150 word forum response

MARK 5360 –Advanced Services Marketing Case Study

Customer Relationship Management (CRM) success is highly reliant upon the motivation and performance of a firm’s customer contact staff. Taking into consideration all that you have learned in the class review the situation below – do you think that the management has made the right decision?

CASE STUDY

Assume that you have just started working at a grocery store, in its marketing department. The store’s management team on advice of accounting has just introduced a no-refund policy. The policy was changed because it was calculated that the old full refund policy was costing the store an average of $50 per year for each of their customers. The store has approximately 10,000 regular customers, the new policy represents a cost saving of approximately $500,000 per year for the store

Some of your fellow staff members have discussed with you that this change will make it much more difficult for staff to deal with customer complaints and service recovery. As a member of the marketing staff you are aware of the following information:

QUESTIONS

Answer each question using theory and knowledge gained from class. Saying I agree or disagree is not a complete answer.

1. Do you think that management has made the right decision by introducing their ‘no-refund policy’? Justify your answer with supportive calculations.

Based on my calculations, the accounting department has made a good recommendation on the surface level. The question that we don’t have the answer to is….

How many customers will shop elsewhere because we are now outside their “zone of tolerance”?

Based on what I calculate, the grocery store can afford to lose up 909 customers – over 9% of their existing customer base and still make more money at a higher profit margin. The return policy is worth nearly a full percent in profit and if no customers are lost, the company will increase profits by 2.5M over the 5 year life of a customer. Depending on the number of customers that will shop elsewhere as a result, this is likely a good decision.

While, this is probably a good decision (I can’t see losing 10% of the customer base over this issue), If I were the owner, I would have to have more data supplied by the marketing department.

Would you expect the marketing function to be involved in this type of decision?

Yes, the marketing department should be involved in any service additions or subtractions to determine the exposure the organization will face as it relates to increasing or decreasing customer base. Completing quantitative and qualitative marketing research would give the owner valuable insight to the upside/ downside in lost customers. The marketing department could have completed 1)Customer Complaint Solicitation 2) Identify most common categories returns 3) Relationship surveys: Assess company’s service performance compared to competitors or identify service-improvement priorities 4) Post-transaction surveys- Obtain customer feedback while service experience is still fresh; act on feedback. Tactically,

• Surveyed existing customers as the level of importance returning an item is to them when making a shopping decision. This would give insight into the number of customers likely to leave if the policy is changed. If over 10% surveyed objected, the owners and accounting might reconsider as it would be a losing proposition in the form of lost customers and profit.

• Set up “sample stations” to reduce returns on new products in the store.

• Researched and identified most frequently returned items- and/or reasons for return- Create an action plan to reduce returns on these items including coupons, try before you buy, or testimonial campaigns to rate products.

• Consider a compromise or set up a pilot / trial period - on the policy by reducing the opportunity to return from 30 days to 7 days to allow those people who need to make an immediate exchange or return flexibility to do so (for a recipe or something that called for something different).

• Segment Customers by identifying repeat ‘offenders” –Who is costing the company money and time and are they driving up the return rate? Segmenting the customers to understand who the lost leaders versus the extremely valuable customer behavior as it relates to spend versus return would be critical to understanding the potential impact of this decision.

• Customer Appreciation Day – Set up a special day and promote to high use- loyal customers. Offer discounts and incentives to get feedback from these key patrons on the importance of returning items.

• Evaluate alternatives or competitive threats- Are we the only grocery store in the immediate area? Are there other easier more convenient stores that we compete with? What other options do our customers have and what is their return policy?

What are the implications and ramifications in respect to customers in regard to this charge?

• Potential implications are frustrated and worst case scenario lost customers over this issue.

• On the flip side, if this is not a big issue for loyal customers, it could mean a significant improvement in profit and allow the grocery store to hire more employees, expand service such as assisting with groceries to the car and offer a more diverse product line.

• The increase could be used to create scholarship fund for associates, improved training and culture which would reduce turnover costs such as the example from Wegman’s Grocery Store.

I shop at Market Street in Coppell. It feels like it is locally owned. I am not sure if they take returns or not. I love the atmosphere, the produce, the service of having someone help me to my car and taking the cart. They hire local teens and teach them to look customers in the eye, shake their hands and build rapport. It is not important to me that they accept returns. The experience and service is what is important to me. I love they are teaching the teens to communicate. I also shop at Wal-Mart on occasion. While Wal-Mart takes returns, I have never returned anything because the line is so long it is not worth it. I think this is part of their strategy as well. One must be really motivated to return something there.

ASSIGNMENT

1. Once you have formulated your response to the questions; you will need to post your answers to the class discussion board by May 5, 11:59 pm Central time.

2. Once you have posted your answers –you will be able to see the posts of your classmates. You will need to review and analyze your classmates’ posts and make comments on two classmates’ posts using theory and knowledge gained from class. I suggest you read numerous posts to gain insights but you may not comment on a post if 3 students have already commented. Saying I agree with you or I had the same answer does not count. You must post this comments no later than May 4 at 11:59 pm Central time.

3. You need to respond to comments on your post by May 5 at 11:59 pm Central time.