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Advertising under Customer Acquisition Strategy

To increase customer's knowledge - cognitive outcome

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Operational CRM

Marketing Automation (MA)

allows companies to develop and operate loyalty management programmes

Analytical CRM

Provides essential insights into customers’

behaviour that are useful when developing retention plan

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Only for short term

Reduce customer loyalty

decrease long lasting r/s between customer and company

Customer will feel reluctant staying

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Helps to improve attitudinal loyalty

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Should customer loyalty programme be free 

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Should customer loyalty programme be free 

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NO

Depends on the company

Paid loyalty program can be attractive and effective too

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Rewards should be given in exchange for information about customers that can be used to deepen the relationship or customise the products/services

Have different tiers - encourage customers to remain with company

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Factors affecting attractiveness of loyalty programmes

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Factors affecting attractiveness of loyalty programmes

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Value

Attractive and worth the amount

Convenience

Claiming the rewards should be simple and not complicated

Achievable

Reasonable and attainable

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To motivate customers to return often, make frequent purchases and shun competitors

Benefits and value both company and customer

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High future LVC

Similar to MVC (Lesson 03)

Highest value for the company

High volume customers

Referring to large number of customers.

May not be generating so much profits but help to absorb high volume of fix cost hence manage to maintain the overall cost low

For example airline – economic class (the number of ppl buying it on a regular basis hence maintain the fix cost), – telco (prepaid user)

Benchmark customers

Influencers, blogger (follow their recommendations)

Inspirational customers

Post a lot of feedback on social media, always write to company, they bring value to customers as they give new ideas and recommendations for company to do well

Door Opener customers

Allow the supplier to gain access to a new market

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Rank 1 – super growth

Rank 2 – Most valuable

Rank 3 – Most growable

Rank 4 – Low maintenance

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Value of the market segments

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Most growable, super growth and low maintenance – worth retaining

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Committed customers need to be continuously reassured about the choice that they have made.

Frequent advertising for maintenance of brand is imperative

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Choose because convenient or price is good, whatever is easy for them

Company need to know and tackle first why they unhappy and make more efforts

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Shallow

Actively seeking for alternatives

Convertible

Ready to convert to other brands

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Entrenched

Perceive the brand as significantly better than the other brands in the market. They are advocates of the brand

Average

Will not switch now but later might

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Lesson 05

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Satisfaction with existing brand

Perception of alternative brands

Importance of brand to customers

Customers’ degree of ambivalence

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The longer the customer stay w u – help to strengthen the r/ds , help improve the trust and commitment

Build loyalty - with stronger r/s , company can gain a meaningful insight and able to satisfy their need more meaningful

Increase revenue - higher customer loyalty and satisfaction – company now have a chance to do cross-selling or upselling to increase the customer wallet share, through referrals from the customers they can gain revenue from other people

Loyal customer are more less price sensitive hence they will pay and also they are not easily to entice to other competitors if they give them discounts

Keeping customer is less complicated and much easier than acquiring new ones

Why is it sell to your customer is easier – r/s is there trust is there hence more willing to buy from u and your products cater to their needs

Why they can save the 2% - save some of the acquisition cost, reduce operational cost, resources and efforts

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Transactional marketing is more costly cause u focus on acquisition

Relationship marketing focus on acquire and retaining

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Nurture r/s w value creating customer, offer personalisation,

We have to be smart who we keep, we have to keep the valuable ones

Little value - loss of time, manpower and financial resources of the company

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Lesson 06

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Customers' referrals

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Sales Force Automation (SFA) helps to reduce the customer acquisition cost by streamlining the selling process

Service Automation (SA)
reduces the time and cost required
to serve the customers

Marketing Automation (MA)
enables companies to enhance
the efficiency & effectiveness of their marketing campaigns

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Ensure the right offer is made to the right prospect via the right channel at the right time

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Merchandising, direct marketing,
exhibitions, online sources, etc.

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Involves someone whom customers assume
to be independent of commercial influence

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Influence prospect at the consideration stage so that they have a reason of going ahead

Examples include sampling, free trials, discounts, rebates,
free gifts, etc.

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Company should not select advertising with lowest cost 

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Company should not select advertising with lowest cost 

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Lowest cost doesn’t mean can reach out to the target market

Must consider the frequency too

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Reach

Number of targeted audience exposed to the advertisement

Frequency

How many times it is exposed to the customers

Cost

Determined by the ownership of the communication channel.

