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The below table would represent few of the universally accepted and available marketing metrics that can be used to
measure customer loyalty and retention of an organization. The metrics were carefully chosen from accredited
academic & industry related sources and screened by the author to provide relevance to the topic wherever applicable.
Figure 1: Process exercised by the author to determine the metrics to measure customer loyalty & retention for
Research metrics from academic writing, journal articles, & sources from industry practioners.
Step
Step 11
Prepare the screened portfolio of metrics that could be used to measure the customer loyalty & retention.
Step 4
ACECAM
who paid licensing subscription to the number who who are continuing to be growth / decline
didnt during the end of subscribed service period (CRM with the firm and its when obtaining the
Manager of ACECAM) offerings. (Assistant customer count
Marketing Manager of
* Session Duration of the website: Calculates how long Cargills Bank-Sri Lanka)
users has retained in a particular webpage or the total * To access the relevance of
time spent on the website (Google Analytics) the content provided in the
website and the interaction
it provides.
04) Customer * Equation * Indication of the future * Difficult to quantify
Lifetime Value (CLV) Margin ($) * Retention Rate (%) cash flows in present * Forecasting require the
[1 + Discount Rate (%) Retention Rate (%)] figures a particular data acquisition to be
(Farris, 2006) customer will produce if the accurate as deviations will
firm manages to retain that result in false indications.
particular customer. * Discount rate should be
chosen with care.
05) Customer * Measured in a scale of 1 5 through a survey, where * Indication of a likelihood * Response bias
Satisfaction customers describe their experience with a brand or a towards repurchase * Captures insights of
firms offering at a given time. * Understand dissatisfaction existing customers, which
* Calculated in individual level but the results are and causes of it fails to provide insights on
presented in an aggregate level almost always in terms of * Ensure to give positive why the others didnt
a percentage of total customers exceeding a specified experience by developing retain.
satisfaction level. (Farris, 2006) brand, offerings, employee * Require to review
engagements satisfaction over time
* A fair indication of future within the same market in
purchases order to correct the issues
* Indicate on decline in of response biasness
quality or service. * Rising levels of
expectations among
customers will alter results
as providing low quality
offerings.
06) Willingness to * % of customers that states that they would recommend * To measure loyalty * Response bias
Recommend a brand to friends, relatives, and colleagues. among the current * Difficulty in obtaining a
* Calculated through a survey with a scale from 1-5 customers linear feedback on
* To identify the level of contribution to revenue
potential impact that generation.
customers have over others
* To access the likelihood
of customers in expressing
their experiences with
others
Table 1 shows a detailed analysis of the screened portfolio that includes how the metrics are being calculated, the
primary purpose of that metric, and possible shortcomings that it produces.
With respect to the interview conducted with the Marketing Executive at ACECAM, it was revealed that they segment
their customers according to the industry that the individual customer operates in. Currently ACECAM serves for 9
distinctive industries in Sri Lanka (Refer Figure 3, Organizational Summary). In order to invest resources on
developing customer loyalty and retention ACECAM currently consider the following criteria to identify their key
accounts among the industries that they serve.
1. # of subscribed customers
2. # of licenses they own
With reference to the above table, the key industry that is currently focused by ACECAM is the Manufacturing
industry due to its growth potential in the current economy of Sri Lanka. Manufacturing industry is greatly influenced
by the booming apparel manufacturing in Sri Lanka and the availability of high quality and cheaper labor when
compared to neighboring countries. Also the new government regulations too are in favor of improving the
manufacturing industries through appointing BOI (Board of Investment) zones around the prominent locations in the
country and lowering taxations on imports and exports (Wickremesinghe, 2016). Manufacturing industry in Sri Lanka is
comprised of many sectors and contributes for BOP immensely. Some of the significant sectors are,
Textile & Apparel Plastics Products
Rubber & Rubber based products Footwear & Leather
Ceramic & Porcelain Giftware & Toys
Electrical & Electronics Handloom
Printing & Stationery Wooden
Boat & Ship Building
According to above table, Textile and apparel sector is the most prominent, which accounts to 40%
(Srilankabusiness.com, 2016) of the total exports whereas Tire sector accounts to a growth rate of 4-6% per annum
(Srilankabusiness.com, 2016).
