Managing Customer Experience and Relationships

Managing Customer Experience and Relationships
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Every business on the planet is trying to maximize the value created by its customers  Learn how to do it, step by step, in this newly revised Fourth Edition of Managing Customer Experience and Relationships: A Strategic Framework. Written by Don Peppers and Martha Rogers, Ph.D., recognized for decades as two of the world’s leading experts on customer experience issues, the book combines theory, case studies, and strategic analyses to guide a company on its own quest to position its customers at the very center of its business model, and to “treat different customers differently.”  This latest edition adds new material including:  How to manage the mass-customization principles that drive digital interactions How to understand and manage data-driven marketing analytics issues, without having to do the math How to implement and monitor customer success management, the new discipline that has arisen alongside software-as-a-service businesses How to deal with the increasing threat to privacy, autonomy, and competition posed by the big tech companies like Facebook, Amazon, and Google Teaching slide decks to accompany the book, author-written test banks for all chapters, a complete glossary for the field, and full indexing Ideal not just for students, but for managers, executives, and other business leaders, Managing Customer Experience and Relationships should prove an indispensable resource for marketing, sales, or customer service professionals in both the B2C and B2B world.

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Don Peppers. Managing Customer Experience and Relationships

Table of Contents

List of Exhibit

Guide

Pages

Managing Customer Experience and Relationships

Foreword The View from Here

Note

Preface

How to Use This Book

Notes

Acknowledgments

About the Authors

CHAPTER 1 Evolution of Marketing and the Revolution of Customer Strategy

ROOTS OF CUSTOMER RELATIONSHIPS AND EXPERIENCE

How to Think About Relationships and Customer Experience as Key to Business Strategy

Traditional Marketing Redux

Continuing Roles for Mass Media and Branding

INITIAL ASSESSMENT: WHERE IS A FIRM ON THE CUSTOMER STRATEGY MAP?

COMPARING MARKET-SHARE AND SHARE-OF-CUSTOMER STRATEGIES

WHAT IS A RELATIONSHIP? IS THAT DIFFERENT FROM CUSTOMER EXPERIENCE?

Who Is the Customer?

How to Think about Customer Experience

LEARNING RELATIONSHIPS: THE CRUX OF BUILDING CUSTOMER VALUE

Notes

CHAPTER 2 Treat Different Customers Differently: How Learning Relationships Lead to Better Experiences and Higher Profit

FOCUS ON RELATIONSHIP EQUITY

THE STRATEGY: TREAT DIFFERENT CUSTOMERS DIFFERENTLY (TDCD)

THE TECHNOLOGY REVOLUTION AND THE CUSTOMER REVOLUTION

Customers Have Changed, Too

WHAT CHARACTERIZES A RELATIONSHIP?

Characteristics of a Genuine Business Relationship

CUSTOMER LOYALTY: IS IT EMOTIONAL? OR BEHAVIORAL?

CUSTOMER RETENTION AND ENTERPRISE PROFITABILITY

The Financial Payoff of Building Customer Relationships in Financial Services

Why Do Companies Work at Being Customer-Centric?

Return on Customer: Measuring and Increasing the Efficiency with Which Customers Create Value

Notes

CHAPTER 3 Better Customer Experiences for Better Shareholder Return

FRICTIONLESS: THE IDEAL CUSTOMER EXPERIENCE MAY BE NO EXPERIENCE AT ALL

How Hard Does Your Customer Have to Work for You To Make Money?

The Shoe Salesman's Hidden Motivation

PRODUCT COMPETENCE

Customer Experience Duality

CUSTOMER COMPETENCE

Don't Run Your Business on the Goldfish Principle

UNDERSTANDING CUSTOMER EXPERIENCE THROUGH CUSTOMER JOURNEY MAPPING

What Is Not Customer Journey Mapping?

What Makes a Good Map?

CJM Outcomes

Notes

CHAPTER 4 IDIC and Trustability: Building Blocks of Customer Relationships

IDIC: FOUR IMPLEMENTATION TASKS FOR CREATING AND MANAGING CUSTOMER EXPERIENCES AND RELATIONSHIPS

Making It Look Easy

Relationships and Trust Happen in Unison

HOW DOES TRUST CHARACTERIZE A LEARNING RELATIONSHIP?

Becoming More and More Trustable to Customers

DO THINGS RIGHT, DO THE RIGHT THING, AND BE PROACTIVE

Basic Principles of 21st-Century Trustability

The Man with the Folding Chair

RELATIONSHIPS REQUIRE INFORMATION, BUT INFORMATION COMES ONLY WITH TRUST

BEHIND THEIR CUSTOMERS' BACKS

HOW TRUSTABLE COMPANIES OPERATE

RECOVERING LOST TRUST

Trustability Proof Points

Notes

Part I: Food for Thought

Note

CHAPTER 5 IDIC Step 1: Identify Individual Customers

INDIVIDUAL INFORMATION REQUIRES CUSTOMER RECOGNITION

Step 1: How Much Customer Identification Does a Company Already Have?

