Summer+2009+Section+08-PS+Week+3

If memory serves, we began class discussing the Brita case and the Lifetime Value of Customers purchasing Brita pitchers. This was where an equation was introduced:

This little equation does it all: It can help determine the viability of various projects as well as predict when a pain-in-the-ass customer has outlived their usefulness to the company.


 * remember to include "% of market "per n.

Next, we talked about customer satisfaction or dissatisfaction and all the different nuances in between. Here are some of those examples:

Defector/Terrorist: Terrorists are especially damaging due to the importance of word of mouth and how the increasingly networked society has given us all bigger mouths.
 * Exm. The Brita pitcher didn't work and customer calls in to get a replacement or fixed but has a bad experience, this customer then decides to say bad things to their friends about the company via phone, blogging, etc.

Mercenary/Hostage: These people are not necessarily happy, but haven’t found it convenient to find other options or they don’t perceive any other options to be available.
 * Exm. Cable TV subscribers who don't have the option of another cable company due to regional legislation. But once they have another option, they will most likely defect.

Loyalist/Apostle: Drank the Kool-Aid, want you to do the same.
 * Exm. Dedicated to one brand that has worked for them and refuses to move to a different brand no matter what others tell them.

Paul expanded on this concept across different markets and showed a pretty graph detailing different industry curves for Satisfaction (x) and Loyalty (y).

Then we got a little bit deeper into the word of mouth discussion where we determined that there is really only one important question to ask in a satisfaction survey and that is **__“Would you recommend company XYZ to your friends?”__** or something to that effect. At some point, Paul talked about how word of mouth does not necessarily have to be positive to be valuable to a marketing campaign. He used the Woody Allen/American Apparel lawsuit as an example. Then he moved on to talk about the Harrah’s case. This is where I checked out for a moment to do some google-ing. This is the fruit of my labor:



Then, Keith and I had a discussion about just exactly how the procedure goes for swiping your card and keeping track of player bets for comps in Vegas casinos. Keith was very knowledgeable about this. Somewhere in there we had dinner, and I’m sure I’m missing a lot of things, like the whole Ativa case for starters…Wiki it up, kids

How do you determine that a customer is unprofitable and why…what about turning that customer around what about the cost it may cost to turn them around…can you get the misers to change their behavior? What message do you want to send? How are you going to send it? One way to determine if a customer is unprofitable is by comparing what they bring to the table (revenues and referals) versus the resources they use (warranties, customer service). After you determine if they use more resources than the revenue they provide they are probably unprofitable. A company must be careful before deciding to write off a "unprofitable" customer. A unhappy "unprofitable" customer may tell their happy, profitable friends about their negative experiences with your customer and the potiential of losing profitable customers exist. Ly had a wonderful example of how her previous company wrote off unprofitable customers. She worked for an auto indurance provider and cutomers that made too many claims and called the call center too frequently were reclassified into a more expensive policy which would drive them away from the company. I think that her company sent their message the correct way by using policy to their advantage they were able to convince the customer to leave on their own accord which limits (but does not remove completley) negative word of mouth.

The below is a short excerpt from a music interview off of a website called Jambase.com. It is not relevant who the band is or what type of music they play; what struck me was their approach towards self marketing…which in a way is not too far of from Harras or even Brita. There is a little tongue and cheek involved…but this particular band does employ math to determine customer profitability; in addition to the math this particular group is also employing some very subtle yet highly strategic marketing principles. [|www.jambase.com] 5/20/09 "Roger, do you really have a mathematical formula that you've used to calculate when the band will become profitable? How does commercial success relate to artistic satisfaction?"
 * Roger:** "The commercial side is less complicated than you might think. We don't need the band to be profitable. What we need is a tribe of fans who value the band enough to cover our costs. We're making fantastic progress on that. How? By giving stuff away. It's cheaper to give away music and video over the Internet than to do advertising or make an album, so that's what we do. Now we have a real tribe - people who spread the word - and lots of fans who come to shows."

Case Discussion: The Customer's Revenge - How should Atida Deal with it's Unhappy Customers? by Dan Ariely
A lesson to be learned - unhappy customers will talk to way more people than happy customers. Deal with "terrorist customers" before they deal with you.

 The way we see it, Atida gives unhappy customers two options to vent their concerns: 1) Unhappy customers can talk to their friends or 2) They can talk to a call center in India. Atida wants unhappy customers to talk to the company first, so that we can continue to develop the relationships, take advantage of the customer touch point and try to address concerns.
 * Team Gestalt's version of what Atida should do:**


 * The Issue:** When customers call the call center, the call center staff was not able to address their concerns. Either the call center staff did not have the authority to make decisions that would address the problem, or customers perceived that the call center staff did not care.


 * The Problem:** The organizational structure inhibited the call center staff from donig their job - they weren't able to respond creatively to address customer concerns. Instead of listening to each complaint and using basic problem solving skills, they followed a list of procedures and pre-set responses whether they were relative to the customer's concern or not.

We identified 4 basic tenants of dealing with unhappy customers:
 * 1) Listen to them.
 * 2) Understand them.
 * 3) Emphasize with them.
 * 4) Help them.

You cannot train empathy, but you can certainly hire candidates with a fitting disposition or set of skills. Atida needs to demonstrate it's commitment to quality customer service throughout all departments: recruiting, hiring, training, sales, marketing, etc.

The best way to deal with customer complaints is to greet them head on before they become viral YouTube videos.