Customer

Journey
Management
Disclaimer: Not what you expected

Instructor: MSc. Ngo Hien Dan

ngohiendan.cs2@[Link]
CUSTOMER JOURNEY
The customer journey is a representation of the stages that customers go through to
achieve a desired outcome through their relationship with a supplier.
CUSTOMER JOURNEY: Loyalty Ladder
Loyalty Ladder: reflects customer transition towards an ever-deeper relationship with the company.

Customer Journey Customer value implication for supplier

Stage
Suspect UNCLEAR – it’s not certain the customer fits the company’s target
market profile
Prospect POTENTIALLY VALUABLE – the customer fits the company’s target
profile, and the company approaches them for the first time
First-time Customer TRANSACTIONAL VALUE – the customer makes a first purchase.
There is potential for a longer-term relationship.
Repeat customer RELATIONAL VALUE – the customer makes more purchases. The
company’s offer plays a minor role in the customer’s purchase portfolio.
Majority customer RELATIONAL VALUE – the customer selects the company’s company
as supplier of choice. The company occupies a significant place in the
customer’s purchase portfolio.
Loyal customer RELATIONAL VALUE – the customer is resistant to switching suppliers
and has a strong positive attitude to the company or offer.
Advocate RELATIONAL VALUE, WORD-OF-MOUTH VALUE – the
customer generates customer referrals through positive word-of-mouth.
Customer acquisition

For B2B businesses

Companies are acquired or merged with each other or with other companies;
The company stops producing goods and services for which your company
provided inputs;
The company ceased operations (stop working).
For B2C businesses
Launching new product launches and for new business start-ups. For
companies looking to expand into new markets or product categories,
acquiring new customers is essential and for small businesses with ambitions
to grow, customer acquisition is often as important as customer retention.
To replace churned customers since there are some reasons why customers
decide to no longer buy from the company: Customers aging and the
development of the family life cycle; Clients' personal circumstances change;
Customers no longer find value in the company's product, or they are no
longer living.
Kotler-Armstrong model of strategic CRM model

The goal is to balance short-term gains (Butterflies) with long-term investments (True
Friends) while minimizing unnecessary efforts on Strangers and figuring out how to
increase value from Barnacles.
New customer types

New to the product category are individuals or people that are purchasing
a product or service from a particular category for the first time.
In B2B context: Starting a business requires new inputs or find new
solutions to existing problems
In B2C context: Identify a new need; found a new type of solution for
current needs or use existing products for other purposes

New to the company customer are those who switch to the company’s
products/services AFTER experiencing those of competitors that offered
a better solution or value variety. New-to-company customers are the
ONLY option for growing customer numbers in mature markets. New-to-
company customers can be very expensive to attract, particularly if they
are strongly committed to their current supplier.
New customer types: The conversion model

Commited Uncommited
CUSTOMERS Customers Customers

NON- Open Unavaiable

CUSTOMERS Non-customers Non-customers

(The Conversion Model ,Jan Hofmeyr, 1986)

The conversion model: For existing customer

Entrenched customers: unlikely to switch the supplier in the

foreseeable future.
Commited
Customers
Average customers: unlikely to change suppliers in the short term
but may switch in the medium term.

Shallow customers: lower commitment than average, some of

them are already considering another supplier
Uncommited
Customers
Convertible customers: likely to change to another supplier.
How to measure customer commitment?

For existing customer, the level of customer commitment is due to:

The level of customer satisfaction with the brand; the attractiveness of
alternatives and level of customer engagement

To measure customer commitment, there are 4 questions that need to

be asked about the company:
• How satisfied are customers with the chosen option?
• What issues do customers care about in their relationship with
suppliers?
• Are there other options that customers are interested in?
• If so, how is that option different from other options?
The conversion model: For non-customer

Available non-customers: interested in other options than the

Open current one and are ready to switch.
Non-
customers Ambivalent non-customers: equally paying attention to the
current option as well as to other alternatives.

Weakly unavailable non-customers: prefer the current offers.

