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Have confidence to develop a credit

25 Oct

If these new products do not exist, you can have the confidence to develop them.

Another way in which customer loyalty drives profitability is through the ability to increase prices to loyal customers, because, of all the possible purchasers, they are the ones best placed to understand the value of your products. Loyal customers do not typically require discounts or product add-ons to stay with you. If they are happy with the product or service they are buying and if it is competitive, they will not normally be tempted away. Clearly, this depends on variables such as the nature of the market, but there is an element of inertia in most markets.

Loyal customers can also be used to help with market testing of new products. This not only saves money in testing through other means, but it is also often much more effective.

 
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Posted in bonds, business, credit, credit cards, international markets, loans guide, personal finances, pricing policy, shares

 

Developing a credit’s lifetime value

23 Oct

The concept of customer lifetime value is not new, but it is worth considering how customer loyalty and repeat business develop profitability.

Most obviously, the longer customers stay with the business the more they will spend over time. This is profitable because having sold once, there is likely to be less need to market or sell to them to attract them back; the only requirement is to focus on the quality of the value proposition. Loyal customers also provide a base on which to build market share, which in turn provides a platform from which to develop new commercial opportunities. For example, it can be used to attract advertisers or to entrench the business’s position in the market.

Repeat business often leads to referral revenue. If customers are pleased with the service they will tell others, and they can be offered incentives to do so. Satisfied customers may be receptive to new products as well as (or instead of) their original purchase. By clearly understanding what the customer wants, you can cross-sell other products.

 
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Posted in income, international markets, loans guide, personal finances, pricing policy, revenue, shareholders, shares

 

Measuring the profitability of credit

20 Oct

This will help to determine the structure, resources, direction and development of the sales effort, enabling the business to develop its activities.

To achieve this, customer analysis should highlight profit per customer, identifying the best and least profitable customers. It is also important to understand the characteristics of the most profitable customers, both tocontinue to meet their needs and to support tailored marketing campaigns that will attract the right customers.

Customer profitability can be measured by analysing two things: customer revenue and customer costs, including defection and retention costs. Some of the most important are listed in Table 12.1. Identifying the most and least profitable customers enables current and future initiatives to be targeted at the most profitable customers. It may also allow the business to find ways of reducing the costs of doing business with the least profitable customers.

 
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Posted in money guide, money issues, money management, money tips, payday loans, personal finances, pricing policy

 

Credit that grants satisfaction

18 Oct

The effect of these measures was monitored through customer-satisfaction surveys placed in each truck. As well as checking that customers were satisfied, the surveys also served to highlight Ryder’s renewed commitment to service, enhancing future sales prospects. Other measures helped to establish credibility with customers and improved the image that the business projected. For example, testimonials were featured in marketing literature, and each outlet was inspected monthly rather than quarterly to ensure that literature, banners and signage were appealing. This approach turned Ryder’s business round during a recession, returning the company to the number one position in its industry.

 
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Posted in international markets, loans guide, making money, merger, money guide, money issues, money management

 

The road to success: credit to buy

15 Oct

In the early 1990s, Ryder, the largest truck-leasing company in the world, suffered a steady decline in sales as competitors eroded its business. The company’s main response was to use information more effectively to benefit customers. Its approach had three elements:

To help customers buy. Ryder made it as easy as possible for customers to buy its services. For example, it produced a brochure explaining why customers should buy its damage insurance, and another offering other supplies and accessories. It also recognised that customers would want to make comparisons among competitors (they were doing this anyway), so it produced a truck comparison chart, highlighting its competitiveness and reassuring potential customers.

To help customers use the service. Ryder provided a free guide to moving, The Mover’s Advantage, in Spanish and English, to every current and potential customer. It understood why customers used its trucks and saw the advantage in helping them.

To help customers adapt their usage. As well as ensuring that each outlet displayed a strong commitment to customer service and corporate identity, Ryder offered new products and services from its outlets. This included information about the advantages of using Ryder’s towing equipment and longer-term discount rates for returning customers.

