11.1.1 Who is a Customer?
Think: How would you define a customer?
A customer is a person who has the right to demand for a service or a product from us. He is the recipient of a service. A customer is the person who does the shopping. Shopping is the activity of buying a product or a service. A customer can also be defined as a person who buys or uses a product or a service to meet his personal needs. Customers visit the store to meet their needs. They are happy, if they receive good customer service.
11.1.1.1 What do the Customers Value?
If customers are satisfied with the service, they will shop more and come back to the store again. In addition to this, they will share their positive experiences with their surrounding social community. Customers can purchase the same product that meets their needs from numerous stores. They choose the store that provides better customer service.
11.1.1.2 Segmenting the Customers
Segmentation means dividing the markets into smaller groups, which differ from each other. In other words, segmentation means that a company defines its target groups. Due to the increasingly competitive environment in the retail sector, it is important to get a better understanding of customer characteristics. In this way a store can get new customers or achieve a higher level of customer satisfaction. The more specified customer groups' retailers can define the easier is meeting the needs. This dividing is called segmentation.
The four basic market segmentation strategies are based on behavioral, demographic, psychographic, and geographical differences. The segments differ from each other on some ground. The company should choose a group(s) which is the target for their marketing operations. Since you cannot please everyone, the company has to understand the needs and expectations of its target groups. The segment/segments should be chosen while defining the business idea of the company. The segmentation begins by studying the demand and buying behavior. Customer types are based on purchasing habits. The most common types are discount customers and loyal customers.
Case: Segmenting customers
Alma has a small shoe store for women in the downtown area in a capital city. She has two employees, Agnes and Rihan. She sells different kinds of shoes in her store; for example casual shoes, evening shoes, flip flops, flippers, training shoes and running shoes. Which are Sally´s customer segments now and how would you advise her to improve segmentation? What can Sally do to get loyal customers?
Think: What customer segments do you belong to?
11.1.2 Understanding the Customer
Think: Why is it important to understand the customer? What happens if you don´t understand your customer?
Customer behavior refers to a person’s decisions and behavior in purchasing and using products and services. One way to evaluate customers is to understand their values and attitudes, personality and innovativeness.
Attitude is the individual’s propensity to react in a certain way to some object. The attitude plays a vital role in one’s acting and receiving information. They can be influenced by marketing but it is difficult to change them.
Values are the goals and beliefs, which conduct one’s thinking, choices and acts. The values are very important to an individual and they are very immutable.
Personality consists of two factors, innate qualities and the impact of the environment. Some examples of these factors are: basic person’s nature and temperament, intelligence, giftedness and learning skills, values, attitudes and appreciations, interests and hobbies, worldview and life experience.
Innovativeness is ability and desire to adopt new things. People can be divided to four different groups according to their ability to adopt new thing. These groups are:
· pioneers
· early adopters
· majority
· dawdlers
It should be noted that you may meet different customers or the same customers in different moods each day in the store.
Think: What kind of a buyer you are when you are buying clothes, electrical devices or food?
11.1.2.1 Formation of the Customer's Attitude
The customer’s attitude factors can be divided in two different factors. The outer factors include the information from others, impact from the environment and the marketing efforts of companies. Then there are also the inner factors which include knowledge, feelings and the customer’s own experiences.
Buying behavior
The customer’s buying behavior is the sum total of a customer's attitudes, preferences, intentions, and decisions regarding the customer's behavior in the market place when purchasing a product or service. A customer servant meets lots of clients every day – every encounter is unique. Every client is an individual. Even the same client can act in a different way in different service situations. The customer´s buying motivation and needs to consume vary from time to time. That´s why a customer servant needs to listen to his customers precisely in order to understand them.
11.1.2.2 The Buying process
Think: Think about the situation when you are buying some goods: What happens in this situation? What is important for you?
The buying process starts with a stimulus. A stimulus can be caused by inner (thirst, feeling of cold) or outer factors (a nice commercial, a friend’s recommendation). After the stimulus the customer notices a need for something (I want to/need to buy a new jacket). He starts collecting information of the product (where to buy, comparing of similar goods). The customer compares the information of the products (prices, retailers, features, advantages, benefits). The customer makes the purchasing decision (where and how to buy the product).
After purchasing the product he evaluates the experience. If the customer is happy with the product and/or the service, he makes a re-purchase of the same product or another product in the same shop. He shares the experiences and may recommend the product or shop to others. If the customer is dissatisfied with the product or service, he starts to search for another option for the next purchase.
11.1.2.3 Factors Influencing the Purchasing Decisions
Think: What different factors influence the customer´s purchasing decisions?
You should be aware that there are numerous factors influencing the purchasing decisions. It makes you a better customer servant, if you are able to find the factors that are influencing your customer’s purchasing decision. There are several factors, like: needs, motives, values and attitudes, personality, innovativeness, family, membership groups, social status, culture and subculture, age, sex, religion, education and profession, residence, wealth, the life phase and size of the family, physical environment, time and money available.
11.1.2.4 Why Are Customers Leaving Us?
Think: Have you ever left a store or company and decided never to return again? Why?
For a customer servant it is good to evaluate every now and then why some of the customers are leaving us. There are many reasons why the customers do so. One study shows that the reasons are as follows:
· 68% Carelessness, attitudes and behaviors of the employees of the company providing the service
· 14% Dissatisfaction with the product
· 9% Marketing practices of competitors
· 5% Building another friendship
· 3% Moving to a new address
· 1% Customers passing away
Case: The Customer is leaving
Alex has been working in his food store for a couple of months. He realizes that many mothers with children are leaving the store without buying anything. What could be the reasons for this? What could Alex do to find out why they are leaving?
Tips: DO NOT
· play games with the customers’ finances, avoid paying rebates or ignore discounts
· lie to your customers or intentionally mislead them
· forget previous promises and refuse to live up to your commitments
· make false statements or advertising about your products or services, practice "puffery"
· make it virtually impossible to get in touch with a human being, add more menu options to answering services, or do not return messages
· disrespect your customer, pretend they are not there, ignore them, be rude or condescending
· blame problems on the company policy or co-workers, take whatever tact is necessary to avoid personal responsibility
· remind your customer that you are the only option
· assign numbers to your customers and avoid using their names, make them look for their number
· tell them to quit whining because there are other customers who have the same problem or have it much worse