PROFITABLE
CUSTOMER ENGAGEMENT
Concepts, Metrics & Strategies
V. Kumar
© Dr V.Kumar
Chapter 1
Introduction to Customer Engagement
Instructor’s Presentation Slides
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© Dr V.Kumar
Introduction
Profitable Customer Relationship Management
adds value to the company by identifying;
 Profitable customers
 Ways to manage, retain and reward customers
based on their profitability
 The “right” product for the “right” customer
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Product Centric Approach
Companies with a product centric
approach typically concentrate on
 Product development and
introducing new features to the products
 Increasing product market share
 Increasing profitability by improving the
product features
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Product Centric Approach to Profitability
INNOVATION
•Product
•Service
BETTER
ACQUISITION
•New customers
•Customer win-back
RICHER
EXPERIENCE
Reinvested Profits
HIGHER
PROFITS
ENHANCED
REVENUES
HIGHER
SATISFACTION
STRONGER
LOYALTY
CROSSSELLING
IMPROVED
RETENTION
Source: V. Kumar, J. Ilaria Dalla Pozza, Andrew Petersen, and Denish Shah, “Reversing the Logic: The Path to
Profitability,” Journal of Interactive Marketing, 23(2), (2009): 147–156. Copyright by the Direct Marketing
Educational Foundation, Inc., published by Elsevier Inc. Printed with permission.
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© Dr V.Kumar
www.drvkumar.com
Customer Centric Approach
Companies with customer centric
approach try to understand their
customers and their needs by
understanding
 How to align product features with
customer needs
 Which customer segments should be
focused on
 What customer-centric metrics are
needed to evaluate firm’s
performance
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© Dr V.Kumar
www.drvkumar.com
Customer Engagement
Customer engagement is defined as the total value provided by
customers who value the brand through purchase transactions
and non – purchase transactions.
 Purchase behavior
 Non-purchase behavior in the form of:
 Providing referrals through the firm's Customer referral program
 Sharing feedback
 Exerting influence on other customers through social media
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© Dr V.Kumar
www.drvkumar.com
Customer Engagement Approach to Profitability
Own purchases
CUSTOMER
ENGAGEMENT
Incentivized referrals
FIRM
PERFORMANCE
Influence in social media
Reinvested
Profits
Customer feedback
ENHANCED
CUSTOMER
PROFITS
STRONGER
CUSTOMER
LOYALTY
PROFILE
PROFITABLE
CUSTOMERS
HIGHER
CUSTOMER
SATISFACTION
BETTER
CUSTOMER
EXPERIENCE
INPUTS FOR
INNOVATION
ACQUIRE &
RETAIN
PROFITABLE
CUSTOMERS
The focus on customers related to the level of engagement and how it
can be harnessed to grow the bottom line.
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© Dr V.Kumar
www.drvkumar.com
Conclusion
 Traditional approach to drive profitability
 Focused on customers buying more
 Forward looking approach to drive profitability
 Focused on customer engagement including
purchases, referrals, influence in social media
and active participation in
feedback/suggestion process.
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© Dr V.Kumar
www.drvkumar.com
End of Chapter 1
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© Dr V.Kumar
www.drvkumar.com