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1 loyalty scheme
Mktga sales promotion technique used to encourage customers to continue buying a product or using an organization’s services. It works by rewarding customers who spend more and/or stay longer with an organization. Examples include a shopper card that gives discounts on purchases over a period of time.There are several other loyalty scheme approaches: points systems—which give points to customers based on what they purchase; premium customer programs—where customers who spend certain amounts of money and are repeat purchasers gain special status and receive benefits such as discounts, exclusive offers, and gifts; buyers’ clubs—where a certain number of customers can club together to buy a particular product, at a special volume discount.If implementing a loyalty scheme, it is important to remember that it must be there for the long term, and the level of incentive must be right. Offering too much will hurt your profits; offering too little will not attract members. Customers also need to be able to check up on their status easily—to see, for example, how many points they have currently accumulated. -
2 customer relations
Mktgthe approach of an organization to winning and retaining customers. The most critical activity of any organization wishing to stay in business is its approach to dealing with its customers. Putting customers at the center of all activities is seen by many as an integral part of quality, pricing, and product differentiation. On one level, customer relations means keeping customers fully informed, turning complaints into opportunities, and genuinely listening to customers. On another level, being a customer-focused organization means ensuring that all activities relating to trading—for example, planning, design, production, marketing, and after-sales of a product or service—are built around the customer, and that every department and individual employee understands and shares the same vision. Only then can a company deliver continuous customer satisfaction and experience good customer relations. -
3 customer profitability
Mktgthe degree to which a customer or segment of customers contributes toward organization profits. Customer profitability has been shown to be produced primarily by a small proportion of customers, perhaps 10% to 20%, who generate up to 80% of a company’s profits. Up to 40% of customers may generate only moderate profits, and the other 40% may be loss making. Such data enables companies to focus efforts on the most profitable segments. -
4 global pricing contract
Opsa contract between a customer and a supplier whereby the supplier agrees to charge the customer the same price for the delivery of parts or services anywhere in the world. As globalization increases, more customers are likely to press their suppliers for global pricing contracts. Through such contracts suppliers can benefit by gaining access to new markets and growing their business, achieving economies of scale, developing strong relationships with customers, and thereby gaining a competitive advantage that is difficult for competitors to break. There are risks involved, too, for example, being in the middle of a conflict between a customer’s head office and its local business units, or being tied to one customer when there are more attractive customers to serve. -
5 marketing management
Mktgone of the main management disciplines, encompassing all the strategic planning, operations, activities, and processes involved in achieving organizational objectives by delivering value to customers. Marketing management focuses on satisfying customer requirements by identifying needs and wants, and developing products and services to meet them. In seeking to satisfy customer requirements, marketing goals to build long-term relationships with customers and with other interested parties and to provide value to them. This begins with market research, which analyzes needs and wants in society, and continues with attracting customers and the cultivation of mutually beneficial exchange processes with them. Tools used in this process are diverse and include market segmentation, brand management, PR, logistics, direct response marketing, sales promotion, and advertising. -
6 accounts receivable turnover
Econ, Fina ratio that shows how long the customers of a business wait before paying what they owe. This can cause cash flow problems for small businesses.EXAMPLEThe formula for accounts receivable turnover is straightforward. Simply divide the average amount of receivables into annual credit sales:Sales/Receivables = Receivables turnoverIf, for example, a company’s sales are $4.5 million and its average receivables are $375,000, its receivables turnover is:4,500,000/375,000 = 12A high turnover figure is desirable, because it indicates that a company collects revenues effectively, and that its customers pay bills promptly. A high figure also suggests that a firm’s credit and collection policies are sound.In addition, the measurement is a reasonably good indicator of cash flow, and of overall operating efficiency.The ultimate business dictionary > accounts receivable turnover
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7 agile manufacturing
Opsa manufacturing philosophy that focuses on meeting the demands of customers by adopting flexible manufacturing practices. Agile manufacturing emerged as a reaction to lean production. It differs by focusing on meeting the demands of customers without sacrificing quality or incurring added costs. Based on the idea of the virtual organization, agile manufacturing aims to develop flexible, often short-term, relationships with suppliers, as market opportunities arise. Stock control is considered less important than satisfying the customer, and so customer satisfaction measures become more important than output measures. Agile manufacturing requires an adaptable, innovative, and empowered work force. -
8 channel management
Mktgthe organization of the ways in which companies reach and satisfy their customers. Channel management involves more than just distribution, and has been described as management of how and where a product is used and of how the customer and the product interact. Channel management covers processes for identifying key customers, communicating with them, and continuing to create value after the first contact. -
9 customer capital
Gen Mgtthe value of an organization’s relationships with its customers, which involves factors such as market share, customer retention rates, and profitability of customers -
10 customer flow
Mktgthe number and pattern of customers coming into a store or passing through a railway or bus station, airport, or other large service, retail, or leisure area. Customer flow can be monitored by observation, time lapse or normal closed circuit television, or, less satisfactorily, by analysis of purchase data. This provides useful information about the number of customers, flow patterns, bottlenecks, areas not visited, and other aspects of consumer behavior. -
11 customer focus