 
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Posted in credit cards, credit score, economy, finances, get out of debt, income, international markets

 

Building customer credit loyalty

13 Oct

One popular method of building repeat business is through customer loyalty schemes. Their inventiveness can be surprising, providing insights into the brand values of the company as well as the threat that they pose to competitors. Virgin Atlantic, for example, has an ingenious way of using such schemes: to reduce the time it takes to get new customers, it offers privileges to people involved in competitors’ loyalty schemes. For a while, Virgin offered a free companion ticket to any British Airways frequent flyer who had accumulated 10,000 miles. This had the added advantage of reinforcing perceptions of the Virgin brand as being dynamic and flexible, if somewhat bold and outrageous.

 
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Posted in CEO, business competition, cash reserves, loans guide, money guide, pricing policy, shareholders

 

Investors’ Overconfidence

17 Jul

Overconfidence can become the norm in investment bubbles. Investment experts and the financial press were overconfident in stocks by the end of the 1990s bull market.

Your overconfidence is used against you to sell investment products. If you are a highly competent professional, your ego is likely to convince itself that it is also going to be a highly competent investor. The combination of a Realtor’s pitch and a professional’s ego has closed many strip shopping center deals.

Any investment can trigger overconfidence if properly presented to the client. Security and Exchange Commission (SEC) rules that only allow certain investments to be sold to investors with large assets or large incomes promote wealthy investors’ overconfidence in their ability to invest. Limited partnerships are a typical trigger to overconfidence. High minimum investment amounts and a limited number of shares available only to qualified investors causes many deals to be sold without proper scrutiny.

The press can also lead the masses into overconfidence. Irrational Exuberance by Robert Shiller explains in detail how the press, word of mouth, and many other factors created the stock bubble of the late 1990s. Many academic studies have demonstrated the effects of overconfidence on investors. Despite studying overconfidence, some finance professors never overcome it themselves.

 
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The purpose of a budget

13 Jul

To help you better understand where I think budgets fit into your life, I want you to imagine your journey to get out of debt as a road trip. You’re the driver, and it’s up to you to get us where we need to go.

Most people, when I use this analogy, want to think of the budget as the front windshield. They think that it shows us where we’re going. I would argue that it’s just the opposite; it’s a rearview mirror. A good budget shows us where we’ve been, as much or more than where we need to go.

Most successful budgets are not built on speculation about what you will spend. Rather, they’re built on a thorough knowledge of what your past spending habits are. From there, you often kick yourself and swear to make changes. In your journey to get out of debt, I want you to imagine budgets as a hindsight tool. They’re not the front windshield, and they’re not their steering wheel.

 
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How to Decrease Variable Expenses

10 Jul

1. Make your own cup of coffee. Even if you made your own coffee half of the time, it might save $10 to $15 per week, or over $750 per year.

2. Take your lunch. Whether it is the “taco truck” or the factory cafeteria, eating out can easily cost $5 to $10 per day. Bringing a lunch just twice every week could save $500 to $1,000 per year.

3. Go camping for your next vacation. Two nights at a three-star hotel with a view of the parking lot … $198. Two nights beachfront in a tent listening to the waves and the birds … $28. Getting your credit card paid off sooner than later … priceless.

4. Avoid dry cleaning. Getting five items dry-cleaned per week can easily cost you $10 or more per week, or over $500 per year. By wearing your washer-friendly items, as well as not buying new dry-clean-only garments, you can save a bundle!

5. Wash your own car. The full-service carwash can be a money trap. Between the carwash, the tip, and some snacks while you wait, you can easily spend $20 every couple of weeks. By washing it yourself, you’ll save $400 to $500 per year and get a free workout.

6. Donate goods instead of cash. If you feel called to give to charity, consider emptying out your house or closet instead of your wallet! You can still take a tax deduction, and use the cash to pay down your debts.

 
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