Have confidence to develop a credit
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
Developing a credit’s lifetime value
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.
Measuring the profitability of credit
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
Credit that grants satisfaction
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.
The road to success: credit to buy
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
Building customer credit loyalty
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
Investors’ Overconfidence
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
The purpose of a budget
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