Unavaiable
Non-
customers Strongly unavailable non-customers: strongly prefer the current
offers.
The conversion model: Strategies for customer

Commited Uncommited
CUSTOMERS Customers Customers

Maintain and engage Find causes and solutions

NON- Open Unavaiable

CUSTOMERS Non-customers Non-customers

Depends on customer value Enhance communication

Create proper strategy Make offer more interesting
Customer acquisition strategies: Sale leads qualification

Sale leads: A lead is any person who indicate interest in a company’s product or
service. A sales lead indicate a potential customer who may have shown interest
or may have a requirement for the company's products/services.

Types of Sales Leads

Cold Leads: These are individuals who haven’t shown much interest in a
company’s products or services but may have been targeted based on
demographics or other data. Cold leads require more outreach and nurturing.
Warm Leads: These are individuals who have already expressed some level of
interest, such as interacting with the company’s website or social media but
haven’t yet made a purchase. Warm leads are more likely to convert than cold
leads.
Hot Leads: These are highly interested leads who are ready to make a purchasing
decision soon. Hot leads often result from inquiries, product demos, or trials.
Why sale leads need to be qualified?

Because not all leads are created equal. The company must confirm that the
customer is indeed able and willing to make a purchase and (ideally) that the offer
under consideration is well suited for that customer’s needs and wants. If the
company can find such evidence (i.e., the customer confirms this themselves or
the company finds some other compelling evidence), then the sales lead becomes
‘qualified’.

When a company chooses the wrong target customer, it can lead to failed
product launches, alienation of its existing audience, or financial losses.

Leads
Qualification
Prospects

Sales
Sale leads qualification – B.A.N.T Framework

Budget - "How much is the prospect willing and able to spend for solution?"

Authority – “Who made the decision?”

Need – “Does the prospect actually have the problem that company can solve?”

Timeline - "How much time the prospect need to make a purchasing decision?"
Where to find sale leads?

Sales leads indication often come after:

1. Direct approaches to the prospect (e.g. the company directly contact

the prospect to require more personal information)

2. Customer-related data analysis (i.e., by identifying prospects with

customer profiles)

3. Customer responses to marketing communications from the company

(e.g., the prospect submits an online enquiry, uploads their personal
information for an offer, trial, or subscription, signing up for a
newsletter after visiting the company’s website or social media
pages...)
Method Sub- categories Direct/Indirect B2B B2C
to customer
Personal selling Direct X X
Networking Direct X
Events Direct/Indirect X X
Tele-marketing Canvassing
Lead generation Direct X X
Direct marketing Email marketing
Direct mail
SMS Direct X X
Some
Online sources Search engines
sources of Company websites
sales leads Online portals
Social media
Blogs/content Indirect X X
marketing
Advertising Indirect X X
Sales promotion Discounts
Trail offers
Competitions Indirect X X
Public Relations Indirect X X
Merchandising Direct/Indirect X X
Some sources of sales leads
Personal selling involves a direct interaction between a sales professional and a
prospect. Personal selling involves skilled professionals familiar with the nuances of
the products/services the company sells, understand the prospect’s requirements,
proposes a solution, and deals with any issues the prospect faces.

Networking is the process of setting up and maintaining business-related or

personal relationships. A network might include members of a business association,
chamber of commerce, friends from university, or professional colleagues in other
companies.
Networks may interact face-to-face (e.g. Chamber of Commerce), online (LinkedIn
groups) or hybrid format. Networking is more common in B2B contexts since
networking involves the development of professional relationships.

Events are social gatherings, normally for a specific purpose, in either face-to-face
or online formats. Event allows the company to show their products and services, to
receive feedback, and to find sales leads. Common events include exhibitions,
seminars, webinars, workshops, trade shows, and conferences.
Some sources of sales leads
Tele-marketing involves systematically contacting prospects using a telephone. Tele-
marketing involves a core group of personnel in a call center who follow a standard
sales script to generate sales leads (i.e., canvassing). Outbound tele-marketers make
outgoing calls to find and qualify leads while inbound tele-marketers receive calls
from prospective customers. Tele-marketing also use to mange other customer
purposes: cross-selling, handling complaints, and winning back at-risk or churned
customers,...

