CHAPTER 4. Servicing the Customer to Build Lifetime Value. “Not everything that can be counted counts, and not everything that counts can be counted”. Albert Einstein. Relationship selling is a process that occurs over time. Knowing the Status of Customers.
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Servicing the Customer
to Build Lifetime Value
Salespeople can further use this information in decisions to grow, retain, or win customers
Salespeople can use this information
to predict customer behavior
Data are used to profile customers
and create customer segments
from customer interactions
When salespeople use the information they have derived and accessed from every contact the customer has with the sales organization, they have the opportunity to improve their relationships with customers and successfully take a lifetime value approach
20 percent of customers provide
80 percent of the profits
most of the rep’s sales revenue. However, they often
offer little room for growth, so the salesperson may
simply act to maintain excellence in relations through
the provision of service.
Salespeople must make choices about which customers are worthy of large investments to move them to key customer status.
These customers often represent the best growth
opportunities. Salespeople should expend effort
with these and try to work with the sales firm to allocate
resources toward these customers.
Customers That Are
Candidates For Growth
Salespeople must make choices about which of these customers represent growth opportunities and should receive attention.
These customers account for a very small percent of the
salesperson's revenue. They may even represent loss of revenue. Salespeople can choose to deactivate them or continue coverage if they offer higher future value.
Refer to Table 4.2 (A-D)
Using Customer Lifetime Value and Return on Investment to Make Sales Decisions
(Refer to Table 4.3--Types of Discounts)
$5.00 = Cost to manufacturer
+2.00 = Markup (28.6 percent)
$7.00 = Selling price to wholesaler
$7.00 = Cost from manufacturer
+2.00 = Markup (22.2 percent)
$9.00 = Selling price to retailer
$9.00 = Cost from wholesaler
+6.00 = Markup (40 percent)
$15.00 = Selling price to consumer
$15 Cost from retailer
or direct from the manufacturer
ROI = Net profits (or savings) ÷ Investment
Payback period = Investment ÷ Savings (or profits) per year
Customers evaluate products based on experience not awareness
Refer to Appendix