Customer Management

A customer-centred business with a market orientation should be putting effort into retaining its customers by building customer relationships. Customers can have life-time value. Most businesses are trying to turn short-term and one-off transaction-based 'leaky bucket' marketing into partnerships and long-term relationships and networks.

Success depends on the co-ordination of the different value adding activities in the value chain and comparing them with the competition. There are core business processes including product development, inventory management, order-to-payment and customer service that help with the management of the value chain and customer value delivery.

Businesses can lose customers and must keep account of customer retention. Many markets are mature markets and therefore there is a lot of competition to attract new customers and to retain existing customers, especially the profitable ones. It costs five times more to attract one new customer than it does to keep one existing customer happy. Retaining customers can add significantly to profits. The continuation of exchanges depends on customer satisfaction.

Customer satisfaction is central to retaining customers. It depends on meeting the customer's expectations. Customers defect for different reasons. Complaints and suggestion systems, satisfaction surveys, mystery shoppers and lost customer analysis can help identify the reasons why customers defect. Adding extra benefits to the offering can help to keep customers and attract new ones. The financial and economic dimension of the relationship can be increased, learning about customers needs and wants, personalisation and customisation can add to the social benefits by turning customers into clients and a variety of linkages can add structural ties.

A business must manage its customers as well as its products. A relationship marketing programme can be put in place to enable good customer management.