Direct marketing involves targeting company communications to prospects in their

own time and space. Direct marketing includes: Email marketing (Cost effective; Can
be sent with large quantities; Quick and easy to respond; Content can be
personalized); SMS or text messaging (Cost effective; Can be sent with large
quantities; Directly engaging with the customer using smartphones; Useful for
promoting short-term deals or offers) and Direct mail or ‘snail’ mail (physical letters)
(Costly to produce and to send; Difficult to respond quickly as email or SMS.
However, for many customers, the novelty of receiving a physical letter is a really
engaging way to communicate with the company
Some sources of sales leads

Search engines provide an indexed guide to websites. Users searching for

information by typing keywords into the search engine’s webform. After that, the
engine showed a list of results or lists the number of web pages that are relevant
to the keywords. Then users can click on a hyperlink to take them to the relevant
pages. If a hyperlink appears closer to the top of the page, users are more likely to
click it and view the content that emerges.

Company websites provide detailed information about the company’s products

and services. This allows prospects to see who and how company may be
delivering the product and service for them and help them build confidence that
they have made the correct purchase choice.
Some sources of sales leads

Online portal acts as information hubs since they store a variety of

different information resources and other avenues for online support. This
is particularly useful for companies that offer knowledge-based services.
Social media: a mechanism that channels company and customer interaction
through a central online hub.
1. Companies use social media as an advertising medium: Maximizing the
exposure of the brand to the online community that uses the social media
platform.
2. ‘Content marketing’ on social media: the company tries to create videos,
text-based and other forms of content (e.g., games) to encourage high user
engagement.
3. Partnership with an ‘influencer’ (Influencer Marketing) : company collab
with an individual with an existing, large group of online followers or pay
celebrities to endorse their products in social media
Some sources of sales leads

Advertising is the creation and delivery of messages to targeted audiences through

the purchase of time or space in media owned by others.
Factors evaluating the effectiveness of advertising messages:
Recall: How much of the ad's content can customers recall?
Comprehension: Do customers understand the advertising content?
Credibility: Is the message trustworthy?
Feelings evoked: How do customers feel about advertising?
Intention-to-buy: How likely is it that the customer will buy?
Advertising can be successful at achieving two different classes of communication
goal:
Cognitive advertising: Cognition is concerned with what customer know.
Cognitive advertising objectives include raising awareness, developing
understanding and generating knowledge.
Affective advertising: Affective advertising is concerned with what customer feel.
Affective advertising objectives include developing a liking for the product,
evoking feelings and generating preference.
Cognitive advertising - high involvement advertising or “learn-feel-do” process
1. Happens in high involvement buying contexts: products or their usage context
are personally significant for the consumer
2. Customer will go through “Learn-feel-do” process: customer learn about the
product and compare with the alternatives to reduce perceived risk, after that,
customer will develop a preference and intention-to-buy
3. In this case, advertising is one of the sources they can use in the “learn-feel”
part of that process.

High involvement advertising requirements:

1. Better to make long copy: prospects use advertising to learn about alternatives
2. Featuring endorsements by opinion formers may be influential (e.g. influencers
collaboration)
3. Using long-dwell time medium: magazines, newspapers, social media posts,...
Affective advertising - low involvement advertising or ‘learn-do’ process
1. Happens in low involvement buying contexts: the product category or its
usage context is unimportant for customer.
2. Customer will go through “learn-do” process: The customer is simply
become aware of the product and buy it. Evaluation may only take place if
the product does not deliver the benefits expected. Customer develop
emotional responses that linked to a buying intention
In this case, advertising is one of the sources they can use in the “learn” part of
that process.

Low involvement advertising requirements:

1. Copy needs to be short: prospects won’t read long advertising copy.
2. Using simple visual cues to achieve recognition.
3. Using low involvement media: TV, billboard, ..
Some sources of sales leads
Sale promotion is any behavior-triggering temporary incentive that the company
aims at prospects, customers, channel partners, or salespeople.

