Customer life time value is how much the customer is worth to the business and how much the business should spend on keeping them as a customer. It is calculated by looking at what a customer buys and how long they have been a customer with the business. If HSBC is interested in customer life time value then they will want to know how much they are likely to spend with them overall. This is done by:
Average transaction value
X
Annual frequency
X
Life time of customer
This is why relationship marketing is so important to any business, as it builds relationships to help keep customers with the company for a long time, to help satisfy their needs to attract them to spend more. As the more HSBC customers spend the higher their customer life time value increases so the more money they make in the future. It is a more secure way of getting sales by thinking ahead and by doing Ad-hoc research to get repeated sales by improving their services to provide a better service and experience overall.
In B2B and B2C terms HSBC will find it much simpler to build relationships with business to customer as they are mainly dealing with parents and children, so they know who has the power to make the decisions when it comes to completing a sale. However with B2B HSBC will find it more complicated as there is so many roles and influences when generating a sale, for example shareholders, managers, managing directors etc.
An example of a simple structure a business may follow is shown below:
Decider
Gate keeper
Buyer
User
Relationship marketing is the process of attracting, maintaining, and enhancing relationships with key people, so it helps decide who to target and who has the power in a transaction to help persuade and promote products and sales. It is importation HSBC build relationships with their customers to help build a good reputation and stay competitive within its market by constantly being customer focused to help generate sales. It overall leads to increase in profits and better communication through out.
Conclusion
Overall from the above information I conclude that the greatest effect from adopting relationship marketing techniques is success and better knowledge of what its customers wants. As today’s customers become more sophisticated and demanding, marketing strategies have had to adapt in order to stay ahead. By having an excellent relationship marketing policy HSBC will be able to continue to grow and increase its profits as it will help generate on going sales and secure future transactions.
- SECTION A: RELATIONSHIP MARKETING AND CUSTOMER SERVICE.
-Identifying and describing customer service functions (P2)
Date: 13 May 2008
Report on: Customer service functions in a selected business
Introduction
This section will describe the customer service functions within a selected business, to help further my understanding of what customer service is and how this can be conducted within an organisation to help strengthen relationships with customers. This will be in regards to Boots the Chemist plc and with the use of library and internet research to help obtain the information needed to conclude this section.
Findings
Customer service is an important aspect of any business; it is what the business provides for the customers. For a company to be successful it must have good customer service. Every customer will have different needs and expectations of an organisation. Therefore it is important to be absolutely sure that you understand what they need or expect in order to deal with them effectively and efficiently.
In order to understand what customers want or need a business should:
-
Ask for information in order to ensure that their needs are met.
-
Provide information for the customer
- Don’t wait for the customer to approach you instead ask them what they want.
Building good customer relationships can help an organisation to maintain existing customers and to attract new ones by providing good service.
Boots The Chemist plc is a leading health and beauty retailer in the UK; it has its own brand, which is one of the most respected on the high street. The Boots family started trading in 1849 selling herbal remedies and has successfully developed from then on.
Boots have a range of customer service functions in place to help strengthen customer relations. For example Loyalty scheme, this is so customers feel like they are getting something extra from shopping at their stores, also they have a range of products and services on offer so customers have the freedom of choice and also to help provide everything in one place and in addition Boots have specialised staff on hand to offer expert advice about the products/services they sell for free. Their own brand is also seen as a customer service function as they offer similar products at a discounted price etc. These series of activities are designed to enhance the level of customer satisfaction and to help gain the feeling that their product and service have met the customer’s expectations.
Boots customer service activitys help strengthen customer relations as they offer the best qualit and standards in their products and also provdie excellent custoemr services through their staff. From this Boots customer will feel good doing business with the company and are more than likely to stay with the business and recommend it to others. It is a lot cheaper to retain customers than find new ones; this is why good customer service is important as it saves the company a lot of money in the long run.
In managing relationships with customers, it is critical that Boots constantly show them how important they are to the organisation. This message must be evident every time a customer comes in contact with the business. At each of these "moments of truth" there is the potential for customers to be either impressed or disappointed.
Customers need to be made to feel that the company wants their business. If they don't feel valued, they will take their business elsewhere. It's easy to understand how companies send the wrong message when they don't pay enough attention to customers, when commitments are not met, and when calls are not returned etc.
