Change from product orientation to consumer orientation
Tuesday, 15 May 2012
Md Nurul Islam Sohel in the second of his three-part article on marketing
An old man, a boy and a donkey were going to town. The boy rode on the donkey and the old man walked. As they went along they passed some people who remarked it was a shame the old man was walking and the boy was riding. The man and boy thought maybe the critics were right, so they changed positions. Later, they passed some people that remarked: "What a shame, he makes that little boy walk." They then decided they both would walk!
Soon they passed some more people who thought they were stupid to walk when they had a decent donkey to ride. So, they both rode the donkey.
Now they passed some people that shamed them by saying how awful to put such a load on a poor donkey. The boy and man said they were probably right, so they decided to carry the donkey. As they crossed the bridge, they lost their grip on the animal and it fell into the river and drowned. What is the moral of the story? In marketing, if you try to please everyone, you might as well...
The objective of all business enterprises is to satisfy the needs and wants of the society. Marketing is, therefore, a basic function of all business firms. When a salesperson sells washing machines, a doctor treats a patient or a government asks people to take their children for getting polio drops, each is marketing something to the targets. Since early 1990s there has been a change in the thinking of businessman from product orientation to consumer orientation. Modern business concerns lay emphasis on 'selling satisfaction' and not merely on selling products.
The activities have to be coordinated so as to build up the marketing mix, which provides maximum satisfaction to the customers. That is why marketing research and product planning occupy an important role in marketing. The other important functions of marketing include: buying and assembling, selling, standardisation, packing, storing, transportation, promotion, pricing and risk bearing.
Thus, the scope of marketing is very wide and no more restricted to merely selling of products. The marketing concept holds that the key to achieving organisational goals consists in determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors. Under marketing concept, the emphasis is on selling satisfaction and not merely on the selling a product.
The objective of marketing is not the maximisation of profitable sales volume, but profits through the satisfaction of customers. The consumer is the pivotal point and all marketing activities operate around this innermost point. It is, therefore, essential that the entrepreneurs identify the customers, establish a rapport with them, identify their needs and deliver the goods and services that would meet their requirements.
Building a relationship: One of the most fundamental issues for any company is whether to place more focus on customer acquisition as opposed to customer preservation. Of course both are extremely important to making your business a success, however, frequently much more effort is placed on acquiring new customers.
This would make sense due to the fact that most of a company's initial revenue is generated by new customer acquisitions. However, if a company doesn't care what happens to a customer after they are on board, the company will have a high attrition rate and not do well in the long term. We must build to last not fit to bust in deed.
Remember serving the customers is your prime job. For a newly established company finding new ones may top the priority. Soon after this acquisition you must concentrate on how to retain them with satisfaction. You are not in the business to have fun in hiring and firing your customers.
You know what your customers need, and what are their aspirations, fear, and desire. Not just acquisition takes time, but building a relationship also takes time. After you have successfully wooed new customers, you need to spend time and energy on building a relationship with the new customers.
You need time to understand their desires, aspirations, expectations, spending pattern, and their price sensitivity. And while you do that, the profit from new customers remain on the lower side. The effort on all this could be saved provided you decide to concentrate your effort on retaining your existing customers.
The acquisition cost on existing customers has already been recovered. As said, it takes time, energy, man power, and money to acquire a new customer, and all these add up to the cost, which means diminished profit. It is only after the customers are with us for some time that we recover the cost incurred during the acquisition process. With existing customers, we already have recovered the cost, so they are already profitable. This cannot be said about the new customers, as they are yet to prove their worth. And at the onset, we even do not know if they will stay with us or not. So why take chances?
Who does not like to have new clients? Before that we must be sure of enough capacity for that. New customer acquisition should be done as this is how we grow, but not at the cost of losing existing customers. The cost of customer acquisition versus customer retention could reach as high as 700 per cent, according to a report by Frederick Reichheld of Bain & Company.
Why don't you make the buyers stick for life? They are your dedicated customers who continue to use your services by virtue of the fact that you provide a specific product or service which they need, they are used to and that which is not on hand elsewhere. You may have exceeded their expectations by a superior product or service, over delivered on your product value proposition or provided additional value to them in a special way.
You might also have given them privilege pricing which is unmatched elsewhere. Or your delivery channels are good match for their needs. In all aspects, you must have impressed your repeat clients well to keep them coming back for more. This coming back to you is your goodwill. And there are ways you could further capitalise on them.