Sampling. Sampling involves the provision of a free sample of the product. To

encourage further purchases, using a voucher for a discount can be a very effective
accompaniment to free samples.
Free trials. Try first, pay later. If the customer decides they like the product they
keep it and pay. It encourages the customer to adopt new behaviors that they find
difficult to break after the trial period ends.
Discounts. Discounts or money-off deals are temporary price reductions. The
temporarily lower price provokes customer purchase, not only do customers save
money but also perceive a lower risk since they have not had to spend as much.
Coupons. Coupons are physical or virtual documents that give the customer access
to an offer that is more attractive than the standard offer for the same product.
Rebates. Rebates or cash-back offers involve an offer by the company to return a
portion of the purchase price to the customer.
Bonus packs. Bonus packs see the customer receive a larger amount of the
product for the same purchase price as a lesser amount
Banded or bundled packs. A banded or bundled pack promotion involves more
than one product sold together as a single item, at a lower price than the
customer would experience had they bought each product separately
Free premiums. A free premium is a gift to the customer. The gift may be offered
at the point-of-purchase, in packaging, or require the customer to mail, email,
text, or phone in a request.
Cross promotions. These occur when two or more non-competing brands create
a mutual promotion.
Lotteries. A lottery is a game of chance, not involving skill. Consumers are
invited to buy the product and be entered into a draw for a prize. Prizes are
highly variable. They range from low value items such as shopping vouchers to
high value prizes such as personal makeovers, vacations, or even fully furnished
houses.
Competitions. Unlike a lottery, a competition requires skill or knowledge. The
prizes are varied, as in the case of lotteries.
Some sources of sales leads

Word of mouth (WOM) is the exchange of information between individuals about

a product or organization, in which the recipient of the information believes that
the person sharing the information receives no commercial benefit from the
company. WOM can influence the perceptions, emotions, purchasing intentions
and purchasing behavior of the recipients because of its apparent separation from
commercial influence is regarded as independent and trustworthy.

Merchandising involves the production and distribution of any tangible behavior-

triggering stimulus. The term ‘merchandising’ was originally the promotion of
products at retail and other points-of-sale (e.g. special displays, signage, shelf
tickets,...) but now evolved to broadly mean any products that promote the
company’s brand and its products/services. This can include office stationery with
the corporate logo, drink containers, backpacks/satchels, clothing, banners, and
cards, to name a few examples. Businesses use merchandising to create brand
recognition through brand visibility.
Customer acquisition strategies: Performance indicators (KPIs)

Key performance indicators (KPIs): the degree to which the outcomes it

sees over time are consistent with the goals company has set.

Major KPIs to evaluate customer acquisition activities:

1. The number of new customers that the company acquires (e.g., new
sales leads, new sales enquiries, conversion rates from prospect to
purchase).
2. The cost of acquiring each new customer (e.g., the money invested in
prospecting activities such as advertising).
3. The value of the new customer throughout the relationship (e.g., the
total revenue the customer generates, the total cost of serving the
customer).
Customer retention

Customer retention is the maintenance of continuous trading relationships with

customers over the long term. High customer retention as equivalent to low
defection/churn.

Customer retention will bring economic benefits:

Increase the number of customers who consume products/services over time
Increase the number of customers willing to pay higher prices for
products/services
Lower customer management cost
Increase product/service referrals to new customers
Customer retention strategies
1. Deciding on the best customers to retain and/or develop
Customers who have strategic value to the company: directly influence the business
growth and bring benefits that beyond revenue
High future lifetime value (CLV) customers: expected to generate revenue and profit
in the future
High volume customers: consistently buy a large quantities of products or services
Benchmark customers: these are customers that other customers follow, and they
can add credit to the company and can attract more potential customers for the
company
Inspirations: give feedback or provide innovative ideas that can inspires company
product or service
Door openers: “high-profile” customer who can help company to “open the door”
to the new market (mainly in B2B context).
Recently acquired customers: recently started doing business with the company and
have growth potential
Highly significant customers who are not committed to the company: have impact
on revenue and value to the company, but not fully loyal or committed to the
company
2.1. Build customer engagement

Customer engagement refers to a psychological and emotional state that the

customer experiences through their interactions with brand touchpoints.

Customer engagement is a multi-dimensional construct, involving four

elements: cognitive engagement, affective engagement, behavioral
engagement, and social engagement.