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Cognitive Outcome

A lot of factual information being shared to create and educate

Affective Outcome

Emotion based

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To generate awareness

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The cost of convincing potential customer to buy a product or service.

The ideal customer lifetime value to customer acquisition cost ratio is 3:1

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Strongly prefer their
current brands and will adhere to that in the short term

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First choice lies with
their currently brands, though not firmly

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Customers of the
competitors’ brands who prefer their current brands

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Perceive the alternative and
their current brands as equally attractive

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Prefer an alternative to their
current ones and are psychologically ready to switch

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Uncommitted customers of
competitors brands who are willing to explore alternatives

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Open

The easiest group to target  and acquire

Offer worthy incentives (e.g. lower price, attractive offers) to entice them to switch

Unavailable

Advertising has minimal effect on the unavailable non customers segment. The major means of persuading this segment is through free trials

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Lesson 06

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Commitment Level

Enable companies to identify and target the appropriate customer groups to acquire

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Purchase a range of products/services

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Purchase more products/services

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Purchased the first product/service

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Likely to promote the company actively

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Customer choose company as a preferred choice  Strong positive attitude and buy a lot from the company

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The moment the suspect expressed explicit interest we can consider them a prospect

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Based on the criteria set by the company in order for the company to classify them as a suspect.

Have limited information and may not even aware of the company/ products/services

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Progression of the customers tag with the company

Convert potential customers to
advocates and enjoy the maximum lifetime value

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Lesson 05

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Customer Loyalty Ladder

The highest

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Customer Loyalty Ladder

2nd highest

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Operational & Analytical CRM under Perspectives

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Operational CRM - marketing automation

Analytical CRM – analysig all the data – group of customers that u can consider to divest cause no longer profitable

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how can they get the customers to end the r/s – must be mutual

Ending the r/s must be done with sensitive manner if not there will be negative word of mouth

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Company can decide to move their customers to other channels.

Work w external parties

Possible to refer to competitors that has a lower cost structure

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For example, if I have a lower tier I can move my customer to the higher tier to reduce cost for the lower value customer (move them up) or bring them to a lower tier

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Use when step 2 is not working.

This step is what else can we do.

Can the company and customer get the same value from each other

Attractive when company can offer different pricing and strategies for customers

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Usually use media to educate customers, use advertisement, use employees to increase customer’s knowledge

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Company should ask themselves – for example have they misunderstood or serve them wrongly

Lacking in engagement w customers , neglect them, not generating their products/service awareness

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Should not only look at the financial matrix

Have a broader view of the context

Should not assume the problem only lies in customer

Could be the company fault

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Must go through proper step

Help to identify which customers

Can stop at step 2 if u think educating is the best one

Only proceeds to next step when u think its not enough

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Profitability

Common reason ending the r/s with customers

Customers purchasing pattern change and
no longer provide sufficient returns on investment

Even if it is a very valuable customer.

Customers’ behaviour

customer behavior is unacceptable for example, rude, obnoxious customers - affecting the employees

Unreasonable customers who like to complain give the staff a hard time

Company's capacity

Underestimate the customers' demand

Lack the necessary expertise, physical or
financial capacity to continue providing the service

Change in governmental regulations
or external environment beyond companies’ control

Business strategy

Change their existing cooperate strategy

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Also known as ‘de-marketing’ or ‘sacking’

An option of last resort

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Provide good customer experience

The company must join in the process

Example:
create and send personalize invite

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Easy to understand and sign up process is simple

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Reward both to reduce psychological impact – not taking advantage of their friends to take up the service.

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Something value for customer and useful

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Instead of leaving it to the customers, the company may want to do something to make them do the referrals

More valuable to the company

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Inform the customers about the products and services that they don’t need, recommend other products than the one they already purchasing (complement products and services)

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Company make u spend more

Visualise the value
that customers will get by choosing the higher priced option

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Unbundle the value proposition and reprice it to the customers

Customer may end up paying more

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Doesn’t mean they give you high value they going to consistently give you high value, its not guaranteed

If increasing value is no longer possible, companies may
need to end their relationship with unprofitable customers

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Increase referrals

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Increase Spend

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Lesson 07

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Acquisition and retention of customers