From the analysis presented in table 1, it is in evident that not only manufacturing but academic sector is also a
potential industry that ACECAM can capitalize upon. Academic sector currently consist of State Engineering
University faculties, private engineering education providers, and technical education centers.
The key customer segments of ACECAM can be classified by using the following diagram, which is the process of
market segmentation (McDonald, 2009). The below approach would allow ACECAM to understand their key customer
segments identified in Appendix 4 in a much broader manner.
Step 1
Market
STAGE 1: Your market and how it Mapping operates
Structure
and
Decision
Makers
Step 3
STAGE 2: Step 2 Customer and
What is
Who Buys
transactions bought
Customer
Purchase
Profiling
Options
Step 4
Who buys
what
Customers
and their
purchases
Step 5
STAGE 3: Segmenting the market Why it is
bought
Customer
Needs
Step 6
Forming
Segments
Combining
Similar
Customers
Step 7
Segments
Checklist
Reality
Check
The below table would explain the current process of customer classification at ACECAM, which is formulated with
reference to the above market segmentation framework. It is altered in appropriate to match the context of ACECAM.
The market map on decision-making applied for each segment is stated below the table.
The 2 preferred and the potential market segments of ACECAM were segmented in the above table in order to identify
their insights to measure them on customer retention and loyalty.
Market Map
( Ministry of Education/
CXO's - CEO/COO/Head of F CXO's - CEO/Head of IT/ i Education Authorities/
IT/Head of Engineering/ Head of Head of Engineering/ Head Board of Directors
g of R & I (Top Level u
R&I
r Decision Makers) e
(Top Level Decision Makers)
Principal / Dean
Department Managers -
Manager Product
Department Managers - Development / Manager R
Engineering Manager/ R & I & I / Manager Engineering
Manager (Managerial Level)
(Managerial Level) Head of Department
The below form was prepared to obtain the customer data to calculate the metrics on customer retention and loyalty
factors. The form was developed to bridge the prevailing gap of data according to the MkIS format introduced by
Kotler (2000).
Formulation
The marketing team at ACECAM developed the below questionnaire with reference to the data requirement discussed
in the MkIS. Since the in-house expertise is absent to conduct extensive research, the survey was developed through
the assistance of Ms Kavita Aroor, the channel marketing professional of DS SOLIDWORKS Corporation for South
East Asia, which is headquartered in Pune, India.
Execution
The survey was conducted on a sample size of 300 customers that had a fair representation on the key industries and
marketing map discussed in appendix 5. The prepared questionnaire was circulated among the sample via email to
generate the required responses. In order to take maximum output from the generated survey the marketing team have
stretched their efforts on placing phone calls for the customers who were unable to reach via emails and who has
difficulties in responding to them. The survey was conducted during 5 working days.
Analysis
Upon generating the responses successfully, the marketing team analyzed the responses accordingly and generated the
required data to apply on the metrics in order to identify the current key customer segments on attributes of customer
retention or customer loyalty and classify them accordingly. The analysis and calculation of metrics were conducted
within a period of 5 working days after the data collection procedures. This will help ACECAM to capitalize their
investments and obtain a better ROMI.
Questionnaire
Dear
Thank you for giving us the opportunity to better serves you. Please help us taking a few minutes to tell us about the service that
you have received so far. We appreciate your business and want to make sure we meet your expectations. Attached, you will find an
electronic coupon good for LKR 2500/- redeemable at Emerald Store Island wide. We hope that you will accept this as a token of
out goodwill.
Sincerely,
Ruwan Manchanayake
Managing Director
Company Name:
Industry:
Designation:
2. What is your current overall Computer Aided Design (CAD) requirement at your company/division?
3. Based on your experience and awareness of SOLIDWORKS is it better, the same, or worse than other brands of
CAD?
