Could someone please provide assistance with this. I need a reply to my classmat

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Could someone please provide assistance with this. I need a reply to my classmate post.

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There clearly seems to be a relationship between customer satisfaction, customer retention and profitability. For example, the whole concept of Customer Lifetime Value suggests that we need to consider the profits received from customers from all of the transactions over their lifetime. Further, we know that other organizations are constantly vying for our customers. In this conference, please share your thoughts and perspectives on this issue. Especially, consider the difficulty of customer retention during economic downturns.

You might also want to investigate the experience of McDonald’s, NetFlix, Bank of America or some of the many other companies in the news in regard to their efforts to retain customers and maximize profits.

Here is classmate response to the question. I need a reply to their post.

I would think that although retaining customers is a priority, care needs to be taken not to go overboard. If the initial cost of gaining a customer, combined with the cost of retaining the customer costs more in total than the lifetime value of the customer, then the customer brings negative value to the business. That fact that other businesses want the customer makes it that much more difficult because if the cost of customer acquisition and retention is an amount estimated to be lower than the customer's lifetime value, it could still become a loss if that customer's relationship with the business ends earlier than predicted.

The Medium article, “Uber’s 5 Secrets To Phenomenal Customer Retention”, one of the five secrets listed includes focusing on the customer experience by constantly updating the Uber app and keeping customers abreast of any changes to company policy. This is a good example of how this week’s reading points out that companies may change their methods of CRM as their CRM vision and available technologies evolve. Uber makes the most of available technologies to give their customers in-app features that make using Uber worthwhile and convenient, lessening any chance of their customers leaving and giving their business to competitors.

Uber’s biggest competitor, Lyft is also evolving in order to be the top ride-hailing company. It is important that the company’s product is available when the customer wants or needs it. In this industry that means that the company with the most available drivers on the road has the most available product. I recently began driving for both companies and wondered if one company would ever figure out a way to entice drivers to not drive for the competition. About a week ago I noticed that Lyft began offering cash bonuses to drivers for completing consecutive rides without logging out of the app. The new bonus scheme is an effective way to prevent drivers from logging out of the Lyft app to give rides through the Uber app, thus giving Lyft customers greater availability of the Lyft product. Lyft understands the needs of their customers and has come up with a clever way of ensuring a continued customer relationship and increasing profits that would otherwise be lost to Uber.

Explanation / Answer

Answer :

Many companies spend more on customer acquisition than retention. Once a customer has been retained through exceptional service they tend to stay loyal to the brand for a relatively long period of time. However this dynamic has been changing.

Changing Consumer Trends and Behaviours that effect media usage (a shift to ecommerce & a discount driven economy to retain customers)

There have been both recent as well as expected changes in consumer behaviour as a customer and their traits, reference groups and core values . They've completely transitioned to e commerce over brick and mortar stores to meet their demand for high quality, variety, accessibility. ease and price for shopping. Competitive pricing and excessive discounts have made their choices and preferences of products and services more fluid they are more they are more consumers likely to spend on experiences over products and merchandise. There has also been a significant shift in consumer purchase preferences. They prefer brands endorsed by major everyday real life influencers through social media platforms like Instagram over celebrity influencers.

Price Strategy to Retain Customer

This is a competitive strategy which competes by using aggressive discounts that increase sales and helps the organisation acquire new customers. When a business launches a product or a service at a discounted rate or a low price and then increases it or removes the discount over a period of time as the product or the service market saturation increases. Traditionally e commerce companies use price or cost strategies.

The Problem with Customer Retention using discounts

The problem in doing so is that the ROI on discounts are decreasing with increasingly competitive discount wars between firms which is leading to dwindling profits and fickle customer base who are ready to switch or shuffle between brands like channel on a television, tuning into the next best thing after the other. They're a lot like steroids. As long as discounts are running the company's retention and sales are doing good but the second the discounts are discontinued. they see a drop in sales. This is even more tough during a recession when they need the margins and the customers.

Case Study of a Company that uses discounts to drive sales and customer retention : Amazon

Amazon is the worlds largest global ecommerce company which has also diversified into logistical support. payment tech , entertainment content and its latest offering AWS or Amazon Web Services which offer a variety of cloud storage and cloud computing solutions. Amazon covers over 16 countries across the world. Its logo symbolizes A - Z which represents its product offerings which are almost everything and anything which is why its logo denotes A - Z.

Issuing Discounts (Offsetting profits for growth and revenue)

Discounts are a great way to capture market share from both existing domestic as well as foreign competitors. Although the company may take a temporary hit in its profit margins, it would have been successful in capturing a majority market share.

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