One of the ways Boots the Chemist reach out to its customers is by periodically rewarding them for giving the company their business e.g. loyalty scheme and promotional offers This tells customers that Boots have noticed that they do repeatedly comeback to do business again, and it also shows that they appreciate their custom. This element of recognition is important. It satisfies a fundamental human need for appreciation. But, such recognition is much more effective when it appears to the customer to be spontaneous and not part of a contrived customer-rewards program.
Delivering extraordinary service is one of the more obvious, but seldom perfected, ways in which Boots endear the business to their customers – by providing a positive service experience every time. This involves performing beyond customers' zone of tolerance; adding value for customers by exceeding expectations and surprising them with exceptional service e.g. offering free expert advice on their products etc.
The service itself, though, cannot create the desired emotional attachment between customers and the business. However, as Boots customers continue to receive exceptional service every time they come in contact with the business, they will come to accept this as the norm. This is the initial, requisite stage of trust and commitment. The businesses customers trust that they will have a quality experience each time they interact with the company and they know that they are committed to providing this high quality service.
Merely satisfying customer is not enough. Boots the Chemist must get beyond satisfaction to surprise and delight them. There is a significant difference between satisfied customers and completely satisfied customers. This is true for all customers: of airlines, hospitals, banks or retailers etc. Keeping this in mind, it is important to concentrate on exceeding customers' expectations in order to move them from being satisfied to completely satisfied.
Conclusion
Overall from the above information I conclude that Boots the Chemist have good customer service in place and do constantly try to seek new opportunities to offer exceptional customer service to its customers. This has shown through out the years as the business has grown and being successful within its markets. They have good techniques and train their staff to offer high quality service so consumers will come back again and again. They are still the market leaders and have grown over seas and become world wide retailers.
- SECTION B: CUSTOMER AND QUALITY
-Different methods used to attract and retain customers (P3)
Date: 15 May 2008
Report on: The methods used to attract and retain customers in a selected business
Introduction
This section will identify all of the techniques used to attract customers to a selected product or service in a selected organisation. This will then follow on to describe how the company retains their custom by using techniques to attract them back to the business. This section within the report will help further my knowledge on the different advertising methods used to attract customers and how a selected organisation keeps customers coming back again and again. This will be done by researching the information needed to help complete this section with the used of accurate and relevant information relating to my chosen organisation. This will be in regards to the following business Boots The Chemist Plc.
Findings
As you have learned in section A Boots the Chemist is a very successful retail outlet. This shows that the company has strategies and techniques in place to attract and retain new and existing customers over the years to help develop their success. Boots use different types of media to attract, notify and retain customers to their store.
It is important to any business to be able to attract customers to their business so they can generate sales and overall make a profit; this is done through promotional campaigns that a business establishes to help attract attention to something or someone etc. However it is also important that customers experience a good service and are satisfied with the service they received, so they will spread the word to help build a good reputation and so they consider coming back to the store. This can be done in many ways such as loyalty schemes, promotional offers, discounts etc, to help attract customers back and generate more sales.
The foundation of direct marketing is based on understanding this insight into why people lost customers. Because direct marketing is a way of marketing. It is oriented towards finding getting, keeping and developing customers one-to-one. Direct marketing is an attempt to approach the customers directly. It a personal approach to customers. It is much more personal than mass advertising and so it can be a key part of attracting and retaining customers within an orgainsation to help build on going customer relationships. Boots use this approach as a loyalty card (Advantage card) to retain custoemrs by giving something back.
- The importaints of data base
A database allows a business to manage and use a mass of information easily. They are easy to set-up, easy to manipulate and easy to use. A database allows Boots to collect customer information and process it easily if it has a good design. This will help to make decisions in regards to new ideas and opportunities. A program can consult the information to answer queries. The records retrieved in answer to queries become information that can be used to make decisions regarding products and services. The information stored can be used to help monitor certain issues, such as customer satisfaction by designing the database to leave feedback on the information that is stored. It is a good tool to help sort out trends on products and produce mailing lists for customers etc.
- Difficulty in attracting new customers
However it can be very difficulty to attract new customers to a business, as markets rapidly change and competition can get tougher to compete against. Also it cost a business more money to attract a new customer than it does to retain an existing customer. This is because media can vary in price as well as many other factors, such as how affective they are in raising awareness or attracting the consumer’s attention and interests. It is a complex process that may not be successful. Also it can cost a lot more to lose just one customer through dissatisfaction with a product or service within a business.
