DAEMON QUEST - Pedro Valdés

Caprabo takes Tesco as a model

Fri, 20 Oct 2006 12:56:10 +0200

The kind of loyalization strategies, the British supermarket chain Tesco, is serving as an example for its Spanish counterpart Caprabo, which is paying attention to its loyalization methods in order to make the most of its customer databases. The supermarket chain Caprabo, with more than 2 million active customer cards, has announced its intention to use the information on purchasing habits, available thanks to these cards, in order to generate personalized offers and cross-selling opportunities.

Source: Cinco Días (Five Days)

Customer Adquisition

Wed, 18 Oct 2006 17:36:56 +0200

Keys for designing Profitable Acquisition and Selective Prospecting Strategies.

Abstract:

The great majority of companies are immersed in indiscriminate, mass obtainment tactics of a short-term nature.
The challenge is not to obtain customers at any price, but rather acquire them intelligently by using targeting strategies that allow us to know who is joining our portfolio, what they are able to offer us, how long they might stay with us, and what they can generate during that time.
The principal objective of every Obtainment Strategy must be profitability, defining how much to invest in each segment of potential customers, what channels to use, and what sales and Marketing resources.
In order to obtain customers intelligently and profitably, companies must establish Selective Obtainment Plans in which the focus is on each segment’s value.
Alongside Obtainment Strategies, there must be Re-activation Strategies that “wake up” inactive customers and allow us to “re-obtain” them.
Every Obtainment Strategy must be joined by proper Channel and Retention Strategies that seek the optimization of resources and maximum profitability.

Every company enjoys communicating their increases in new customers. Obtainment figures and increase in market share always figure among the most prominent aspects in any company’s annual statement. Incorporating new customers into the portfolio in a hyper-competitive market, in which acquiring new accounts or new consumers almost always means taking them away from the competition, is always good news. And that’s true. New customer acquisition is a symptom of good business health, since no company grows healthily without regularly increasing its market share. However, precisely because new customer acquisition is the vital engine for business growth, intelligently managing obtainment is a complex challenge.

Because the unanimous orders in every company are to sell more and steal customers from the competition, the great majority of companies are immersed in indiscriminate, mass obtainment tactics of a short-term nature, which focus more on volume than on value; on quantity rather than quality. And these actions, taken outside the framework of correctly designed strategies, can clearly affect any company’s profitability in the long-term.

Obtainment at any price?

The true challenge, then, is not to obtain customers at any price, but rather acquire them wisely, knowing who is joining our portfolio, what they are capable of offering us, how long they might stay with us and what they can generate during that time, how much to invest in obtainment strategies, what resources to rely on, and what channels to use. Customer obtainment must not be a term that stands alone; rather, it should always be accompanied by the adjective “profitable”.

There are several reports that show that companies that have slowed their rhythm and investments in customer obtainment have nevertheless been able to increase profitability and profits. This is the case for a well-known insurance company in the United States that, aware of the fact that its obtainment costs were above average for its market, asked its agents to grade the probability of acquiring each new policy according to specific factors. If it was below a certain level, the instructions were to abandon the process. Paradoxically, the company saw a decrease in sales, but a clear increase in its profitability ratios and its Customer Equity.

This is a clear example of how many customer obtainment strategies do not count profitability as an essential element, as an increasing number of studies are showing.

Targeting: What customers to obtain?

Intelligent loyalization in large distribution

Wed, 18 Oct 2006 11:41:28 +0200

Intelligent loyalization in large distribution

The retail sector is going through a strategic change in Marketing and Client Management. El Árbol Group and the children’s fashion company Neck & Neck are two innovative examples of how to The number one channel of a big distribution company and another of a medium-sized supermarket company develop intelligent and profitable Loyalization Strategies.

The Árbol Group 'exploits' its points program

Company: El Árbol Group
Objectives: maximizing Marketing Strategy efficiency.
Solution: transforming the loyalty card into an instrument for exhaustive client knowledge.
Result: savings and increase in sales and Marketing action efficiency.

Satisfied, loyal, and profitable Customers

Tue, 18 Apr 2006 11:58:12 +0200

The hypercompetitive environment in which we operate has caused companies to put all the emphasis on obtaining new customers. In their frantic race to gain market share, many companies have ignored customer service, thus creating the paradoxical situation of investing efforts in obtainment, while at the same time seeing a growing increase in customer abandonment rates, or “churn”. It is essential for companies to understand that customer Retention and Loyalization Strategies are, at the very least, equally as important as those of obtainment. And most importantly, they are more profitable.