The Real Objective of Loyalty Programs

Step 2: Get Customers to Identify Themselves, and Make Sure to Identify Customers Accurately Through Any Channel

WHAT DOES IDENTIFY MEAN?

Four Ways to Integrate the Online and Contact-Center Experience

Customer Identification in a B2B Setting

Customer Identification in a B2C Setting: Unify Omnichannel Marketing Programs

CUSTOMER DATA REVOLUTION

What Data Do We Need When We Identify a Customer?

Why Is Identification Important?

First-Party, Second-Party, and Third-Party Data

Cookies and Privacy

Integrating Data to Identify Customers

SaaS, the IoT, and Customer Relationships

Notes

CHAPTER 6 IDIC Step 2: Differentiate Customers by Value

CUSTOMER VALUE IS A FUTURE-ORIENTED VARIABLE

CUSTOMER LIFETIME VALUE

Customer Contribution versus Customer Profit

RECOGNIZING THE HIDDEN POTENTIAL VALUE IN CUSTOMERS

The Potential Value of Prospective Customers

Growing Share of Customer

Assessing a Customer's Potential Value

DIFFERENT CUSTOMERS HAVE DIFFERENT VALUES

Pareto Principle and Power-Law Distributions

CUSTOMER VALUE CATEGORIES

CUSTOMER REFERRAL VALUE

Is It Fair to “Fire” Unprofitable Customers?

Dealing with Tough Customers

Managing the Mix of Customers

Final Thoughts on Value Differentiation

Notes

CHAPTER 7 IDIC Step 2: Differentiate Customers by Needs

DIFFERENTIATING CUSTOMERS BY NEED: DEFINITIONS AND EXAMPLES

Needs

Customers

Demographics Do Not Reveal Needs

Some Examples of Needs Differentiation

Scenario: Financial Services

UNDERSTANDING CUSTOMER BEHAVIORS AND NEEDS

Needs May Not Be Rational, but Everybody Has Them

The Difference Between Customer Behaviors and Needs

WHY DOESN'T EVERY COMPANY ALREADY DIFFERENTIATE ITS CUSTOMERS BY NEEDS?

Content Marketing

CATEGORIZING CUSTOMERS BY THEIR NEEDS

COMMUNITY KNOWLEDGE

Pharmaceutical Industry Example

USING NEEDS DIFFERENTIATION TO BUILD CUSTOMER VALUE

Final Thoughts on Needs Differentiation

Notes

CHAPTER 8 IDIC Step 3: Interact to Learn and Collaborate

DIALOGUE REQUIREMENTS

IMPLICIT AND EXPLICIT BARGAINS

DO CONSUMERS REALLY WANT ONE-TO-ONE MARKETING?

Ubiquitous Interactivity

Omnichannel: Myth versus Reality

Customer Interaction Redefines “Integrated Marketing”

CUSTOMER DIALOGUE: A UNIQUE AND VALUABLE ASSET

Golden Questions

Not All Interactions Qualify as Dialogue

EFFICIENT AND EFFECTIVE CUSTOMER INTERACTION

COMPLAINING CUSTOMERS: HIDDEN ASSETS?

The Dollars and Sense of Social Media

EMPOWERING CUSTOMERS TO DEFEND THE BRAND

Listening to Customers

AGE OF TRANSPARENCY

As Interactions Multiply, Trust Becomes More Important

Influencing the Influencers

Cultivating Customer Advocates

Notes

CHAPTER 9 IDIC Step 3: Interact/Privacy Considerations

PROTECT PRIVACY AND EARN CUSTOMER TRUST TO ENCOURAGE INTERACTION

GENERAL DATA PROTECTION REGULATION

CUSTOMER LOYALTY: IS A CUSTOMER LOYAL TO A COMPANY, OR A COMPANY LOYAL TO A CUSTOMER?

PRIVACY PLEDGES BUILD ENTERPRISE TRUST

The Web That Might Have Been

Points to Consider in Developing a Company's Privacy Pledge

Notes

CHAPTER 10 IDIC Step 4: Customize to Build Learning Relationships

HOW MASS CUSTOMIZATION WORKS

HOW CAN CUSTOMIZATION BE PROFITABLE? ANSWER: CONFIGURATION

Demand Chain and Supply Chain

Not All Customization Is Equal

TECHNOLOGY ACCELERATES MASS CUSTOMIZATION

CUSTOMIZATION OF STANDARDIZED PRODUCTS AND SERVICES

VALUE STREAMS

CUSTOMER SUCCESS MANAGEMENT

The Challenger Model

CULTURE RULES

TECHNOLOGY'S REAL RAINBOW: COLLABORATIVE LEARNING RELATIONSHIPS

Notes

Part II: Food for Thought

CHAPTER 11 Measuring and Managing to Build Customer Value

CUSTOMER EQUITY

What Is the Value Today of a Customer You Don't Yet Have?

