Managing customers for profit : strategies to increase profits and build loyality

Managing your customers successfully is a key business skill needed by all companies to survive in the competitive business environment. Using examples from some of the world's best-known companies, find out the marketing strategies you need to know to manage your customers effectively and profitably. Cover......Page 1 Contents......Page 10 Foreword......Page 14 Preface......Page 16 Acknowledgments......Page 19 About the Author......Page 20 Chapter 1 Introduction......Page 22 Customer Lifetime Value......Page 25 Aligning Customer Management Strategies with the CLV Metric......Page 29 Endnotes......Page 31 Chapter 2 Maximizing Profitability......Page 32 Loyalty Programs......Page 33 How Do Loyal Customers Really Perform?......Page 37 Are Loyal Customers Profitable?......Page 38 Debunking the Myths......Page 43 Where Do Firms Go Wrong?......Page 44 The Problem with Measuring Loyalty......Page 45 When to Stop Investing in a Customer......Page 46 Conclusion......Page 47 Endnotes......Page 48 Chapter 3 Customer Selection Metrics......Page 50 Traditional Metrics......Page 51 The Need for a Forward-Looking Metric......Page 56 Introducing Customer Lifetime Value (CLV)......Page 58 Advanced Model for Measuring CLV......Page 70 Endnotes......Page 77 Chapter 4 Managing Customer Profitability......Page 80 Typical CLV Drivers......Page 81 A Specific B2B Case Study......Page 82 A B2C Case Study in the Retailing Industry......Page 87 Endnotes......Page 94 The Wheel of Fortune......Page 96 Customer Selection......Page 99 Managing Loyalty and Profitability Simultaneously......Page 100 Optimal Allocation of Resources......Page 101 Pitching the Right Product to the Right Customer at the Right Time......Page 102 Preventing Customer Attrition......Page 104 Managing Multichannel Shoppers......Page 105 Acquiring Profitable Customers......Page 106 Viral Marketing Strategies......Page 107 Implementation/Interaction Orientation......Page 108 The Future of Customer Management......Page 109 The Power of CLV and the Wheel of Fortune......Page 110 Endnotes......Page 111 Behavioral and Attitudinal Loyalty......Page 114 Customer Segmentation......Page 116 A Framework for Building and Sustaining Loyalty......Page 120 Cultivating Attitudinal Loyalty......Page 123 Operationalizing the Framework......Page 124 Evolution of Loyalty Programs......Page 128 Endnotes......Page 131 Chapter 7 Optimal Allocation of Resources across Marketing and Communication Strategies......Page 134 Communication Channels......Page 136 Type and Frequency of Communication......Page 137 Resource-Allocation Strategy and CLV Maximization......Page 140 Optimal Resource Allocation: A Case Study......Page 143 Conclusion......Page 145 Endnotes......Page 146 Chapter 8 Pitching the Right Product to the Right Customer at the Right Time......Page 148 What Companies Have Been Doing......Page 149 The Question of “What Next?”......Page 150 An Integrated Approach to Predicting Customer Behavior......Page 153 Increasing the Cross-Sell Ratio: Path to Profitability......Page 159 Endnotes......Page 163 Chapter 9 Preventing Attrition of Customers......Page 164 Impact of Attrition......Page 166 Case Study: Telecommunication Industry......Page 167 Preventing Attrition......Page 168 Conclusion......Page 182 Endnotes......Page 183 Chapter 10 Managing Multichannel Shoppers......Page 184 Search First, Then Purchase......Page 185 Who Are Multichannel Shoppers?......Page 187 Are Multichannel Shoppers More Profitable?......Page 194 Determining the Next Channel a Customer Adopts......Page 195 Are Multichannel Customers More Profitable?......Page 203 Does Order of Channel Adoption Matter?......Page 204 Conclusion......Page 205 Endnotes......Page 206 Chapter 11 Linking Investments in Branding to Customer Profitability......Page 208 Framework for Linking Brand Value to CLV......Page 211 How to Link the IBV to CLV......Page 218 Endnotes......Page 225 Chapter 12 Acquiring Profitable Customers......Page 226 Pitfalls to Balancing Acquisition and Retention......Page 228 Solution to Balancing Acquisition and Retention: ARPRO......Page 233 The Profit-Maximizing ARPRO Strategy......Page 238 Which Is More Critical:Acquisition or Retention Spending?......Page 239 Maximum Profits,Acquisition Likelihood, and Relationship Duration......Page 240 Endnotes......Page 241 Chapter 13 Managing Customer Referral Behavior......Page 244 Customer Referral Value (CRV)......Page 246 Calculating CRV: A Typical Customer......Page 251 Are CLV and CRV Related?......Page 254 Typical