1、Case Study 10 (Chapter 9)Wanted Profitable Customers OnlyAll customers are created equal right? Wrong! Whereas traditional marketing has involved casting a wide net to lure as many customers as possible, todays smart companies now focus on keeping and growing only the most profitable customers they
2、already have. “They are aggressively mining their wide databases to weed out losers, or at least to charge them more, and to target the best customers for pampering,” says Rick Brooks of the Wall Street Journal. Some industries have long favoured good customers over lesser ones. For example, airline
3、s, hotels, and credit card companies throw loads of special services at their premier or platinum customers. However, recent advances in technology now allow companies to assess the value of every customer more precisely, then weed out the less profitable ones. Here are some examples of how companie
4、s are using customer profitability analysis to weed out losing customers and target the winning ones for pampering.Two years ago, shipping giant FedEx began analyzing the returns on its business for about 30 large customers that generate about 10 percent of its total volume. It found that certain cu
5、stomers, including some requiring lots of residential deliveries, werent bringing in as much revenue as they had promised when they first negotiated discounted rates. So FedEx went on the offensive, demanding that some customers pay higher rates and imposing double-digit increases in a handful of in
6、stances. A couple of customers who refused to budge were told they could take their shipping business elsewhere. “We were willing to risk a point or two of the market share to correct a problem,” says a spokesman for FedEx. “You have to be willing to suck it up and walk away.”At Thomas Cook Travel,
7、differentiating the best and worst customers required a huge change in the companys culture. Agents had always been coached to deliver top-level service to everyone. Realising that such an attitude just isnt profitable, the agency divided its customers into As (those who bring in US$750 or more in a
8、nnual revenues), Bs (those bringing in US$250-749), and Cs (those bringing in less than US$250). It found that 80% of its customers were Cs. “Its not that you dont want them; its just that you differentiate,” says Wendy White, a marketing manager for Thomas Cook Travel Canada. You still deliver prof
9、essional service, she observes, but not every client requires or deserves two hours worth of service to purchase an airline ticket. The travel agents at Thomas Cook now know which customers deserve the full treatment and which ones dont. When C clients demand time-consuming services for example aski
10、ng an agent to research a trip theyre not positive they want to take they are now asked to pay US$25 deposit. Clients who are serious pay up; the fee simply goes towards their booking cost. And if theyre not serious and dont pay up, it frees up agents to deal with more profitable A and B clients. Ag
11、ents also receive a quarterly printout form a database that lists the companys top 500 clients and the revenue each generates. It helps agents look for missed sales opportunities and get “a handle on the target and their needs,” White adds. The change in focus has been lucrative for Thomas Cook Trav
12、el, resulting in 20 percent growth in the companys A and B clients.Thus todays marketers are looking closely at the profitability of their customers. Analyst Erika Rasmusson summarises : “All men may be created equal but increasingly, all customers are notLearning where your customers rank in terms
13、of profitability is the future of business, and companies that are doing it now have a distinct advantage over their competitors. Call it selective relationship marketing management companies need to pick wisely which customers they are going to have relationships with and what type of relationships
14、.”Answer the following questions.1. Service marketing is generally seen to be more challenging than marketing of physical goods. Elaborate on three characteristics of services that differentiate them from physical products. Relate these characteristics to FedEx which is mentioned in the case above.2
15、. What do you understand by the term selective relationship marketing? Explain clearly the use of this strategy by highlighting briefly two examples of organizations (other than those mentioned in the case). Discuss if and how this strategy has worked (or not worked) for your chosen organizations.3.
16、 According to your text, service quality has five dimensions. Using a table similar to Table 9.2 (first two columns) of the text, elaborate on these five dimensions and how they might apply to Thomas Cook Travel.4. Many service organizations use logos and symbols (to overcome the problem of intangibility) when promoting their services. Select two examples of service organizations and the logos/symbols they use. What messages do these symbols convey to their potential clients?
