Driving Profitability by Encouraging Customer Referrals: Who, When, and How

Driving Profitability by Encouraging Customer Referrals: Who, When, and How

Introduction

Marketing of the products is changing and companies are undertaking different methods to ensure that awareness is created of their products. In this manner, they are able to gain more profits and are also able to make sure that reputation is built of their company and that they are able to deliver the best product and service. The benefit of managing customer relationship by input and output method of them is that mangers of marketing firms can prioritize their efforts by understanding the return on their investment in marketing cost and thus better able to understand and differentiate between customers (Lee & Feick 2006) .

One of the most famous and important marketing method that is used by companies today is the customer referral value (CRV). This method has helped the companies to make sure that they market their product in the best manner and with word of mouth; the companies are able to market themselves in a much better and effective manner. The article, 'Driving Profitability by Encouraging Customer Referrals: Who, When, and How' talks about the same aspect and will be reviewed in this paper.

Discussion

According to the article, there are many companies that rely on this marketing aspect. This helps the companies in ensuring that the customer is aware of the products that it is providing. Word of mouth is an effective way of ensuring that the company is able to market the products in a manner that will prove to be beneficial for the profits of the company and will also help the company in earning more. There are different methods by which CRV can be calculated. Customer data is collected from different sources and then is used for the calculation of CRV.

Customer lifetime value

This is another helpful measure in ensuring that the company is able to market itself in a positive manner and that will prove to be beneficial for the image of the company. There are different steps outlined in the article for the computation and calculation of CRV. The first step is the determination of the decision of the customer whether or not he would have bought the product prior to establishing the CRV. The next step is to determine the future value of the referred customer. Third step is to predict the number of referrals and ...