Generally speaking, marketing is the process by which brands create and deliver value to customers and capture values from the customers in return. The bond between customers and brands are relationships. The stronger the relationship, the more value the brands would get. The key aim of marketing is then to build strong and lasting customer relationships with superior value and customer satisfaction.
However, not all customers are worth taking care of. Brands should focus on those profitable customers and divest in those unlikely to contribute profits to the companies. Customers could be classified into four basic categories based on profitability and projected loyalty: strangers, butterflies, true friends, and barnacles.
Strangers
Unlikely to be profitable
Unlikely to be loyal
Little fit between the company’s offerings with the customer needs
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Butterflies
Possibly profitable
Not loyal
Good fit between offerings and needs
N.B. they are highly likely to shift to other brands when their offerings are better. E.g. highly price sensitive customers
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True friends
Both profitable and loyal
Strong fit between the offerings and the needs
Brands love them and they love the brands.
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Barnacles
Highly loyal but not very profitable
Limited fit between offerings and needs
If they buy, capture as much as profits while you can.
If they don’t buy, say bye to them.
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In order to achieve strong and lasting customer relationships, the company needs to excel at partnership relationship management as well, which means that the companies should work closely with the partners within the company and outside the company to create and deliver superior value and satisfaction to their target customers in order to beat their competitors.
What is value and satisfaction them?
Customer perceived value (CPV) is the customer’s evaluation of all the differences and all the costs of a marketing offer compared with other competing offers in the market.
N.B. the price is not the sole measure of CPV. There are other variable affecting the CPV: brand, design, quality, easiness of purchase, return policy…
There are three possibilities of match between perceived performance and customer expectations.
(1) L when the expectation exceeds the performance. When you bought a fancy dress online and received a rag, that’s it.
(2) = when the expectation matches the performance. When you bought a fancy dress online and it was a fancy dress you received. Successful shopping you would say.
(3) J when the expectation matches the performance. When you bought a fancy dress @ £15 and it was a fancier dress worth about £50 you received. WOW!
This reminds of a psychological term called Buyer’s Remorse and a strategy to avoid that -- Justifying the Sale with Social Proof. Remind the customers that they have made a wise decision in choosing the offering. This is a strategy often used in fashion retailing industry. Sales associates often make compliments of the customer’s purchase when they are closing the transaction. Reason? Push the customers to confirm that this is a good choice they make and nothing would go wrong about it.
After all, the companies chase after profits and what constitutes the profits? Customer equity. No customers, no business. What is customer equity then? Customer equity is the total customer lifetime value of all the customers the company could get hold of. Now you realize how important customers are? The job of the marketers is to attract, delight, and grow customers. Because highly satisfied customers are more likely to speak in favour of the product/service/company, they will do the marketing for the brands.
What is Marketing?
