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Marketing Basics: Assessing the Value of Your Customer
 
 

Assessing Your Customer Value for Marketing

A company sells a product. So do a lot of other companies. How does the first company keep its customers coming back for more?

The company needs to find a way to create value for the customers, and then keep them coming back for more.

There are five steps to creating and capturing customer value. Here they are:

1. Understand Marketing and Marketing Goals

2. Understand How Your Product Fits in the Market and What the Customer Needs

3. Implement a Marketing Strategy That Focuses on the Customer

4. Build Relationships With Your Customers

5. Capture Customer Value

1. Understand Marketing and Marketing Goals

Marketing is defined as the ability to match the wants and needs of the consumer with the ability of a company to fulfill those needs. Marketing is the art of selling a product to the consumer.

For this article, we will be using the marketing philosophy. Therefore, the company plans to do market research to determine what the customer wants.

Basically, you want to produce the right product at the right time and market it to the right people at the right price. Sound easy? Well, it's not.

So, what does the marketer do now?

First, they must determine what the customer wants. There is no need to make a product before you know whether the product will sell. That is production marketing, and it is a philosophy that rarely works.

Then, they must find out where the customer shops, and specifically, where they shop for their type of product.

The final step is figuring out how to produce the product at a price the customer would see as a good value.

And all three of these steps must work together and come to fruition at the right time. If any of these steps are missed, or wrong, the product will be a failure. Period.

A company that makes school planners for high school students, and has the planner schedule of January through December, and sells the product in November and December, would fail.

Why?

Because students and their parents would buy this product before school starts, and they would need the planner to start in August or September, and go through June.

This process is where a marketing team begins when they are considering a new product, or improving an old one.

Always remember the four Ps of marketing. They are:

Product or Service

Place

Price

Promotion

Think!

Imagine you are part of a marketing team that wants to develop and sell a new type of printer.

What steps would you take before the development of the product?

2. Understand How Your Product Fits in the Marketplace and What the Customer Needs

What does your customer need?

First, we must define needs and wants.

What do people need? People need shelter, food, and clothing. Everything else is a want.

A marketer must ask: How does a product fit in the marketplace, and does it meet customer needs?

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For this calculation, marketers use the product/market fit. This term was originated by Marc Andreessen, the founder of Netscape, and a well-known venture capitalist. Basically, the product/market fit means that you have a good product, in a good market that needs the product. There is a hole in the market that your product can fill.

For example, a company can produce the best product available. It is innovative and unique. However, if there is no market for the product, it will fail. A seller of a product must know what the market is, and strive to meet the needs of the market. That's the only thing that matters.

That said, it is not necessary to create the best product, as much as it is to create a product that meets the need in the market. When you understand your customers' needs, you are able to direct your marketing efforts to meeting those needs.

Let's use an example.

An estate planner is looking to increase his business. He needs to market his product to get more clients. Who would he market to?

He would aim for potential clients who are over 40, and have an income of over $150,000. Why? Because people under 40 normally aren't looking for estate planning help yet. And people who make under $150,000 usually don't have enough assets to warrant an estate planner.

He could just blanket market, and send information to everyone, but that would be a waste of time and money. By targeting a well-defined group, he will have a much better chance of signing on new clients.

Think!

ABC Company has developed a solar calculator that is very durable.

Who would they market to?

3. Implement a Marketing Strategy That Focuses on the Customer

Implementing a marketing strategy for a business requires the owner to develop a plan that will target their desired market.

To do this, they must decide how to advertise and promote the product, and how to do it in the most cost-effective way possible.

There are five steps to implementing a marketing strategy that focuses on the customer:

1. Analyze

The marketing team must analyze the potential market for the products or services they want to market and sell to. They use market research to learn more about their market, as well as their competition. The goal is to develop a brand, as that is the simplest way to retain customers.

2. Customers

The marketing team gathers as much information about potential customers as possible. They can hire a market research firm, or do the market research themselves. There are myriad ways to accomplish this. They can do focus groups, which are a group of random people, and ask them about their preferences, and whether they are interested in the product.

Focus groups are often very helpful, as it is possible to gather a great deal of information. A marketing team can learn their buying preferences, as well as their desires and financial status.

Using this information, the marketing team can decide what are the best ways to reach their customer. Examples of promotions are coupons, brochures, signs, and posters, as well as newsletters and direct mailers.

3. Management

Managing a marketing strategy is just as difficult as implementing one. The marketing team or manager must monitor the strategy to ensure it is providing the desired result.

For example, an accountant wants to increase his business during tax season. He advertises on three local radio stations. The marketing manager would gather results of those ads to determine which ones are most successful. If one station is getting better results than another, the manager might choose to increase the ad buys with the first station. Or, they might stop advertising on the station that has the poorest results, and funnel that cost into additional ads on the station that has been successful.

