Unit 6: Consumer Analysis and Marketing Strategy
Customer management is a process for maximizing customer value that leads to better company profitability. Customer value is the revenue or profitability contribution each customer makes to the organization. The company will enjoy better profitability over the long run by maximizing customer value. "Over the long run" is important because a customer management initiative may not have a positive effect in the current period, but the company will realize its impact over time.
An important principle you must understand is that customer management is a journey, not a destination. As the organization improves its customer management, the customer's needs or external forces change, requiring a change or improvement in the organization's management strategy.
This unit covers the steps in the customer management process and how to determine customer value or profitability. We will also study the impact on customer experience and acquisition.
Completing this unit should take you approximately 5 hours.
Upon successful completion of this unit, you will be able to:
- identify the components of an effective customer management strategy;
- compare the different formulas for calculating customer value;
- identify the different dimensions for a customer segmentation;
- explain how to use information from the customer management cycle to acquire better customers; and
- evaluate the differences between the customer management approaches for mass marketers versus direct marketing.
6.1: Customer Management
Customer management is part quantitative and part qualitative. There are parts of the process that can easily be quantified, thus making decisions in those areas easy to make, easy to repeat, and easy to justify. Then there are those gray areas that require just as must art as science. For example, determining current customer profitability for a period is a straightforward concept for most organizations, but determining future profitability or lifetime value usually requires the help of an old sage who can talk from experience or a good data modeler who can help determine likely lifetime value.
6.2 Other Uses for Customer Management
A good customer management strategy is important to an organization because it can increase profitability by reducing costs. The organization is no longer trying to market to every consumer. They focus on profitable, highly valued customers and prospects with the potential to be valuable. Keep in mind that competitors are after an organization's best customers. If they are not treated according to their perceived value to the organization, they will buy from the competitor.
Customer management impacts areas outside of traditional marketing. Read this study to learn how customer management affects entrepreneurial marketing.
Unit 6 Study Resources
This review video is an excellent way to review what you've learned so far and is presented by one of the professors who created the course.
Watch this as you work through the unit and prepare to take the final exam.
- Unit 6 Review Slides File PDF document
You can also download the presentation slides so you can make notes.
We also recommend that you review this Study Guide before taking the Unit 6 Assessment.
Unit 6 Assessment
- Receive a grade
Take this assessment to see how well you understood this unit.
- This assessment does not count towards your grade. It is just for practice!
- You will see the correct answers when you submit your answers. Use this to help you study for the final exam!
- You can take this assessment as many times as you want, whenever you want.