tailieunhanh - Lecture Business marketing: Connecting strategy, relationships, and learning (4/e): Chapter 16 - Dwyer, Tanner

Chapter 16 - Customer retention and maximization. After reading this chapter, you should be able to: Classify different customer relationship as always-a-share or lost-for-good, identify the structural characteristics of the transaction environment that make for the above classification, graph the profit implications over a range of customer retention probabilities,. | McGraw-Hill/Irwin Copyright © 2009 by the McGraw-Hill Companies, Inc. All rights reserved. Chapter 16 Customer Retention and Maximization THE NATURE OF A CUSTOMER Customer Relationships can be found at any level Always-A-Share Customer Lost-For-Good Customers Lowest Level Relationship Highest Level Relationship THE KEY FACTOR: SWITCHING COSTS The Direct and Indirect costs a buyer will have to pay to go to another supplier 16- LOST-FOR-GOOD ALWAYS-A-SHARE Customers are tied to a system. Switching costs may include: Specific investments Cancellation penalties Setup costs for a new supplier Retraining Finding/Evaluating a new supplier Customers can allocate their purchases to several vendors . A period of no purchases can be followed by a number of purchases. Doesn’t want to rely on a single vendor. Suppliers are largely interchangeable DEFINING THE EXTREMES OF CUSTOMER NATURE Exhibit 16-1 16- PAYOFFS TO SELLERS FROM LONG TERM CUSTOMER RELATIONSHIPS GROWS ADDITIONAL BUSINESS . | McGraw-Hill/Irwin Copyright © 2009 by the McGraw-Hill Companies, Inc. All rights reserved. Chapter 16 Customer Retention and Maximization THE NATURE OF A CUSTOMER Customer Relationships can be found at any level Always-A-Share Customer Lost-For-Good Customers Lowest Level Relationship Highest Level Relationship THE KEY FACTOR: SWITCHING COSTS The Direct and Indirect costs a buyer will have to pay to go to another supplier 16- LOST-FOR-GOOD ALWAYS-A-SHARE Customers are tied to a system. Switching costs may include: Specific investments Cancellation penalties Setup costs for a new supplier Retraining Finding/Evaluating a new supplier Customers can allocate their purchases to several vendors . A period of no purchases can be followed by a number of purchases. Doesn’t want to rely on a single vendor. Suppliers are largely interchangeable DEFINING THE EXTREMES OF CUSTOMER NATURE Exhibit 16-1 16- PAYOFFS TO SELLERS FROM LONG TERM CUSTOMER RELATIONSHIPS GROWS ADDITIONAL BUSINESS OPPORTUNITIES for new products or increased purchases PREMIUM PRICES result from giving first-rate service and product quality REDUCED SELLING COSTS from tighter coordination of production and logistics ADDITIONAL REVENUES POSSIBLE from customers’ referrals and joint sales calls with customers 16- 1 3 2 5 4 6 Years in Relationship Exhibit 16-5 RELATIONSHIP BENEFITS TO SELLERS 0 500 400 300 200 100 Profits Referrals Reduced costs Increased Purchases Base profit Price Premium 16- TWO REASONS COMPANIES STAY IN A BUSINESS RELATIONSHIP REASON 1. THEY HAVE TO No alternatives, binding actions such as contracts, product ties REASON 2. THEY WANT TO Relationship is satisfying because of cooperation and meeting financial objectives 16- TIES THAT BUILD RELATIONSHIPS SUPERIOR PERFORMANCE at a good price (value) SOCIAL RELATIONSHIPS created by frequent interaction TECHNICAL DEPENDENCIES brought about by reliance on a supplier’s products or support FORMAL AGREEMENTS involving investments or