- Cost of lose of customers
It can cost Boots a lot of money and reputation, from losing customers due to poor customer service. As customer can tell from around 5-15 other people about their dissatisfaction and this can be passed around by word of mouth to a much higher number. That means that losing even one customer can result in negative word-of-mouth involving up to a hundred or more people. Losing many customers because of dissatisfaction can result in thousands of potential customers getting negative feedback about a business and clearly most companies cannot afford this kind of reputation.
The company uses a rage of media to advertise their product/services, but also to keep them coming back to the store by promoting discounts, offers etc. Boots uses TV advertising to promote their products, services and business, as this is the main type of media customers use on a daily bases. This type of promotion captures more people’s attention and is seen by more customers as nearly every house around the world has a Television in their home. This helps Boots to sell their products and increase their brand awareness, which will help them build on there brands growing success internationally, as this type of media reaches a wider audience easily, this means more customers will be attracted to the store as they have seen it on TV.
Also another type of media that is used as direct marketing to help get repeated purchases and introduce new products is Boots loyalty card scheme. This is called the advantage card and is free to every customer. It rewards them with points every time they make a purchase in Boots stores. This helps retain custom as the more point’s collect the more customers will have to spend on products they want in store. This is designed to keep customers coming back, as they are getting something back in return for their custom. It also monitors what customers buy and sends promotional material by direct mailing to advertise products that they will be interested in.
Boots offers its advantage card customers a free magazine each month. This is another type of promotional media that attracts consumers to visit their stores to obtain an advantage card for this special offer that is available. Even if Boots consumers only visit the store to pick up a magazine there is a chance that he/she will purchases something else within the store as they are shopping. Also it increases the chance of consumers coming back to the store to use their new advantage card and collect points as the card can only be used in Boots shops. This helps the business to gradually boost its sales as there is a higher chance of products been sold if more consumers are visiting their stores
Leaflets is another type of media Boots uses to make people aware of their special promotional offers in store and what the latest products and services they have on offer. So that people will be interested in shopping at their store and buying their products instead of their competitor. This is another of Boots strategies to attract and retain consumers, by using persuasive writing and images to overall help persuade them to buy from their business. It helps to increases the chance of them obtaining an advantage card once they have visited the store.
Boots use Questionnaires to find out relevant information about their customers so that they can find out and estimate what their customers will want. For example what products their customers would like them to sell, what they are interested in so that they can offer products and services that they would like. So that they would be more attracted to their store than any of their competitors. This will enable them to be more customer focused, so that they can offer what people want, which will help them maximizing sales and maximizing the values of the company.
Boots brand is another media the business uses to help them attract and retain customers to buy their products. As this adds value to their products and makes customers recognise their businesses logo and products they sell. Which means more people will want to buy their brand as they know that they offer good quality value for money. So will trust them to get what they want from their products. This will raise awareness of the business as well as its products. It helps them create a good image as they are offering value for money which will make customers want to come and buy from the store in the future, and promote their business from word of mouth, which might make other consumers visit their business. So the business can building on there brands growing success internationally and maximize the values of the company from this.
- Promotion of unique selling point
Conclusion
From the findings I have found that Boots the Chemist have many promotional activities to help the business promote its self and attract and retain customers. Through this the business can achieve the aims of the company and continue to be successful and progress further. Boots use many different types of media to promote their business, products and services. The selections of the media used are very effective in raising awareness and attracting attention. Overall I think Boots have a very successful promotional campaign that has allowed them to grow over the years and become a respected well known brand
- SECTION B: CUSTOMER AND QUALITY
-Description of quality systems operative (P4)
Date: 19th May 2008
Report on: The quality systems in place in a selected organisation
Introduction
This section will describe the quality systems in place in a selected organisation and will identify what strategies they use to overall maintain and improve the quality of their products/services. This will include the activities used to help measure quality and how the organisation track customer satisfaction. This will be done by researching the information required to complete this assignment and to help further my understanding of relationship marketing and the other aspects involved in building relationships with customers.
Findings
What do they do to measure quality?
How do they track customer satisfaction? Monitor performance
Bibliography
By Michaela Louise Burnett Tutor Barry Forrester
