resources
- Manage customer expectations so that they willing to adapt
(C) Renegotiate Value Proposition
- to achieve mutual benefits for company and customer
- Implement different pricing and strategies
(D) Migrate Customers
- Consider altering the valur proposition when there is no realistic option.
- Identify partner or subsidiaries in same category as alternatives.
(E) Terminate Relationship
- Discontinue relationship when customer remain unprofitable after all the efforts of retaining

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3. Customer Divestment Strategy
- What is the reason?
Profitability
- Purchase pattern change and no longer provide sufficient return on investment
- Consider to have high potential value
Customers' Behaviour
- exhibit intolerable behaviour for a
prolong
period of time will affect the productivity of the employees
Company's Capacity
- lack the necessary expertise, physical or
financial capacity to continue providing the service
- Due to a change in governmental regulations
or external environment beyond companies’ control
Business Strategy
- overall corporate focus or strategy may change
- Happen when companies decide to exit certain
market segments

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Criteria for an effective customer referral programme

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Criteria for an effective customer referral programme

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- willing to participate if the referral,
sign up and reward redemption processes are simple
- Personalised
the invitation so that referee will perceive it
as an intimate message rather than an advertisement

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(c) Cross-Selling
- encourage customers to buy related products and services to complement original purchase.
- Alerts customers to product and services that may not know are offer by the companies.
(d) Referrals
- method of promote products and services to new customers through positive word of mouth.
- Happens spontaneously among customers but can influence through appropriate strategies.

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2.  Customers Development Strategy
- Methods to increase customer value
(a) Unbundling
- the value proposition and reprice it to the
customers
- Customers end up paying for seperate services instead of one complete service.
(b) Upselling
- encourage customers to purchase comparable higher priced products/services
- help customers visualise the value that they will get when choosing higher priced option.

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1. Identify Customer to Develop
-  Find the potential Value of customers
- Cusomer Value do not increase automatically
- Customers potential value may drop and become unprofitable over time.
- Companies need to implement carefully planned activities to increase value.

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- Refers to process of developing the value that companies could gain when retained customer.
- achieved by increasing average customer spend from retained customer and new sales from referrals.

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1. Advertising
- Create and deliver message to target audience
- influence by advertising communication objective and advertising medis used.
- Advertising communiction consists of:
- Cognitive Outcome
ideal for companies to raise awareness and generate knowledge of product/service
- Affective Outcome
ideal for companies to develop a liking for the brand and generate preference.
2. Sales Promotion
- temporary incentive aim at prospect to buy the product
- effective to influence prospects at consideration stage.
- E.g Sampling, free trials, discounts
3. Word of mouth
- customers assume
to be independent of commercial influence
- E.g Social Media, Customer Referrals etc.
4. Others
- other methods to market
- e.g direct marketinng, merchandising etc.

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(B) - Customer Acquisition Cost:
- Cost of convincing potential customer to buy product or service.
- The cost varies across different marketing channels.
- Companies use lower cost methods which is Word of mouth, directing marketing and sales promotion.
- Cost is usually higher for social media advertising.

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- Low priority in Customer Acquisition
- customers of competitors brands who prefer their current brands.
- Consist of
Weakly unavailable non customers': first choice lies with
their currently brands, though not firmly (harder convince)
Strongly unavailable non customers: strongly prefer their current brands and uses other product and services in short term.

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- High priority in Customer Acquisition
- uncommitted customers of competitors brands who willing to explore for alternatives
- Consist of:
Available non-customers: prefer alternative to the current ones and ready switch product or services.
Ambivalent non-customer: Uses a lot of brands and not committed.

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- it is for non customers
- Divided in to Open non-customers and Unavailable customers

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-  Identify the potential prospects using commitment level and customer acquisition cost.
(A) - Commitment level:
- used to predict customer future loyalty
- Use conversion model to segments between based on level of commitment.
- Companies able to identify and target the appropriate customer group to acquire

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1. Acquires
- Get new customers (reach out)
- Prospect to first time customer
2.  Retain
- Retain existing customer
- Keep Customers by Loyalty programmes, product updates etc.
3, Develop
- Develop existing customer value's and grow customers by referrals.

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(Increasing Loyalty)
1. Suspect
- Who fits the customer profile and have limited information.
2. Prospect
- Who show interest in the product and services
3. First time customer
- who make first purchase
4. Repeat Customer
- makes additional purchases
5. Majority Customer
- Associates yhe company as a company of choice
6. Loyal Customer
- Resistant to switch company
7. Advocate
- generates positive word mouth.

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- Classified of customers based on their level engagement with the company
- Helps to identify potential customers who can remain loyal and engaged to the compant for a long time.
- Aim to convert potential customers to
advocates and enjoy the maximum lifetime value

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Acquisition and retention of customers
(Lesson 5 and 6)