Customer Focused Models Vs Customer Centric Models
Dr. Peter Fader author and co-director of the Wharton Customer Analytics Initiative at the University of Pennsylvania presents to the marketing world a model that is designed to accommodate the changing state of business-customer and data relations.
The traditional model of customer acquisition and retention is hinged on marketing departments having a “customer focused” approach. This method is designed to put the product first and the customer second. It includes developing marketing strategies to obtain as many customers as possible and spending a lot of money and resources to keep them all.
This way of doing things has worked relatively well for some companies, but has failed as a successful blueprint for most. The problem is most customers that are acquired are not good customers. They demonstrate a lack of loyalty and are typically a burden on marketing and operation cost. Essentially creating a cycle of wasting money on customers that have no value to the company.
The Customer Centric Point of View
The model Dr. Fader presents is contrary to the “customer focused” perspective. His approach is in line with a “customer centric” view. This model separates the customer base into two groups. Great customers and ordinary customers. Great customers are individuals that are loyal to the company and have high retention rates. Ordinary customers are not loyal and routinely jump from company to company.
Customer Centric Strategy
His strategy is to study the customers that are identified as great and spend money and resources to keep them. Knowing your customers habits, likes and dislikes is vital to successful business growth.
Most marketing departments operate in the dark when you consider 66% of marketing leaders don’t know how much their customers are worth. This is an unfortunate stat considering companies can have a 17% increase in sales when valued customers are identified and retained.
The core component of a customer centric approach is data. Information about good and bad customers gives a company the opportunity to identify patrons that will benefit the bottom line and those that will hurt it.
Technology has become woven into the business fabric changing the way companies operate especially marketing departments. The existence of social media and the amount of digital data that is exchanged (daily) creates opportunities for companies to target specific clients and to create a pool of coveted patrons.
Keeping Your Customers Loyal
Once a loyal customer is identified then marketing strategies can be developed to target them. The accumulation of great customers ensures resources are used wisely and marketing and production budgets are not squandered.
Let your profit growth be directly connected to the most valuable customers. Customers that exhaust budgets and resources will contribute to the slow decline of your business.
After successful client acquisition is accomplished it is important to focus on the development of programs, products and services to keep your valuable customers loyal and happy.
9 Secrets to Increasing Website Visitors and Email Subscribers