The cognitive and affective elements of reflect the experiences and feelings
of customers, and the behavioral and social elements capture brand or
organizational participation by consumers, beyond merely buying the
company’s offerings.
4 types of customer engagement
1. Cognitive engagement: The level of mental involvement or attention a
customer devotes to a brand (e.g. think about the brand, learn about its
products or services, and consider it in their decision-making process...)

2. Affective engagement: The emotional connection or feelings a customer

has towards a brand. (e.g. feelings of excitement, happiness, trust, or
attachment,...)

3. Behavioral engagement: The actions or behaviors that customers

perform in relation to the brand (e.g. repeat purchases, signing up for
loyalty programs, interacting with content,...)

4. Social engagement: The level of social interaction a customer has with

or around a brand (e.g. sharing experiences, participating in brand-
related communities, and participating on social media,...)
Build customer engagement: Customer delight

Delighting customers, or exceeding customer expectations, means going

above and beyond what would normally satisfy the customer.
Customer delight occurs when the customer’s perception of their
experience of doing business with company exceeds their expectation.
CD = P > E
CD = Customer Delight, P = Perceived performance, E = Expectation
Kano’s model of High satisfaction (customer delight)
customer delight

Low Indifferent High

perpecived perpecived
performace performace

Low satisfaction (customer disatisfaction)

Add customer-perceived value: Loyalty schemes
A loyalty scheme is a customer management program that offers delayed or
immediate incremental rewards to customers for their cumulative patronage.
Loyalty schemes work by incentivizing repeat customer behaviors. The more a
customer spends, the higher the reward which can include discounts, special
promotions, and free offers.
Pros
For customer: Loyalty schemes can be positive influences in customers’ lives by
making them feel valuable. Loyalty schemes also provide a sense that customers
belong to a social group and customers can also experience significant rewards
through their loyalty.
For company: Loyalty schemes are important sources of customer-related data
To become members of loyalty program, customers must register their details
through an app or a website. Each time they use their loyalty card or app, this creates
a purchase record at the point of purchase. This record includes the timing, the value,
the contents of the customer purchase, and the store location (among other details).
The company can then use this data to supports customer analytics and customer
purchase-related insight.
Cons: Customer loyal to the scheme rather truly loyal to the brand
Types of loyalty schemes

Points-Based Program: Customers earn points for each purchase, which can later be
redeemed for rewards, discounts, or products. The more they buy, the more points they
accumulate.
Tiered Programs: These programs reward loyalty over time, with higher spending
unlocking better rewards. The more a customer spends, the higher they climb in the tier
system, which may offer perks like free shipping, exclusive products, or VIP customer
service.
Paid Memberships: Customers pay a fee to join the loyalty program, receiving benefits in
return.
Add customer-perceived value: Customer communities/club

A customer club is a company-run membership organization that offers a range of value-

adding benefits exclusively to its members. Customer clubs differ from loyalty schemes in
that they only involve members who are passionate about the product or service and who
want to engage with the company, the brand, or the product on a deeper level – through
shared experiences with like-minded people. (E.g: Lego Ideas)
Add customer-perceived value: Sales promotions
In-pack or on-pack voucher: Companies can include vouchers as part of their
packaging or in other formats, such as emails. In some cases, vouchers entitle
customers to a free product after a certain number of purchases.
Rebate or cash-back: Companies can offer customer rebates or cash back after they
register their purchase with the company, normally through an online portal or app.
Patronage awards: In this case, companies encourage customers to collect proof of
their purchases, such as store receipts or barcodes from packaging, which the
company then redeems for awards, gifts, or other favorable treatment.
Free premium for continuous purchase: Same techniques with patronage awards but
free premiums have a tiered reward structure that looks to motivate customers to
continue their participation in the scheme
Collection schemes: customer collects items with every purchase and customers didn’t
know what card they had until they bought and opened the pack. These became
collectible items (e.g. blind box)
Self-liquidating premium: a consumer sales promotion where a customer pays a set
amount of money for a gift or item in exchange for proof of purchase. This entitles
the customer to buy a discounted premium such as a camera or gardening equipment.
Add customer-perceived value: Bonding

Social bond: are found in positive interpersonal relationships between people,

are characterized by high levels of trust and commitment, which makes
customers feel valued and connected to the brand on a personal level.

