Customer Asset Management Why Customers Are Assets
Jun 19, 2015
Customer Asset Management
Why Customers Are Assets
Why Customers are assets
Do Organisations' view them this way ? No
Organisations obsessed with products, policies & competitions at best
Customers don’t feature in financial statementsBelieve customers belong to the marketing &
the service department at the bestSilo mindset make the management of every
function an end by itself and isolated islands in the organisation
Do Organisations View Them This Way ? No
Multiple management layers completely isolate top management from customer contact
Poor or inconsistent regulatory framework to protect against customers vis-à-vis financial mismanagement
Unlike financial stakeholders customers are not institutionally organised
Do Organisations View Them This Way ? No
Believe that profit is generated through clever financial management and not through customers willingness to pay and sustained goodwill
Believe value is created in factories and not in the minds of customers who has a choice whether to buy the product or not at the price the company derives
Why Customers Are Assets
Only self sustaining long term revenue sourceHas multiplier potential can bring referral
businessNo predefined output potential can consume
multiple productsCost of maintenance goes down with age -
requires lesser handling as tenure of association ship expands
Why Customers Are Assets
Value enhances with age – buys not just for himself but also for dependants
Contribution to profits enhances with age- sunk cost of acquisition gets completely recovered overtime + lower cost to serve due to greater familiarity with the organisation and its products
How To Make It A Reality
• Organisational mindset Change• Data Capturing & Mining• Mass customization• Adapting new marketing paradigm
What Can Change The Mindsets
Severe competitive pressure through massive proliferation of choice
Market saturation: No scope to grow by merely expanding into new geographies
Sustained high customer attrition ratesAttaining financial reporting to profitability by
customer and not by product or product division
What Can Change The Mindsets
• Tougher regulatory framework for consumer interest protection
• Orientation of management academic curriculum towards “Customer orientation” as opposed to the current functional orientation
• Evaluation of corporate performance on the basis of time scale rather than the current snapshot accounting
What Can Change The Mindsets
• Recognising Drucker’s timeless words of wisdom – Profit is the outcome of creating a satisfied customer and not the end adjective of business
• Realising that there are no results in the walls of an organisation. The end result of a business is a satisfied customer : Peter Drucker
What Can Change The Mindsets
• Acknowledging that the only person who pays all the bills/debts of the organisation is the customer
• Understanding that marketing only creates promises and not customer loyalty
• Recognising that loyalty is created only through customer centric behaviour on the part of the entire organisation
What Can Change The Mindsets
• Realising that customer loyalty is not possible without employee loyalty and thus investment in training and development and empowerment of employees is critical towards attaining a sustained competitive edge
• Customer satisfaction sure linked compensation for entire organisation
• Mandating customer facing “time” for all employees at regular intervals
• Recognising and rewarding customer centric behaviour
Data Capturing & Mining
• Investing in periodic customer satisfaction studies
• Investment in analytical tools• Training front – End staff• Rigorous review mechanism for data sanctity• Rewarding customer for furnishing personal
data
Data Capturing & Mining
• Rewarding customer for elongating tenure• Robust time bound escalation mechanism for
unresolved customer issues• Research to understand customer
situations/settings and not just usage behavior
Mass Customization• Extensive use of segmentation tools to
identify affinity groups• Customized products• Customized engagement processes for
adoption of the products by different customer segment
• Understanding that its customer centric people who create effective mass customization and not sophisticated analytical tools
New Marketing ParadigmFocus Means End
Sales Concept
Product / Service
Selling & Promos
Profit thru Volumes
Marketing Concept
Customer needs Integrated Marketing
Profit thru Customer Satisfaction
The New Marketing Concept
Customer needs & Resources
Holistic Marketing
Profit thru customer retention & growth, i.e., CLTV
Marketing needs to now focus on not just “what” the needs is but “how” does the customers go about satisfying that need.
Need to enhance the product definition of a product or service to “providing customer solutions / experience”