BU247 Lecture Notes - Lecture 3: Net Promoter, Switching Barriers, Fred Reichheld
Document Summary
Marketing, selling, distribution, and administrative (msda) expenses independent of volume and mix of products that company produces. Many of these expenses incurred to market and sell products to customers through multiple distribution channels. Many companies today are quantifying their customer relationships by using nonfinancial metrics on satisfaction and loyalty, but don"t trace. Mdsa costs to customers to facilitate an accurate measurement of customer profitability. Excessive focus on improving customer performance with only nonfinancial customer metrics can lead to deteriorating financial performance. To balance pressure of meeting and exceeding customer expectations, companies should also be measuring the cost to serve each customer and profits earned, customer by customer. Measures such as % of unprofitable customers and $ lost in unprofitable customer relationships provide valuable balancing metrics for company"s strategy and its balanced scorecard. Measuring customer profitability: extending the madison dairy case. 80-20 rule: 80% of region"s income/wealth held by top 20%