Example: Customers can become highly attached to a company’s people.

Customers may talk about ‘my banker’ or ‘my mechanic’ or ‘my builder’.

Structural bonds appear when companies and customers commit resources to

a relationship to realize mutually beneficial outcomes.

Example: Customers may develop a deep sense of emotional attachment when

their personal values align with those of their supplier. Customers have many
and varied core beliefs such as sustainability, honesty, child protection,
independence, family-centeredness and so on.
Key Performance Indicators (KPIs) of customer retention

Outcome-related KPIs Process-related KPIs Cost-related KPIs

Customer satisfaction KPIs that measure the Software subscriptions

Share of wallet (SOW) performance of a particular Wages and salaries
Raw customer retention rate strategy. For example, after- Space costs
Sales-adjusted retention rate sales service including: Parts costs
Profit-adjusted retention rate Service availability Freight and travel costs
Customer churn rate per Speed
product category, sales region Responsiveness
or channel Parts availability
Market share Accuracy
Customer equity
ROI
Measuring customer retention
Measures to use
Raw customer retention rate: This is the number of customers doing business with a
firm at the end of a trading period expressed as percentage of those who were active
customers at the beginning of the period.
Sales-adjusted retention rate: This is the value of sales achieved from the retained
customers expressed as a percentage of the sales achieved from all customers who
were active at the beginning of the period.
Profit-adjusted retention rate: This is the profit earned from the retained customers
expressed as a percentage of the profit earned from all customers who were active at
the beginning of the period.
Customer retention rate should not be calculated annually but should be calculated
according to the customer's purchase cycle because the customer re-purchase cycle
may differ between types of products or services.
Automobile, housing, and several other forms of insurance tend to involve an annual
re-purchase cycle.
Customers replace smartphones and laptops every two to four years.
Fast food, snacks, beverage re-purchases may be weekly or monthly.
Customer journey: Customer development

1. Up-selling: Selling higher priced or higher margin products and/or services

to an existing customer.
.

2. Cross-selling: Selling additional products and/or services to an existing

customer

3. Down-selling (Reducing cost-to-serve): Selling products and/or service

with lower prices or with less amount to an existing customer.
Customer journey: Customer termination

Customer termination occurs when a brand decides to end its relationship with a
customer or when a customer choose to stop doing business with a brand. In some
cases, businesses proactively terminate customers who are unprofitable, abusive, or
violate terms of service.

Companies fall into three clusters of the customer-sacking behaviors

Hardliners: take an active and rigorous stance in terminating unprofitable
relationships, regardless of a potential loss of trust in relationships with other
customers or negative word-of-mouth.
Appeasers: take a more cautious approach concerning the termination of
unprofitable relationships, due to strategic considerations such as not playing
customers into competitors’ hands.
Undecided clusters: reluctant to end unprofitable relationships, mainly because they
fear the costs of attracting new customers.
Strategies for managing relationships with unprofitable
customers

Which customers to terminate relationship with?

The company’s value proposition is not aligned with the unprofitable

customer’s needs and wants;
Customers who demand discounts, only buy when the prices are
reduced;
Customers who have extremely high and unpredictable services needs;
Customers who are persistent late payers;
Customers who are serial complainants;
Customers who are capricious and change their minds with adverse cost
consequences for the supplier.
Strategies for managing relationships with unprofitable
customers

Make offers become profitable by raising prices or cutting cost-to-serve:

Customers unwilling to pay the higher price find insufficient value in your
offering given the higher price and effectively remove themselves from the
customer base when they stop transacting.
Reduce the cost-to-serve: Encouraging marginally profitable or unprofitable
customers to self-serve using apps and websites might make many of them
profitable to reduce the cost-to-serve
Unbundle the offer: The company can then reprice the individual components
and reoffer it to the customer.
Respecify the product: This involves redesigning the product so that it no
longer appeals to the unprofitable customers you want to terminate.
Reorganize sales, marketing and service department: Firms should not focus on
segments or customers they no longer wish to retain.