Marketing Seminar: Week 3-Discussion Question-Responses

Discussion Answers Responses:

Please note in this assignment, your task is to post one response for each of the three answers from three different individuals. You need to refer to your answer the files you read in the last assignment: “Marketing Seminar: Week 3-Discussion Question-“Firing unprofitable customers!”” and try to respond to each of the three answers I paste blow.

#1: Answer from Renee Sumbry

I’m guessing that firing customers in this case means closing their accounts.If so, I think it depends on the situation.For example, over the years, I’ve had my share of revolving credit cards.Some I’ve opened only to get the discount at the time of purchase, planning to hardly use it after that. I would pay them off over the course of a few months and then would be presently surprised after trying to swipe, not even a year later, that the account had been closed due to inactivity.

In this case, I could understand why the card company would “fire” me because they weren’t making any money off of me.I wasn’t a regular user of their card and paid it off quickly so I wouldn’t have to pay all of the interest charges. To them, I was unprofitable.

As for a solution when it comes to inactivity, instead of closing the credit card, maybe offering different perks such as offering interest-free periods, providing extra percentages for using the card during checkout or providing discount rewards after spending a certain amount of money. I think a lot of card companies already provide a couple of these perks, but if the customer still isn’t using the card, then I would definitely close the account.

I believe it’s also the same when it comes to banks/financial institutions.When I worked in a collections department, we would close any savings account that was dormant for an extended period of time (I believe a couple of years). Now, I think they charge fees on any dormant savings account that has a low balance until all of the money is gone and then they close the account. That’s only if a checking account isn’t tied to it, which brings me to my next point of cross-selling.I think if banks and financial institutions make it a point to cross-sell additional services that can actually benefit the customer, then they will become a profitable customer.If done correctly, this can also create customer loyalty.

#2: Answer from Angela Jones

I do agree with firing customers because, just like all companies are not the right match for a customer, not all customers are the right match for a company. For instance, if a customer is mainly looking for a commercial real estate loan, some smaller banks or financial institutions that mainly deal in residential loans may not be equipped to provide the high quality of service the commercial customer may need. They may not be educated enough to provide the proper service and should advise the customer of this and “fire” them by advising they go to another bank. Another situation where a company should fire a customer is when that customer costs the company more than that customer is worth to them. A customer that makes high dollar purchases, say of over 100,000, and requires a lot of service calls and appointments would be worth the extra time spent by employees servicing this customer. On the other hand, a customer that only makes a few low dollar purchases, say one or two hundred dollars’ worth a year, and requires much attention may not be worth the time employees spend answering their many service calls and questions. If this customer requires more attention than their business is worth, the company may need to fire them.

Before firing a customer, however, the company should work with them to determine if they can be of any help in resolving the situation that is making the relationship an ill fit. In the instance of the real estate customer, the bank could, instead of referring the customer to another bank, instead train and educate their own staff on commercial real estate enough to keep this client and service future commercial clients. In the example of the customer who requires much attention but does not spend much money, the company could assign someone to work one on one with the customer to determine all their issues at once and try to resolve them. The company could also institute a policy of charging for time or labor after so many customer service calls or appointments. This would reduce the amount of service needed per customer and save the company money. Either way, if a company is losing more money than it is making on a particular customer, they will need to sever the relationship before it hurts their bottom line.

#3: Answer from Barbara Morris

Like any other cases, I think it all depends on the situation. I would say “yes” in the majority of the cases; if a customer doesn’t bring profit to my company or even worse it’s adding up to my costs, I would be better off to let it go. On the other hand, if the customer is a long-time client and it’s been having a “slow-period”, I can keep it and maybe offer it a different product or lower the rates.

Personally I, and some of my relatives and friends too, consider a bank just like a place to deposit our money without having to keep it in the house and carry cash every time we go shopping. Most of us are unprofitable customers; we deposit our paycheck at the beginning of the month and spend it all or almost all by the end of it, giving our banks not much room for profits.

It’s a little different when we consider credit card companies where the money in the analysis has been borrowed and produce a higher interest. Unprofitable customers, in this case, are those who paid off their debts before maturing interests. For this situation, companies should avoid grace period or apply higher interest rate, but this solution may push away they prospective customers causing an even greater damage than keep unprofitable customers. A lower constant rate may be a better decision to guarantee the company a continuous monthly payment that most of the customers can afford.

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*For each of your three responses, it should be around 150~200 words.

**Please note this is in a discussion board, so your wording should be less formal and when you point out someone’s problem, please be euphemistic.

***Please make sure the originality and quality of your work.

****I will attach your answer and the reading materials from the last assignment here for convenience.

Thank you!