5. Based on your experience with SOLIDWORKS, how likely are you to buy
Definitely Will Probably Will Probably Will Not Definitely Will Not
Subscriptions
Multi-products (if applicable)
10. Based on your experience with SOLIDWORKS, would you recommend it to a friend?
Definitely will Probably will Probably will not Definitely will not
11. Based on your experience with ACECAM, would you recommend our services and trainings to a friend?
Definitely will Probably will Probably will not Definitely will not
12. If you would like to share any additional comments or experiences about SOLIDWORKS & ACECAM, please
This section will present the calculation of metrics, which was identified in Appendix 4. The data required for
calculations were obtained from the survey conducted by the Marketing Team at ACECAM (Appendix 6). The metrics
will be applied to the key customer segments, which were identified under the current classification process (Appendix
5) in order to obtain insights on their level of customer retention and customer loyalty for ACECAM and
SOLIDWORKS.
This will be calculated in terms of units. The brand purchasing and total category purchases were taken as segment average. The answer
will be in terms of a %. Sales History of customers and Q1 & Q2 in the survey is used to obtain the data to calculate the above.
Modifiers Inventors Scholars
= (10/60) x 100 = (90/100) x 100 = (400/500) x 100
= 16.67% = 90% = 80%
*Since primary use is to improve *Since they are involved with new product *Licenses are released by batches of 200.
manufacturing processes, 3D CAD solutions development, almost every designer and Hence most tend to rely with the optimum
are used by higher-level designers/automation engineer needs access to latest technologies. number required them to satisfy their need.
engineers only. Rest of the CAD requirement Hence their consumption is high.
is satisfied by less expensive alternatives.
2) Willingness to Search
Focused on figuring out customers willingness to retain with the brand/solution/service provider by referring to 3 aspects,
Reasons for delaying purchasing/ Are they delaying on attaining a purchasing decision?
Tendency to switching into other platforms like 2D
Are they willing to use a limited number of licenses without switching into cheaper solutions?
Data from the ZOHO CRM was used to identify the insights, which the marketing team was granted access for the purpose of conducting
the survey. Overall responses were taken as a percentage of total.
Modifiers Inventors Scholars
60% 88% 20%
*Tends to delay the purchase decisions *Higher tendency to stick with the latest *Usually have a longer sales cycle due to
since investment choices on core activities technology due to its relation to core activities extended decision-making process to follow
vs. support activities of the company. Hence lesser purchase delays. with. Hence will delay purchasing
*Easily switched between cheaper solutions *Importance of the solution limits them to *Higher tendency to switch to cheaper due to
*Prefer to use 3D solutions at the most switch between platforms the budgetary concerns and lower awareness
relevant place only. Hence will stick with of the latest technological trends
limited licenses.
3) Retention Rate
# of Active License Subscribers to the # who differs
Focused on understanding who are the customers prefer to pay subscriptions and be enrolled with the value added services provided.
Excel Databases and survey questionnaire was used to obtain data for the calculations (Q5 Direct, Q4, 6, 7, 8, 9 Indirect)
Modifiers Inventors Scholars
= (9/200) x 100 = (5/200) x 100 = (18/100) x 100
= 4.5% = 2.5% = 18%
*Larger number of customers when compared *Solely based on the number of current client *Affected by the number of current client base
to other manufacturing sectors due to its base
higher growth potential
4) Customer Life Time Value (CLV)
References:
CentralBankofSriLanka,(2016).CurrentEconomicIndicator.Colombo:CentralBankofSriLanka,p.77
Farris,P.(2006).Marketingmetrics.UpperSaddleRiver,N.J.:WhartonSchoolPub.
Gupta, S, & Zeithaml, V 2006, 'Customer Metrics and Their Impact on Financial Performance', Marketing Science, 25,
6, pp. 718-739, Business Source Corporate, EBSCOhost, viewed 2 May 2016
Morgan, N, & Rego, L 2006, 'The Value of Different Customer Satisfaction and Loyalty Metrics in Predicting Business
Performance', Marketing Science, 25, 5, pp. 426-439, Business Source Corporate, EBSCOhost, viewed 2 May 2016
Srilankabusiness.com. (2016). Apparel Manufaturers, Suppliers & Exporters in Sri Lanka. [online] Available at:
http://www.srilankabusiness.com/apparel/ [Accessed 22 Jun. 2016]
Srilankabusiness.com. (2016). Rubber & Rubber products Exporters,Manufatures & Suppliers in Sri Lanka. [online]
Available at: http://www.srilankabusiness.com/rubber/ [Accessed 22 Jun. 2016]