But if the marketer does nothing, he is wasting money by keeping the poorly performing ads running on the least successful station.

4. Customer Focus

It is essential that a company continues to focus on existing customers, while also attempting to gain new ones. Existing customers are extremely important to a company, as repeat business is very valuable. In addition, it costs less to keep an existing customer than it does to seek out new ones.

One of the best ways to do this is with customer service. Customer service can take many forms. From telephone service, to sending out occasional mailers or coupons, any method of customer service is better than none at all. The same can be said for customer support, if the product requires it. Ideally, every employee in a company has the goal of providing excellent customer service -- not just the marketing and customer service team. And ideally, the executives or leadership team will reward those employees who best serve the needs of the customer.

5. Monitoring Performance

Once the marketing team has decided upon and implemented the marketing strategy, they must continually monitor how the strategy is performing. There are many ways to do this. An online company has many different types of software than can monitor who is visiting their site, and how long they were there. It also enables the manager to know which online ads are working, and which ones are not.

Companies that are not online also have a series of tools available to them. They can also use software that will tell them which ads are working, and how other forms of public relations are working for the company. The goal is to funnel any money used for unsuccessful campaigns into the ads that are working.

Think!

Your company is planning to buy ads on three local television stations -- affiliates of ABC, NBC and CBS. The ads on CBS are bringing in twice as much business as the other two.

As the marketing manager, what would you do?

4. Build Relationships With Your Customers

Your customer is your most important business relationship, and it is essential that you use every opportunity to build on that relationship. It's important that during slow times, you have existing customers to keeping the business running. Developing these relationships will take time, so it's important to use good customer service strategies.

Here are five strategies that will help build and maintain good customer relationships.

1. Train your employees in customer service.

Each employee must have customer service skills. Yes, there are some situations where this is not necessary, like very large companies, where certain employees will never come into contact with a customer. Remind your employees that they are the public face for the company, and each one is acting as an ambassador for your products.

It is key your employees are well versed in customer service skills, and understand that being knowledgeable and experienced is the best way to retain existing customers. Training your employees to do this can be costly, but if you keep employee turnover low, it is extremely important.

Having good customer service will keep customers and give your company a good reputation, which will help when trying to attract new customers.

2. Every customer is valuable.

Each and every customer must be given excellent service. Even one upset customer can affect your business, especially in the time of social media. Each customer must be handled with respect, even if they are small or bring little business. You never know whether that customer will refer another customer.

3. Always look to establish new connections.

The marketer is always looking to establish new connections with current customers. Not only will this improve customer relations, it will give you valuable input regarding your business. Also, continue to promote your business to existing customers, as it will help keep your customer informed and connected to your business. Your company should have a website that is easy to navigate and use. It should also have an area for customers to contact you regarding any customer service issue, and these contacts should be dealt with immediately.

4. Listen to what your customer has to say.

People like to feel like they are important and that their opinion is valuable. This is true for both personal and business interactions. So always listen to what your customer has to say, and give valuable feedback in return. If they have concerns, make sure you address them in a timely and fair manner.

The best way to provide this is to have an area on your website where customers can give feedback. Even if the feedback is left anonymously, it is important and valuable information.

5. Reward loyalty!

Remember, it costs less to keep an existing customer than it does to get a new one. So keep your relationships with existing customers strong. It is important existing customers feel valued and appreciated. Depending on the size of your business, you can reward customers with coupons, special point systems that can earn free products, or being told of new products or services before the rest of the public.

Think!

You are the owner of a gym, and want to gain new customers while also keeping existing ones.

What kind of marketing strategy would you use to keep existing customers happy?

5. Capture Customer Value

How do you keep your customer coming back for more?

The final step is capturing value from customers to make profits and "customer equity." Customer equity is the existing customer base that keeps the company afloat. To do this, the company must meet the wants and needs of the customer.

To do this, a marketing team must have a way to manage customer relationships. The goal is to capture the customer's loyalty, so they remain a customer, and hopefully tell their friends and family about the product.

Each customer must be seen as an asset, no differently than one would see any other asset. And remember, each customer is different, and what one customer might need is different than another customer.

The best way to manage customers and their needs is to use a CRM program. CRM is Client Relationship Management, and it is a software package that allows a business to manage each customer.

You can adjust the CRM to sort customers by different needs. For example, a company might sort customers by age, or by sex, or by prior purchases. This allows a marketing team to target a specific group of customers, and therefore, have a better chance of meeting customer needs.

By being able to direct loyalty programs and public relations to certain groups, the company improves its chances of having better customer loyalty and repeat business.

Think!

You have a product that is used by almost every age group.

How would you promote loyalty to such a large group of customers?

 
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