V. Kumar

1. PROFITABLE CUSTOMER ENGAGEMENT Concepts, Metrics & Strategies V. Kumar

2. Chapter 8 Please help us help you… Instructor’s Presentation Slides

3. Customer Participation • “Customer participation” can be defined as the extent to which a customer is involved in the manufacturer’s new product development process. • Examples • “Show us your pizza” – Domino’s Pizza • “Culture is Everything” – Zappos • “Bringing Ideas to Life” – Quirky.com

4. Customer Feedback • Customers participate in the product development process by providing feedback or suggestions. • Feedback is an important indicator to businesses about the status of their existing products/services. • It allows firms to evaluate how they stand against customer expectations. • Companies often implement customer suggestions or make improvements to their products/services based on customer feedback to enhance customer satisfaction and profits

5. Why is customer feedback important? • Collecting customer feedback can help firms in; • Evaluating the performance of their existing products and services • Assessing how well they are able to meet customer expectations • Identifying areas of improvement in delivering products and services • Identifying suggestions and solutions for future product upgrades and modifications • Securing new ideas for new products and services • Developing ways to reduce the failure rate of new and existing products

6. Customer Knowledge Value (CKV) • The process of measuring CKV begins when the customer has ideas for developing a new product or refinements to the existing products. • Customer Knowledge Value (CKV) can be defined as the monetary value attributed to a customer by a firm due to the profit generated by implementing an idea/suggestion/feedback from that customer.

7. A Conceptual Approach to Measure CKV Solicit Feedback Customer Optional Incentive to provide feedback Business Ideas / refinements are screened based on visibility and relevance by the firm Suggest ideas for new offerings or refinements for existing offerings (Business initiated or self initiated customers Selected ideas / refinements are evaluated for future sales potential High sales potential ideas/ refinements are integrated into the offerings and launched Market CKV Profits realized from selling the revised offering based on customer feedback

8. CKV Measurement Strategy

9. Feedback Response Strategy: Implementation For long –term action Time to Act For immediate action Negative Positive Type of Feedback

10. Impact of Social Media on CKV • Social media is an increasingly important (and free) medium to collect customer feedback. • Sites like Facebook and Twitter are the convenient for customers to voice a praise or complaint. • Customer queries and concerns should be responded to as quickly as possible, including the feedback/comments which appear in social networking accounts.

11. Maximizing CKV • Businesses can help boost a customers’ knowledge about the products and services by encouraging feedback. • Internet aids in establishing contact with customers and it creates value by building a rapport with the customer base (both existing and prospective). • CKV can be maximized when the firm makes communication with customers easy and accessible, provides some form of incentive (monetary or otherwise), and engages the customer in activities through which the customer can offer feedback and collaborate with the firm.

12. Applying CKV in Business • Here are some real-life instances of CKV being applied in practice: • Polyvore.com • Delta Air Lines • Dell • Hewlett Packard

13. Interaction of CKV with Other CEV Components • Linking CKV and CLV • Low CLV customers are likely to have Low CKV. • Rare Customer with low CLV but high CKV Implies that the company’s offerings do not live up to the customer's expectations. • High CLV customers are likely to have High CKV. • However, after a threshold point, high CLV customers are likely to have low CKV.

14. Interaction of CKV with Other CEV Components (Contd.) Linking CKV and CBV High CBV Low CBV Low CKV High CKV

15. Interaction of CKV with other CEV components (Contd.) • Linking CKV and CIV • It is observed that a customer’s CIV will be strongly influenced by his or her online activities and social networking index. • Although positive and negative evaluations generate valuable feedback for the firm and contribute to the generation of CKV, customers providing this feedback generally are at the extremes in terms of CIV.

16. Interaction of CKV with other CEV components (Contd.) • Linking CKV and CRV • Customer Referral Value (CRV) and Customer Knowledge Value (CKV) both depict the connectedness of the customer. • The more connected a customer is, the more knowledgeable he or she will be about other customers’ usage situations, problems, and solutions related to the firm’s products. • By soliciting feedback from a well-connected customer, a firm is able to tap into a much broader knowledge base as opposed to soliciting feedback from an unconnected customer.

17. Interaction of CKV with other CEV components (Contd.) • Linking CKV and BRV High BRV Low BRV Low CKV High CKV

18. Conclusion • CKV is the monetary value associated with the profits generated by a customer’s feedback, suggestion or an idea to the firm over a period of time. • Quantifying CKV in a consistent fashion would allow companies to maximize the efficiency with which they deal with customer feedback, as well as how they implement it into changing their strategies and products. • Being able to analyze, and then quantify the historical value of the feedback from each individual customer allows companies to locate the customer feedback sources efficiently.

19. End of Chapter – 8