Many companies opt for accepting the growing churn rates as a natural occurrence, while simultaneously redoubling their obtainment efforts. This position is as unacceptable as it is absurd. Unacceptable, because with better competition, it is not possible to assume that a certain percentage of customers will leave annually. Absurd, because it’s no secret that obtaining new customers is much more difficult and, above all, more costly than retaining portfolio customers. Daemon Quest studies show that retaining a customer costs between five and 15 times less than obtaining a new one.

The destructive power of a bad reference

Mon, 10 Apr 2006 10:06:03 +0200

The power that “word of mouth” is gaining among consumers who are progressively more demanding, well-informed, and interconnected, is reaching unheard of levels. While positive references are lifting certain companies to the highest of heights, without needing practically any advertising or promotion (see Google, or H&M, to cite some examples), a bad experience with a provider can be devastating for the potential market.

This is the conclusion revealed by a study of the Retail sector, carried out by the Marketing Department of the prestigious Wharton University, and title “Retail Customer Dissatisfaction 2006”. The study reveals that on 6% of customers communicate their dissatisfaction with their provider, while 31% share their discontent with their most immediate environment (friends, family, co-workers). Out of the total of “bad referencers”, 8% say they communicated their dissatisfaction with one person, another 8% to two people, but 8% admit having told six or more people. The report concludes that 100 customers with bad purchasing experiences can “contaminate” and stop the obtainment of between 32 and 36 potential customers.

Sales Force Effectiveness

Fri, 10 Jun 2005 13:33:36 +0200

All the keys to optimizing the sales force

Abstract

The old sales planning techniques should cede the way to new Sales
Intelligence strategies that optimize the management of sales networks.

Analyzing clients; the potential market, the competition’s positioning and
the sales network itself are the obligatory steps before designing objectives
and assigning resource.. An appropriate sales planning is obligatory in a
correct Sales Intelligence Strategy.
Software tools (ETMS, CRM...) included under the umbrella of
the “Sales Force Automation” are useful, but not enough for an optimum
management of the sales network.. Sales reps are, on occasion, reluctant to
an automation that does not include them directly and intelligently.
New sales channels have changed the way of organizing and coordinating
sales networks.
Targeting, Assigning channels, Sales Force Sizing, Portfolio management, Sales
Force Distribution or Territory Alignment, are consecutive and
obligatory steps that must be taken in order to optimize the sales network .

Sales activity is basic, vital, and very complex
In any company, but especially in sectors that need and intense
and well-sized sales structure. Sales effectiveness and care in
the company’s image are aspects that are kept very much in mind
when selecting, forming, and organizing a sales team. But it is
imperative to go beyond that. Other aspects such as targeting,
- determination of strategic clients -, channel management – maximizing
the efficiency of each channel, managing it according to the
appropriate client segment -, Sales Force Distribution – optimizing
the placement of the sales network -, Sales Force Sizing – sizing of
the sales network -, or portfolio management – assigning the appropriate
resources to the right clients -, contain the key to the sales team’s job
being fruitful and translating into a constant increase in business volume.

Levi’s, custom-made trousers for the customer

Mon, 21 Mar 2005 11:58:10 +0100

It is one of the reigning companies in terms of personalization… “Create your Own jeans” is the slogan behind Levi’s strategy, and it has been met with wide acceptance, especially among young customers.

The idea is that, whatever the customer’s style (from the most classic fashion to the most cutting-edge), they always go to Levi’s as an unbeatable and prestigious reference point in the world of denim.

Some data speaks for itself:

Levi’s has approximately 1.5 million possible combinations for their trousers, based on three criteria: style, width and length of leg, and type of fastener.
Close to 50,000 sizes and approximately 30 different styles allow for those 1.5 versions.
Levi’s has created a system capable of taking the customer’s measurements and having their jeans ready in less than two weeks
The repetition rate for Levi’s customers is close to 40%, while the average repetition rate in the consumer goods sector rarely surpasses 15%

Case study:iPod for all tastes

Sun, 20 Feb 2005 17:21:14 +0100

Apple has been one of the most innovative companies in the field of information technologies. It owes a good part of the merit it has accumulated in recent decades to its co-founding genius and CEO, Steve Jobs, one of the great world masters of Marketing and segmentation.

In its recent history, the success of its line of portable music players, the iPod, is what has changed the company’s image. That product’s sales success has been so great that its very name has become synonymous with an MP3 player. At the end of 2004, the company had sold more than 10 million units worldwide, 4.58 million in the last trimester of that year alone.
What’s the iPod’s secret? As in the case of iMac computers, the iPod is not only attractive for its notable technology, but also because of its appearance. With a perfect design, the device has connected more with its users’ emotions and feelings than with their IT and digital music knowledge. The iMac discovered that, while “early adopters" and IT “geeks" notice features before aesthetics, there was also another important potential consumer group for whom the object’s beauty and its extremely easy use (turn it on and its ready to use) represented the key to opening their interest in technology.