PAPERmaking! g FROM THE PUBLISHERS OF PAPER TECHNOLOGY Volume 1, Number 1, 2015
was the time the customer was working with the organisation, the accumulated delinquency days, and his business activity. This axis can also be statistically determined with a desertion score whereby key variables are input into a statistical model that estimates the probability of desertion of other customers with similar characteristics. Below are some considerations that should be factored in when deciding whom to retain as a priority: Strategic importance : Opinion leaders, those belonging to the segment that fits well with the competencies of the business organisation or other potential growth segments. Profitability : Customer relevance often follows the “Pareto” rule, whereby 20% of the customers provide for 80% of profitability. It is important to differentiate whom to retain versus whom to reward. Retention and rewarding strategies are not equal; one could be necessary, the other being optional. Loyalty : Some customers are inherently more loyal than others, for reasons having to do with their profiles rather than something attributable to the organisation. Life time value (LTV) : The discounted present value of future revenues that the customer would give to the organisation should he decide to stay, i.e. since the customer value is measured with respect to its future sale potential and not the current potential. It should be noted that not all organisations have information on customer related costs, so that proxies could be obtained while adequate information is captured on issues such as desertion. Desertion due to service dissatisfaction by customers Many customers are dissatisfied with the services offered by the organisation or company. The customers are very much service conscious and if the quality of service is poor then the customers will not opt for that company; neither will they refer somebody to visit the company, due to the poor service. Therefore the customer desertion will be high. Monitoring the Desertion In measuring performance with respect to client desertion, it is important to distinguish between monitoring (continuous measurement) and other basic forms of information gathering related to market research (undertaken at a specific point in time). In both cases, more important than the method of measurement is to define what is going to be done with the results. Collecting information on consumer behaviour and/or reasons for desertion causes from exit interviews or suggestion boxes, for example, are useless if these are not supported by a market intelligence system that would permit it to flow through and analyse at a strategic decision level. Moreover, the reasons for desertion do not substantially vary over time because customers’ behaviour and attitudes develop over time and therefore do not change quickly; market research efforts are a good alternative to analyse issues relating to desertion instead of regular monitoring of data which will not provide new information. Some business houses should have considered investing in sophisticated information systems – like customer relationship management (CRM) programs, which use data warehouses to mine information about clients (Figure 4).
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Article 5 – Marketing (customers)
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