How to Build Customer Relationships: Crash Course Entrepreneurship #10

CrashCourse
16 Oct 201910:44
EducationalLearning
32 Likes 10 Comments

TLDRThe script discusses the importance of nurturing customer relationships for a business, similar to any committed partnership. It outlines different types of customer interactions, from transactional to fully personalized, long-term bonds. Examples demonstrate how businesses like retail stores and software companies build relationships through loyalty programs, communities, assistance services. The video stresses understanding target customers, offering them tailored options to meet their needs and expectations. It concludes by emphasizing that strong value propositions underpin all sound customer relationships which must continually evolve based on feedback.

Takeaways
  • 😊 There are many types of customer relationships a business can have, from transactional to long-term.
  • 👥 Businesses should consider what kinds of relationships they want and can realistically build.
  • 💸 Transactional relationships involve one-time interactions with no ongoing bond.
  • 🚀 Self-service relationships let customers help themselves with no direct contact.
  • 🤖 Automated services simulate a personalized relationship using algorithms.
  • 🗣 A personal assistance relationship connects customers to a real person for help.
  • 💑 Dedicated personal assistance assigns each client a specific representative.
  • 🎫 Loyalty programs reward repeat customers and increase switching costs.
  • 💞 Long-term relationships take time but can create emotional connections.
  • 🙌 Co-creation relies on working with customers to develop products together.
Q & A

  • What are some examples of transactional customer relationships?

    -A good example is a credit card machine that takes a small percentage fee from each sale. Neither the customer nor the business has any direct relationship, it is purely transactional.

  • What is the difference between self-service and automated self-service customer relationships?

    -In a self-service relationship, the customer does all the work themselves using equipment provided by the business. In automated self-service, the business provides personalized recommendations or suggestions using customer data and algorithms.

  • What are some examples of businesses that use loyalty programs effectively?

    -Gyms often use loyalty programs with discounts or other incentives to make it harder for customers to cancel memberships. Coffee shops sometimes offer loyalty cards where you get a free drink after a certain number of purchases.

  • How can an entrepreneur determine the ideal customer relationship mix?

    -There is no one ideal mix. It depends on the specific business, region, target market etc. Entrepreneurs should carefully consider what relationships they are capable of providing and what would appeal to their target customers.

  • What went wrong with Ashlyn's initial customer relationship assumptions?

    -She assumed customers wanted a long-term personal relationship when actually they just wanted to be empowered to fix their own bike issues quickly. Her self-service clinics ended up being more popular than her personal bike repair appointments.

  • What are some characteristics of a long-term customer relationship?

    -Long-term relationships involve regular interactions over time, sometimes with an emotional connection. Customers believe in the company's mission and values, not just the products. For example, Patagonia has loyal customers who support their environmental stance.

  • How can a business create value through co-creation relationships?

    -In a co-creation relationship, the business works directly with customers to develop products rather than solely relying on internal innovation. YouTube relies on creator-generated videos rather than content produced by YouTube employees.

  • What are some benefits of creating online customer communities?

    -Online communities allow customers to interact and exchange useful information about the company's products. This can strengthen loyalty while also providing the business with feedback and ideas for improvement from engaged users.

  • What event does Salesforce host to build its customer community?

    -Salesforce hosts an enormous annual tech conference in San Francisco called Dreamforce, aimed at bringing together over 200,000 users and partners.

  • Why is the value proposition important when determining customer relationships?

    -The value proposition summarizes what core value a business provides its customers. This should guide decisions around customer relationships and interactions to ensure alignment with what customers actually want from the business.

Outlines
00:00
🤝 Defining the types of customer relationships

This paragraph discusses the different types of customer relationships a business can have, ranging from no relationship to long-term loyal relationships. It gives examples like self-service gas stations, personalized recommendations, loyalty programs, and dedicated account managers.

05:02
💡 Tailoring customer relationships to your business

This paragraph explains how businesses can choose customer relationships that work for them by asking questions and listening to advice. It compares how two very different businesses - a shoe store and a software company - cultivate similar types of customer relationships.

10:05
🎯 Aligning your value proposition with customer relationships

This paragraph emphasizes aligning your value proposition with the customer relationships you want to build. It gives an example of a traveling bike repair business that needed to adapt its relationships based on customer feedback to keep growing.

Mindmap
Keywords
💡Customer Relationship
The connection between a business and its customers. The video discusses different types of customer relationships, from transactional to long-term emotional bonds. Examples include loyalty programs, personalized recommendations, customer service interactions.
💡Value Proposition
What value a business offers its customers. This should guide decisions around customer relationships. For example, Ashlyn's initial value proposition of fast, mobile bike repair didn't match her customers' actual desire to learn DIY maintenance.
💡Transactional Relationship
A strictly financial relationship with no personal connection, like a credit card processing fee. Provides value without an emotional bond.
💡Loyalty Program
Rewards customers for repeat purchases to encourage brand loyalty instead of switching. Makes it costlier to change brands. Examples include discounts, free products after a number of purchases, special events.
💡Switching Costs
The money, time, or hassle involved in changing to a competitor brand. Loyalty programs increase switching costs to retain customers.
💡Community
Bringing customers together into groups centered around the business, like Patagonia's massive annual tech conference. This can strengthen engagement and provide user feedback.
💡Co-Creation
Collaborating directly with customers to develop products instead of solely relying on internal innovation. Example: YouTube relies on creator videos.
💡Customer Feedback
Input from customers providing insights into their needs and interests. Critical for shaping decisions around optimal customer relationships and improving products + services.
💡Customer Experience
All interactions a customer has with a business. This shapes the relationship and perceived value. Provides opportunities to gather feedback.
💡Customer Retention
Keeping existing, repeat customers instead of having to acquire new ones. Loyalty programs and good experiences support retention.
Highlights

The easiest type of relationship to build is no relationship.

Another fairly hands-off option is a self-service relationship.

Automated services can simulate a more personal relationship.

Live chats provide immediate access to a company representative without the hassle of going into a store or the horror of a live phone conversation.

The point is to create a much deeper bond that will last a long time.

Loyalty programs reward customers for their purchases and make it a little more costly to switch brands.

At the most involved end of the spectrum is the long-term relationship.

In a co-creation relationship, companies don’t rely on a lot of in-house innovation and instead, work directly with customers to develop products.

In these spaces, customers can interact and exchange user knowledge, which can end up, strengthening their bond with the business that brought everyone together!

If people are complaining about a glitch or sharing innovative uses in these communities, that’s awesome feedback!

All of the decisions we’ve made so far about our business have involved asking key questions and listening to trusted advice.

There’s also no ideal mix, and we’re not here to tell you exactly what you’ll need to do as an entrepreneur.

Both businesses also want to lock-in customers with loyalty programming.

These days a lot of businesses are trying to build communities centered on their brands, as part of their customer experience.

To keep pedaling forward, Ashlyn needs to let her customer relationships evolve.

Transcripts

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