Lecture 2 - Customer Behavior Flashcards Preview

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Flashcards in Lecture 2 - Customer Behavior Deck (30):
1

customer acquisition

generally easier bc you can just spend more $$ on ads and targeting campaigns

*you have to target the **right** customers so you can keep them longer, then they'll be more valuable to you

2

drivers of firm value

1. drivers of customer value = customer acquisition, retention, and expansion (cross-selling/selling more things)
2. customer profitability
3. profits & CF
4. Firm value

3

customer acquisition

- the "Best" type of customers
- justify acquisition costs using CLV analysis

4

customer expansion

- increase margin
- data mining for cross-selling (once you understand pain points and what people want, you can satisfy needs)

5

customer retention

-*acquire the right customers in the firs tplace
-increase satisfaction, reduce churn, increase loyalty
-switching cost, bundling, contracts make it harder for customers to leave

6

CLV insights on retention

-increases in retention have bigger return than similar % increases in margin or decreases in discount rate

7

80/20 rule

best customers account for most revenue
- not all customers fit value proposition

8

customer heterogeneity

impactful
CLV can help determine how to make customer base more valuable

9

customer equity

value of customers to the firm
= direct value, information value, relationship value, and communication value

10

direct value

profits, $, part of CLV formula

11

relationship value

part of CLV formula; how long you can keep customer
*retention

12

information value

value of information your customers provide; retailers can monetize having point of sale info
Ex. FB

13

communication value

word of mouth and brand ambassadors

14

decision making process

1. need recognition: become aware of need/problem; whether organic or thru marketing
2. information search: produces consideration set
3. evaluation of alternatives
4. purchase decision
5. post-purchase behavior: satisfaction, repurchase, loyalty, disatisfaction

15

customer journey and loyalty loop

circular form captures postpurchase behavior!
1. customer considers initial set of brands based on brand perceptions and exposure
2. consumers add/subtract brands as they evaluate
3. customer makes selection
4. after purchasing, customer builds expectations based on experience to inform the next decision journey

16

evaluation of alternatives

influenced by motivation, effort req'd, perceived cost, risk and personal relevance

17

high effort evaluation of alternatives

making a multi-attribute model (rating attributes and multiplying by importance)

Attitude towards brand = sum of (belief of strength of attribute * importance of attribute)

18

for companies to be competitive

at least know the most important attribute to customers and be competitive on that front

19

importance of attribute to customers

can be changed! look @Visa's success by proclaiming advantages of card acceptance (they changed consumer's importance priorities)

20

low effort evaluation of alternatives

automatic = resource saving
heuristics = choice tactics; price (price/quality inference, esp when we aren't experts), habit, normative ("#1 selling car", it must be good if everyone's buying it), more is better

21

understanding context of decision making

low effort or high effort??

22

post-purchase processes

-satisfaction/dissatisfaction (repeat business is a profit center, CLV)
-factors that influence satisfaction = performance/quality, value ratio
-sense of equity/fairness in the exchange
-idea of expectations/disconfirmation

23

sense of equity and fairness

-people evaluate a transaction according to rewards/costs, which corresponds to the +/- things derived from the exchange
-economic model: subtract cost from rewards and compare to both expectations and alternatives
-fairness = comparison; we look @ outputs vs inputs and we want them to be at a comparable level to some other standard of comparison (ex. seeing ppl get free dessert next to you, your satisfaction decr even though you were fine before)

24

disconfirmation

-satisfaction or dissatisfaction occurs when there's either +/- discrepancy between expectations and the product's actual performance
-keep in mind that expectations are very malleable
-therefore, manage expectations reasonably to attract customers, but also allowing for moderate overdelivery

Satisfaction = f(perceived perf - expectations)

25

value proposition

delineates offering's value that target customers will receive

26

positioning

identifies primary benefits of offering that'll serve as main reasons for customers to choose it

27

customer value

-customer's subjective (and idiosyncratic) assessment of how offering will fit their needs
-fxn of fit b/w attributes and customer needs, and how customer interacts with the offering

28

domains of customer value

*not mutually exclusive*
-functional = directly related to offering performance
-psychological= seeking emotional/self-expressive benefits
-monetary= costs but also benefits from discounts; important in commoditized categories

29

value fxn

how customers evaluate performance of offering on different attribute; how they combine to form overall assessment
-identifying this can help co prioritize aspects of the offering that should be improved to create more customer value
-attributes, relative importance of attributes, offering's performance on attributes

30

customer value as a function of offering attributes

how attributes can translate to subjective benefits and costs for target customers