These repeat customers are what you might deem as 'cash cows' as in the BCG matrix, which entail little maintenance cost, and consistently repeat revenue over time.
Customer-relations: Milk the cash cows, build relationships, and help them to help you. You may launch a special marketing campaign specific for loyal customers and package your most popular offerings using bundled pricing. Essentially, you need to help them to help you grow your business. This way, good word-of-mouth and "testimonial" will bring you much more sustaining proceeds over time.
Your current customers are important not only for their purchases, but for their word-of-mouth to help magnetise new customers. By turning loyal customers into advocates, you significantly trim down customer acquisition costs and significantly boost the value of your current customers.
Word-of-mouth, a key customer experience element, drives customer retention. Remember turning your existing customers into ambassadors is not that easy. This is possible only when you can do something more than they anticipate.
Loyal customers not only continue to pay directly for products and services used on an ongoing basis but also lend a hand to drive down customer acquisition costs by acting as your stealth sales force.
Turn customers into advocates to help you get hold of new customers. If you can do that your customer acquisition job is almost done. Remember advocating by the customers is hundred times more effective than by your marketing executives. People don't get convinced hearing canvass from the employees of that company but if existing customer says something positive about your company the potential customers pay heed to that. Door to door marketing by the officials is not effective anymore. In many cases this type of marketing tarnishes the image of a brand company. The best and most effective marketing can be done by the existing clients.
Right from day one, your company should place a strong emphasis on customer-relations and treating your customers like they are the most important people in the world. Making sure your call centre and customer service staff answering emails are treating your customers like gems.
Your quality control manager should be sent CC on emails between staff and customers. Strict customer service monitoring and training on how to be friendly, helpful and doting on your customers is recommended. Having a company philosophy in place as it relates to treating your customers very well is always a good move as well.
You can also analyse the entire consumer experience on your site from homepage on through to confirmation page to make sure your customers are being taken care of from beginning of the process until the end. Having good auto-responder emails that look personalised, is also a good measure to have in place to make your customers feel warm and fuzzy about their purchase. Having really good and comprehensive Frequently Asked Questions (FAQs) can also reduce needless calls to your customer service department.
soheljec@yahoo.com
An old man, a boy and a donkey were going to town. The boy rode on the donkey and the old man walked. As they went along they passed some people who remarked it was a shame the old man was walking and the boy was riding. The man and boy thought maybe the critics were right, so they changed positions. Later, they passed some people that remarked: "What a shame, he makes that little boy walk." They then decided they both would walk!
Soon they passed some more people who thought they were stupid to walk when they had a decent donkey to ride. So, they both rode the donkey.
Now they passed some people that shamed them by saying how awful to put such a load on a poor donkey. The boy and man said they were probably right, so they decided to carry the donkey. As they crossed the bridge, they lost their grip on the animal and it fell into the river and drowned. What is the moral of the story? In marketing, if you try to please everyone, you might as well...
The objective of all business enterprises is to satisfy the needs and wants of the society. Marketing is, therefore, a basic function of all business firms. When a salesperson sells washing machines, a doctor treats a patient or a government asks people to take their children for getting polio drops, each is marketing something to the targets. Since early 1990s there has been a change in the thinking of businessman from product orientation to consumer orientation. Modern business concerns lay emphasis on 'selling satisfaction' and not merely on selling products.
The activities have to be coordinated so as to build up the marketing mix, which provides maximum satisfaction to the customers. That is why marketing research and product planning occupy an important role in marketing. The other important functions of marketing include: buying and assembling, selling, standardisation, packing, storing, transportation, promotion, pricing and risk bearing.
Thus, the scope of marketing is very wide and no more restricted to merely selling of products. The marketing concept holds that the key to achieving organisational goals consists in determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors. Under marketing concept, the emphasis is on selling satisfaction and not merely on the selling a product.
The objective of marketing is not the maximisation of profitable sales volume, but profits through the satisfaction of customers. The consumer is the pivotal point and all marketing activities operate around this innermost point. It is, therefore, essential that the entrepreneurs identify the customers, establish a rapport with them, identify their needs and deliver the goods and services that would meet their requirements.
Building a relationship: One of the most fundamental issues for any company is whether to place more focus on customer acquisition as opposed to customer preservation. Of course both are extremely important to making your business a success, however, frequently much more effort is placed on acquiring new customers.