Mktgan organizational orientation toward satisfying the needs of potential and actual customers. Customer focus is considered to be one of the keys to business success. Achieving customer focus involves ensuring that the whole organization, and not just frontline service staff, puts its customers first. All activities, from the planning of a new product to its production, marketing, and after-sales care, should be built around the customer. Every department and every employee should share the same customer-focused vision. This can be aided by practicing good customer relationship management and maintaining a customer relations program. -
12 customer retention
Mktgthe maintenance of the custom of people who have purchased a company’s goods or services once and the gaining of repeat purchases. Customer retention occurs when a customer is loyal to a company, brand, or to a specific product or service, expressing long-term commitment and refusing to purchase from competitors. A company can adopt a number of strategies to retain its customers. Of critical importance to such strategies are the wider concepts of customer service, customer relations, and relationship marketing. Companies can build loyalty and retention through the use of a number of techniques, including database marketing, the issue of loyalty cards, redeemable against a range of goods or services, preferential discounts, free gifts, special promotions, newsletters or magazines, members’ clubs, or customized products in limited editions. It has been argued that customer retention is linked to employee loyalty, since loyal employees build up long-term relationships with customers. -
13 database marketing
Mktgthe collection and analysis of information about customers and their buying habits, lifestyles, and other such data. Database marketing is used to build profiles of individual customers, who are then targeted with customized mailings, special offers, and other incentives to encourage spending. Database marketing is a form of relationship marketing. -
14 direct selling
Mktgthe selling of products or services directly to customers without the use of intermediaries such as wholesalers, retailers, or brokers. Direct selling offers many advantages to the customer, including lower prices and shopping from home. Potential disadvantages include lack of after-sales service, an inability to inspect products prior to purchase, lack of specialist advice, and difficulties in returning or exchanging goods. Methods of direct selling include mail order catalogs and door-to-door and telephone sales, and direct selling has increased with the growth of the Internet, which enables producers to make direct contact with potential customers. -
15 field research
Mktgthe collection of data directly from contact with customers and potential customers through surveys, interviews, and other forms of market research -
16 key account management
Mktgthe management of the customer relationships that are most important to a company. Key accounts are those held by customers who produce most profit for a company or have the potential to do so, or those who are of strategic importance. Development of these customer relations and customer retention is important to business success. Particular emphasis is placed on analyzing which accounts are key to a company at any one time, determining the needs of these particular customers, and implementing procedures to ensure that they receive premium customer service and to increase customer satisfaction. -
17 Levitt, Theodore
(b. 1925) Gen MgtGerman-born academic. Harvard professor, who wrote the landmark article “Marketing Myopia,” Harvard Business Review (July/ August 1960). In this article, which has sold over 500,000 reprints and genuinely changed basic perceptions of business practice, Levitt argued that the central preoccupation of corporations should be with satisfying their customers, rather than simply producing goods. According to Levitt, production-led thinking inevitably led to narrow perspectives, the ultimate result of which would be that customers would be overlooked. -
18 lifetime value
Gen Mgta measure of the total value to a supplier of a customer’s business over the duration of their transactions.In a consumer business, customer lifetime value is calculated by analyzing the behavior of a group of customers who have the same recruitment date. The revenue and cost for this group of customers is recorded, by campaign or season, and the overall contribution for that period can then be worked out. Industry experience has shown that the benefits to a business of increasing lifetime value can be enormous. A 5% increase in customer retention can create a 125% increase in profits; a 10% increase in retailer retention can translate to a 20% increase in sales; and extending customer life cycles by three years can treble profits per customer. -
19 personalization
E-comthe process by which a Web site presents customers with selected information on their specific needs. To do this, personal information is collected on the individual user, and employed to customize the Web site for that person. Used properly, personalization is a powerful tool that allows customers to access the right content more quickly, thus saving them valuable time. Personalization is particularly useful if a Web site contains a very large quantity of material, meaning that a visitor is slow in finding the information they seek. It also requires a large number of visitors to the Web site, because personalization systems are complex and expensive to install.Information on the customer is usually collected in one of two ways. Either the individual is asked to fill out a personal profile, perhaps informing the organization of the type of product and service he or she is interested in, or the organization uses software that tracks the way a customer uses the Web site. For example, a customer interested in Product X last week, might receive details of an update for Product X upon their next visit to the Web site. A popular method by which such tracking is carried out is the use of cookies, which reside on an individual’s browser and collect information on that person’s Web behavior. Because it requires the collection of personal information, personalization raises key privacy policy issues. -
20 privacy policy
E-comthe means by which an organization reassures customers that personal information they supply—usually over the Internet—will be securely protected, and used only for the stated purpose.Most customers are willing to give personal information if they know that it will benefit them. However, privacy is a major concern on the Internet, and needs to be addressed comprehensively. The use of customer information is legislated separately by individual countries, and collecting it and—in particular—moving it between countries can be very complicated, because different countries have different laws.However, a basic principle is for an organization to tell the individual clearly why it is collecting the information, and what that information will be used for. If the organization wishes to use the information for other purposes, such as sending out e-mails on special offers, or sharing with partners, the individual should be specifically informed of that intention, and given the opportunity to opt out.It is good policy for organizations to allow individuals to check the information held on them, and to delete information if they wish to do so. A proper security procedure is essential. Internet security breaches are increasing, and hackers are particularly interested in breaking into systems that contain personal information.
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