Database Reference
In-Depth Information
Customer profiling aggregates data from allied Websites based on the identification (ID)
made available when the customer arrives on an event venue or a Website.
Collective filtering involves utilizing the prior experiences of a customer or similar customers
to devise responses to individual customers.
Advantages of personalization are as follows:
Higher degrees of customer service to the customer by anticipating their needs delivering
content, products, services, or pricing information that meets their needs
Improving the efficiency of the interaction and, thus, enhancing the likelihood of a purchase
being made during the current visit
Increasing the level of knowledge about customers and understanding why and how they
prefer to do business with your organization
Establishing a relationship that encourages customer relationship and enhanced customer
Improving the performance with customer site by using tracking to provide insight into fac-
tors that have salutary effect on the performance of the application
1.2.4 Customer Loyalty
Traditionally, companies have focused on winning customers, rather than retaining them. The con-
ventional wisdom was that a dominating market share typically translated into production economies
of scale and the ability to become a low-cost producer. The goal was to continually add customers to
replace those customers that defected to the competitors and also to grow the market share.
However, lately, financial analysis of the cost of customer acquisition versus the cost of
retention has shown that, for most organizations where the cost of acquisition is high, keeping
customers can be a more profitable strategy. It is estimated that it can cost four to seven times
more to replace a current customer than it does to retain one. On the average, US compa-
nies lose half of their customers every 5 years. It is easier to get existing customers to try new
capabilities than to engage and acquire new ones. The cost of contacting existing customers,
researching their needs, and getting them to begin using new services is minimal compared
with either acquiring new customers. It is easy to see how effective this approach of customer
loyalty can be if we recognize that the revenue accruing from customers follows the Pareto's Law:
20% of the customer base accounts for 80% of the revenues and more than 110% of the profits
generated by a company. A study published in Harvard Business Review by Reichheld and Sasser
concluded that some companies could boost profits by almost 100% by retaining just 5% more
of their customers. Mass unfocused marketing is a thing of the past. As stated earlier, as much
as 80% of the sales process may be controlled by specific knowledge of a customer's business. As
the marketing spend needs to show a higher return on investment, a longer-term relationship
becomes essential.
The relative costs for acquiring, retaining, and winning back a lost customer are as follows:
Cost of retaining a current customer
Cost of acquiring a new customer
5× to 10×
Cost of winning back lost customer
3× to 8×
Search WWH ::




Custom Search