This would make sense due to the fact that most of a company's initial revenue is generated by new customer acquisitions. However, if a company doesn't care what happens to a customer after they are on board, the company will have a high attrition rate and not do well in the long term. We must build to last not fit to bust in deed.
Remember serving the customers is your prime job. For a newly established company finding new ones may top the priority. Soon after this acquisition you must concentrate on how to retain them with satisfaction. You are not in the business to have fun in hiring and firing your customers.
You know what your customers need, and what are their aspirations, fear, and desire. Not just acquisition takes time, but building a relationship also takes time. After you have successfully wooed new customers, you need to spend time and energy on building a relationship with the new customers.
You need time to understand their desires, aspirations, expectations, spending pattern, and their price sensitivity. And while you do that, the profit from new customers remain on the lower side. The effort on all this could be saved provided you decide to concentrate your effort on retaining your existing customers.
The acquisition cost on existing customers has already been recovered. As said, it takes time, energy, man power, and money to acquire a new customer, and all these add up to the cost, which means diminished profit. It is only after the customers are with us for some time that we recover the cost incurred during the acquisition process. With existing customers, we already have recovered the cost, so they are already profitable. This cannot be said about the new customers, as they are yet to prove their worth. And at the onset, we even do not know if they will stay with us or not. So why take chances?
Who does not like to have new clients? Before that we must be sure of enough capacity for that. New customer acquisition should be done as this is how we grow, but not at the cost of losing existing customers. The cost of customer acquisition versus customer retention could reach as high as 700 per cent, according to a report by Frederick Reichheld of Bain & Company.
Why don't you make the buyers stick for life? They are your dedicated customers who continue to use your services by virtue of the fact that you provide a specific product or service which they need, they are used to and that which is not on hand elsewhere. You may have exceeded their expectations by a superior product or service, over delivered on your product value proposition or provided additional value to them in a special way.
You might also have given them privilege pricing which is unmatched elsewhere. Or your delivery channels are good match for their needs. In all aspects, you must have impressed your repeat clients well to keep them coming back for more. This coming back to you is your goodwill. And there are ways you could further capitalise on them.
These repeat customers are what you might deem as 'cash cows' as in the BCG matrix, which entail little maintenance cost, and consistently repeat revenue over time.
Customer-relations: Milk the cash cows, build relationships, and help them to help you. You may launch a special marketing campaign specific for loyal customers and package your most popular offerings using bundled pricing. Essentially, you need to help them to help you grow your business. This way, good word-of-mouth and "testimonial" will bring you much more sustaining proceeds over time.
Your current customers are important not only for their purchases, but for their word-of-mouth to help magnetise new customers. By turning loyal customers into advocates, you significantly trim down customer acquisition costs and significantly boost the value of your current customers.
Word-of-mouth, a key customer experience element, drives customer retention. Remember turning your existing customers into ambassadors is not that easy. This is possible only when you can do something more than they anticipate.
Loyal customers not only continue to pay directly for products and services used on an ongoing basis but also lend a hand to drive down customer acquisition costs by acting as your stealth sales force.
Turn customers into advocates to help you get hold of new customers. If you can do that your customer acquisition job is almost done. Remember advocating by the customers is hundred times more effective than by your marketing executives. People don't get convinced hearing canvass from the employees of that company but if existing customer says something positive about your company the potential customers pay heed to that. Door to door marketing by the officials is not effective anymore. In many cases this type of marketing tarnishes the image of a brand company. The best and most effective marketing can be done by the existing clients.
Right from day one, your company should place a strong emphasis on customer-relations and treating your customers like they are the most important people in the world. Making sure your call centre and customer service staff answering emails are treating your customers like gems.
Your quality control manager should be sent CC on emails between staff and customers. Strict customer service monitoring and training on how to be friendly, helpful and doting on your customers is recommended. Having a company philosophy in place as it relates to treating your customers very well is always a good move as well.
You can also analyse the entire consumer experience on your site from homepage on through to confirmation page to make sure your customers are being taken care of from beginning of the process until the end. Having good auto-responder emails that look personalised, is also a good measure to have in place to make your customers feel warm and fuzzy about their purchase. Having really good and comprehensive Frequently Asked Questions (FAQs) can also reduce needless calls to your customer service department.
soheljec@yahoo.com