Marketplace Phenomenon......Page 256 Managerial Implications......Page 266 Endnotes......Page 269 Chapter 14 Organizational and Implementation Challenges......Page 270 Organizational Issues......Page 272 Implementation Challenges......Page 280 Conclusion......Page 286 Endnotes......Page 287 Chapter 15 The Future of Customer Management......Page 288 Customer Groups......Page 291 Marketing Strategies......Page 292 Aligning Marketing Strategies to Customer Groups......Page 293 Endnotes......Page 301 B......Page 304 C......Page 305 D......Page 309 I......Page 310 L......Page 311 M......Page 312 P......Page 314 Q–R......Page 315 S......Page 316 W–Z......Page 317 This is a milestone book in marketing. Most companies claim they are focused on customers, but even those who are, probably do not take a scientific approach to customer management. Professor V. Kumar is the acknowledged expert on the science of customer management. This important book raises all the key questions in managing customers, provides the analytical tools for optimization, and illustrates these tools with a number of company examples. Philip Kotler , S. C. Johnson Distinguished Professor of International Marketing, Kellogg School of Management, Northwestern University Delivering lasting client value is at the heart of profitable businesses today. Managing Customers for Profit provides a compelling, empirically-tested approach to significantly enhance traditional customer relationship management initiatives. I highly recommend this book to all those interested in cultivating lasting profitable growth relationships with current and future clients. Tim Bohling , Vice President, Market Intelligence, IBM Americas Executives are too often guided by backward-looking, short-term metrics. This book shows how a focus on Customer Lifetime Value (CLV) can change management toward long-term results by providing a fresh perspective on customer targeting, retention, and loyalty. Highly recommendedit shows you the way toward strategic customer thinking. Dave Aaker , Vice-Chairman, Prophet, Author of Brand Portfolio Strategy This book shows you how. Leading marketing expert V. Kumar shows how to use Customer Lifetime Value (CLV) to target customers with higher profit potentialmanage and reward existing customers based on their profitabilityand invest in high-profit customers to prevent attrition and ensure future profitability. Kumar introduces customer-centric approaches to allocating marketing resources for maximum effectivenesspitching the right products to the right customers at the right timedetermining when a customer is likely to leave, and whether to intervenemanaging multichannel shopping even calculating a customers referral value. Drawing on his extensive experience consulting with world-class marketing organizations, Kumar illuminates the challenges of transitioning from a product-centric to a customer-centric approach and presents proven solutions. Simply put, this books techniques offer marketing executives a complete framework for linking their investments to business valueand maximizing the lifetime value of every single customer . Foreword xiii Preface xv Acknowledgments xviii About the Author xix Chapter 1: Introduction 1 Chapter 2: Maximizing Profitability 11 Chapter 3: Customer Selection Metrics 29 Chapter 4: Managing Customer Profitability 59 Chapter 5: Maximizing Customer Profitability 75 Chapter 6: Managing Loyalty and Profitability Simultaneously 93 Chapter 7: Optimal Allocation of Resources across Marketing and Communication Strategies 113 Chapter 8: Pitching the Right Product to the Right Customer at the Right Time 127 Chapter 9: Preventing Attrition of Customers 143 Chapter 10: Managing Multichannel Shoppers 163 Chapter 11: Linking Investments in Branding to Customer Profitability 187 Chapter 12: Acquiring Profitable Customers 205 Chapter 13: Managing Customer Referral Behavior 223 Chapter 14: Organizational and Implementation Challenges 249 Chapter 15: The Future of Customer Management 267 Index 283 "To manage and sustain profitability over the long term, companies need to define and execute the right marketing strategies and measure their results against the right yardstick. Dozens of metrics are available, but one is most crucial: Customer Lifetime Value (CLV)-defined as the net present value of future profits from each customer, in Managing Customers for Profit, leading marketing innovator, V. Kumar reveals how to establish forward-looking marketing strategies based on CLV and use them to manage both customer relationships and profitability simultaneously."--BOOK JACKET