Managing Customer Relationships: A Strategic Framework, Third Edition, Don Peppers and Martha Rogers

MKT 456-CRM Instructor: Cynthia Bellian, MBA E-mail: [email protected]

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Managing Customer Experience and Relationships: A Strategic Framework

Chapter 6

Differentiating Customers by Their Needs

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Chapter 6 Preview

Review IDIC Framework: Differentiate

Definitions

Differentiating Customers by Needs

Understanding Needs and Behaviors

Categorizing Customers by Needs

Characteristics of Customer Needs

Community Knowledge

Using Needs Differentiation to Build Customer Value

Managing Customer Relationships: A Strategic Framework, Third Edition, Don Peppers and Martha Rogers

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Action

Analysis

…customers as unique addressable individuals

…by value, behavior and needs

…more cost -efficiently and effectively

…some aspect of the company’s behavior, offerings, or communications

Identify

Differentiate

Interact

Customize

Review: IDIC Framework

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Definitions

Needs: The “why” behind the behavior – what a customer wants or prefers from an enterprise

Customer: End user, retailer, etc.

Product benefits: Advantage from the use of the product – but not equivalent to customer needs

Product attributes: Physical features of the product

Managing Customer Relationships: A Strategic Framework, Third Edition, Don Peppers and Martha Rogers

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Differentiating Customers by Needs

Customers may find different uses for the same product:

Legos used in make-believe role

Legos used as step-by-step building project

Legos used to create a child’s own configuration (not on the box)

Defining customer needs, rather than product benefits or attributes, allows company to develop and offer other products that also meet this need

Managing Customer Relationships: A Strategic Framework, Third Edition, Don Peppers and Martha Rogers

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Understanding Needs and Behaviors

Needs are the “why”; behaviors are the “what”

Three different types of customer profiles:

1. Demographic (static)

2. Behavior-based (dynamic; the “what”)

3. Need-based (dynamic; the “why”)

Needs drive behaviors; behaviors drive value

Managing Customer Relationships: A Strategic Framework, Third Edition, Don Peppers and Martha Rogers

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Categorizing Customers by Needs

Customer needs are unique, but too costly to create a need profile unique to every customer

To take action, customers need to be grouped, ideally according to need:

Market segment: customers with a similar attribute (women over age 45 with household incomes over $50,000)

Customer portfolio: customers with similar needs (women who value friendships and like to entertain)

Managing Customer Relationships: A Strategic Framework, Third Edition, Don Peppers and Martha Rogers

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Characteristics of Customer Needs

Situational

Dynamic

Different intensities

Often correlate with customer value

Most fundamental are psychological

Some shared, some unique

No single best way to differentiate by needs

Whatever way most effectively changes customer behavior to increase value for company

Even in B2B, customers are still individuals

Not just a homogeneous company, but purchasing agents, end users, etc., with specific needs)

Managing Customer Relationships: A Strategic Framework, Third Edition, Don Peppers and Martha Rogers

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Community Knowledge

Community knowledge is the accumulation of information about the preferences of a community of customers, allowing an enterprise to anticipate what a customer will need.

Fueled by collaborative filtering software, a matching engine that can serve up products and services based on what other customers with similar preferences have preferred

Most beneficial for companies that have:

Routine, cost-effective, interactive communications with customers

Customers highly differentiated by needs

Managing Customer Relationships: A Strategic Framework, Third Edition, Don Peppers and Martha Rogers

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Using Needs Differentiation to Build Customer Value

Accumulate information about customer needs in the context of a Learning Relationship

Share this information, within the bounds of privacy protection, with everyone at the enterprise who will interact with the customer

Use this information to treat different customers differently

Managing Customer Relationships: A Strategic Framework, Third Edition, Don Peppers and Martha Rogers

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Goal Tracker Template

IRS and Behavioral Observation Scales

Identify and define the problem to be measured. Please write as a SMART goal:

Identify and write which dimensions are to be measured (Intensity, Quality, Importance, etc.…) below:

Instructions for the chart:

1. Provide a description of the scale

2. List response categories (How many points are on your scale?)

3. Create tailored anchors for the high, low, and midpoints of your scale, and fill those in the designated column

Description of scale: (e.g. intensity of school related anxiety)

Response Categories

Anchors

When and how often will this scale be completed? (e.g. at bedtime, three times per day, after each tantrum)

Develop a behavior observation measure to track your goal

Description of measure (include dimension) (e.g. Frequency of night wakings):

Who?

Where

When?

How?

Create your own behavior tracking form below:

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