CUSTOMER LOYALTY AND CUSTOMER EQUITY

RETURN ON CUSTOMER

Return on Customer = Total Shareholder Return

Using Up Customers

Measuring, Analyzing, and Utilizing Return on Customer

Customer Lifetime Values: Practical Considerations

LEADING INDICATORS OF LTV CHANGE

STATS AND THE SINGLE CUSTOMER

Notes

CHAPTER 12 Customer Analytics, Martech, Critical Thinking, Data Science, and the Customer-Strategy Enterprise

CUSTOMER-SPECIFIC DATA AND LONGITUDINAL INSIGHT

Product Analytics

Customer Analytics

The Many Uses of Customer Analytics

Real-Time Customer Analytics

BIG DATA

Cleaning and Maintaining Data

Welcome to the Digital World

What's the Story?

Qualitative Analytics

LIKELIHOODS, PROBABILITIES, AND REALITY

The Direction of Causation

A/B Testing: Some Guidelines for Non-Statisticians

One Variable at a Time

Sample Size

Randomness

Participation Rate

CONDITIONAL REASONING AND BAYESIAN ANALYSIS

Bayesian Analysis Simplified

Making Objective Decisions and Overcoming Bias

Analytics Run Amok

A SMALL SECTION ON A BIG TOPIC: USING MARTECH TO BUILD CUSTOMER VALUE AND FOR MARKETING TASKS

AN ANALYTICAL FABLE

Lesson 1: Remain Open-Minded

Lesson 2: Have Patience

The Dilemma Resolved

Lesson 3: Share

Notes

CHAPTER 13 Organizing and Managing the Profitable Customer-Strategy Enterprise

WHO OWNS THE CUSTOMER RELATIONSHIP?

WHAT IS THE FINANCIAL CASE FOR INVESTING IN CUSTOMER EXPERIENCE?

Understanding the Customer Perspective

Principle 1: Eliminate Dumb Contacts

Principle 2: Create Engaging Self-Service

Principle 3: Be Proactive

Principle 4: Make It Really Easy to Contact Your Company

Principle 5: Own the Actions Across the Company

Principle 6: Listen and Act

Principle 7: Deliver Great Service Experiences

Improving Customer Service at an Online Financial Services Firm

Improving Service at a Local Retailer

How Do We Measure the Success of Customer Service?

RELATIONSHIP GOVERNANCE

MAKING IT HAPPEN

1. Pilot Projects and Incremental Change

2. Picket Fence Strategy

3. Segment Management versus Customer Portfolio Management. Segment Management

Customer Portfolio Management

How Has the Sales Department Changed?

Compensating the Sales Force

The Customer Success Management Discipline

HOW DOES RELATIONSHIP GOVERNANCE AFFECT CUSTOMER SERVICE MANAGEMENT?

Notes

CHAPTER 14 Leading to Build Customer Value

HOW MARKETERS WORK WITH THE FINANCE DEPARTMENT

HUMAN RESOURCES: MANAGING EMPLOYEES IN THE CUSTOMER-STRATEGY ENTERPRISE

Leaders Manage People in a World Ever More Automated

Reprise: Culture Rules

KEEPING AND GROWING CUSTOMERS IS ALIGNED WITH KEEPING AND GROWING EMPLOYEES

The Importance of Corporate Culture

A Culture Based on Customer Trust Will Welcome Innovation

LEADERSHIP BEHAVIOR OF CUSTOMER RELATIONSHIP MANAGERS AND OTHERS LEADING THE CUSTOMER-CENTRIC ORGANIZATION

The Everyday Leader

The Long View

FUTUREPROOFING THE CUSTOMER-CENTRIC ORGANIZATION

Notes

Part III: Food for Thought

Glossary

Name Index

Term Index

WILEY END USER LICENSE AGREEMENT

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A Strategic Framework

FOURTH EDITION

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e Bloomberg Business, “Sales Moves Beyond Face-to-Face Deals onto the Web,” January 10, 2013, available at: https://www.bloomberg.com/news/articles/2013-01-10/sales-moves-beyond-face-to-face-deals-onto-the-web, accessed August 17, 2021; “The Cost of a Sales Call,” 4D Sales, accessed February 3, 2016, available at: http://4dsales.com/the-cost-of-a-sales-call/, accessed August 17, 2021.

Recognizing that two families of technology have mandated the competitive approach of building customer value by building customer relationships, we can map any organization—large or small, public or private, for-profit or nonprofit—by the level of its capabilities in the arenas of interacting with customers and tailoring for them. A company would be rated high on the interactivity dimension if it knows the names of its individual customers and if it can send different messages to different customers and can remember the feedback from each one. A low rating would go to a company that doesn't know its customers' identities, or does but continues to send the same message the same way to everybody. On the tailoring dimension, a firm would rate highly if it mass-customizes in lot sizes of one; it would rate low if it sells the same thing pretty much the same way to everybody. Based on its rating in these two dimensions, a company can be pinpointed on the Enterprise Strategy Map (see Exhibit 1.2), which includes four quadrants:

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