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DIFFERENTIATING CUSTOMERS
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An example
An example
DKNY: AYer a photographer realised that DKNY were using
his photos in a window display without his permission, he
mobilised his community to share a post asking DKNY to
donate $100,000 to a local YMCA in lieu of compensaSon.
DKNY responded quickly by way of an apology. They
explained that the Bangkok store involved had accidently
used the mock-up photos and they promised to donate
$25,000 to the YMCA. The photographer accepted it was an
honest mistake and thanked them for the donaSon. DKNYs
quick and strong response successfully defused the situaSon
before a social media crisis erupted.
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# an enterprise determine how much it can aord to spend to acquire Repeat customer purchases
a new customer, or perhaps a certain type of new customer. Greater prot and/or lower cost (per sale) from repeat customers than
# a rm decide just how much it would be worth to retain an exisSng from iniSal customers (converSng prospects)
customer. Indirect benets from customers, such as referrals
# With a model that predicts higher values for certain types of Customers stated willingness to do business in the future rather than
customers, an enterprise can target its customer acquisiSon eorts in switch suppliers
order to concentrate on airacSng mostly higher-value customers. Customer records, transacSon records
# in jusSfying markeSng investments than just looking at immediate Products and product costs, cost to serve/support
sales. MarkeSng and transacSon costs (including acquisiSon costs)
Response rates to markeSng/adverSsing eorts
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- Dene actual and potenSal value of customers in One way to think about the process of managing customer
the same way to everyone. relaSonships is that the enterprise is aiempSng to improve its
situaSon not just by adding as many new customers as possible
- Some companies that have enjoyed monopoly or to the customer base, but by managing the mix of customers it
near-monopoly status in the past, such as uSliSes deals with.
or telecommunicaSons (or banks, in some
countries), dene value or customer protability It wants to create more protability among its MGCs, while it
in a more sophisScated way than simple revenue- retains its MVCs for a longer period. It wants to convert BZs to
minus-cost-of-service. protability or else expunge them from the franchise. The
migrators need to be moved up on the value scale, to become
- Nothing about customer dierenSaSon means more protable over Sme.
treaSng anybody badly, ever
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Customers will likely be grouped together based on individually NEEDS- most generic sense
expressed very-similar needs, but it is the feedback from a
parScular customer that determines which needs group he/she is Needs are not just about product usage, but about an expanded need set or the
in, rather than any of the tradiSonal approaches to forming combinaSon of product, cross-buy product and services opportuniSes, delivery
channels, communicaSon style and channels, invoicing methods, and so on.
segments of customers who are then treated the same.
The amount the customer pays the enterprise is a component of the customers value
The key to building protable relaSonships is developing an to the enterprise, the need that the enterprise saSses is a part of the enterprises
understanding of - value to the customer.
Which customers?
How customers are dierent in terms of their needs,
How such needs-based dierences relate to dierent customer Customers needs and products benets (Needs are based on the customer, not the
values, both current and potenSal? product / features, aiributes, and benets are all based on the product)
What behavior changes on the customers part can be
accomplished by meeSng those needs? Focusing on customer needs, rather than on product features, in fact, will oYen reveal
that dierent customers purchase the same product in order to saSsfy very
What are the triggers that will allow the rm to actualize some of dierent individual needs
that unrealized potenSal value?
Consider a company that manufactures interlocking toy blocks for children, and
suppose this rm goes to market with a set of blocks suitable for construcSng a
spaceship. Three seven-year-old boys playing with this set of blocks might all
have dierent needs for it. One child might use the blocks to play a make-
believe role, perhaps assembling a spaceship and then pretending he is an
astronaut on a mission to Mars. Another child might enjoy simply following the
direcSons, meSculously assembling the ship in exact detail, according to the
instrucSons. Once the ship is built, however, he would be less interested in it. A
third child might use the spaceship block set to build something enSrely
dierent, drawn from his own vivid imaginaSon. He simply wouldnt enjoy
puyng together a toy according to someone elses diagram.
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Indirect contact
Need to interact with the customers
individually and processing their feedback
Rather, it could start by idenSfying its most
avid fans, its highest-volume, most valuable
consumer customers.
deeply held beliefs, psychological predisposiSons, life stages, Example: If segments and porxolios were made up of toys, then
moods, ambiSons. red re trucks might be in a segment of toys that included red
checkers sets, red dolly makeup lipsScks, and red blocks. But
Rather than grouping customers into segments based on the red re trucks would be in a porUolio of toys that included
products appeal, the customer-based enterprise places ambulances, reboats, police cars, and maybe medical
customers into porUolios, based primarily on type of need. helicopters, along with re hats and axes, stued DalmaSans,
and ladders.
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With the cost-ecient, powerfully interacSve technology of the World Wide Web, this
Customer needs can be situaSonal in nature pharmaceuScal company wants to begin to establish genuine, one-to-one
relaSonships with at least some of the more valuable consumers of its products.
Customer needs are dynamic and can change over Sme,
as well Compliance is a problem
Customer needs oYen correlate with customer value The pharmaceuScal enterprise undertakes to design a paSent-centric Web site.
The most fundamental human needs are psychological Enterprise conduct a survey of paSents, and discovers that a paSents aytude toward
keeping the disease in check will drive the individual needs for using the Web site.
There is no single best way to dierenSate customers by
their needs Aytudes toward the disease tend to fall into one of three primary categories.
Even in B2B seyngs, a rms customers are not really Individualists.
another company, with a clearly dened, Abdicators
Connectors
homogeneous set of needs
Discussion QuesSon
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