Customer acquisition costs

We find simple contracts that achieve coordination in both the traditional supply chain and the supply chain with drop-shipping. According to these contracts, in the traditional channel the wholesaler subsidizes a portion of customer acquisition expenses as well as compensates the retailer for inventory carried over. In the case of drop-shipping inventory compensation goes from the retailer to the wholesaler. If the wholesaler can choose the wholesale price, the proportion of the customer acquisition expenses to subsidize, and the inventory compensation, an arbitrary split of profits can be achieved. In any case, the proportion of profits that the wholesaler captures coincides with the proportion of customer acquisition costs she subsidizes. Therefore, the higher the subsidy, the higher the wholesale price and the higher the wholesaler s profits. 

Customer acquisition costs. Computer World, August 21, 2000, 48. 

Loyalty programs provide rewards to customers for repeat purchase. Companies build networks of customers for exchanging product-related information and to create relationships between customers and the company or its brand. These networks and relationships are called communities. The goal is to build an environment which makes it more difficult for the customer to leave the family of other customers who also purchase from the company. Examples of CRM-based measures are customer acquisition cost, conversion rate from browsers to buyers, retention rate, same-customer sales rate, loyalty measures, and customer-share (proportion of a customer s business satisfied). 

The cost of total system maintenance and enhancement is currently shared by over one hundred laboratories, reducing the cost and raising to overall system quality as compared to in-house efforts. Proven time and time again by software life cycle, this package is highly superior to any custom written system for long term support and lower acquisition cost. 

To gain an edge over competitors in an increasingly global and competitive marketplace, companies today need to differentiate themselves not only in cost, but in the overall value of the products and the services they offer. As customers demand more and more variety of products, better, cheaper, and faster, an essential value feature for customer acquisition and retention is the ability to quote short and reliable lead times. Reliability is important for customers especially in a business-to-business setting, because it allows them to plan their own operations with more reliability and confidence [67]. 

The wholesaler buys the product at a fixed unit cost c and sells it to the retailer at a fixed unit wholesale price w. The retailer holds inventory and sells it to the customers at a fixed unit price r. The retailer here is the sole decision maker who decides on both the stocking quantity and the customer acquisition spending. Similar to model /,... 

Each optimality condition is interpreted as follows the ratio of the total customer acquisition spending to the total expected revenue (right-hand side) is equal to the demand elasticity times the retailer s relative marginal profit (left-hand side which is revenue minus marginal cost divided by the revenue). 

The Anderson and Narus model [16] identifies tenets sought and acquired by the customer and acknowledges the fact that customers are confronted with acquisition costs. The... 

The notion of a customer value model has been addressed by a number of authors. Heskett et al. proposed a customer value equation (Equation 16.2), which, in addition to customer benefits and acquisition costs, also includes process quality and price [17]. The model is described by... 

The model now includes consideration of the social and economic benefits received as a "positive" consideration here we might consider increased economic productivity from a labor force that is provided with accessible and affordable healthcare. The acquisition costs are increased by opportunity costs, created by the loss of contribution from alternative projects, which could not be funded and that may have made significant, but alternative, contributions. Figure 16.1 reflects the more recent view of the business environment. In a business context, value now considers stakeholder satisfaction, which is a broader consideration than simply customer satisfaction. Stakeholder satisfaction ensures meeting not only customers expectations but also those of employees, suppliers, shareholders, and the investment market influencers, the community, and the government. 

Obviously, this basic model is not designed to capture all the different aspects that have an impact on customer life time value. For example, acquisition costs are not included furthermore, it is assumed that all cash flow transactions take place at the same point of time (Jain and Singh 2002). Nevertheless, even just the basic model offers a suitable opportunity for segmenting customers according to their economic importance to the company. Furthermore, by creating a list, customers can be segmented according to their customer life time value (Fig. 3.9). 

Managing the life cycle of chemicals for a customer, instead of just supplying their needs, is proving to be a very successful business model. There are major cost savings to be made by the user as it is estimated that for every 1 spent on chemicals, between 1 and 10 are spent on managing the acquisition, inventory and disposal. A specialist company is in a much better position to carry out these tasks cost-effectively than the end-user. This approach is widely used in the automotive sector where a surprising number of chemicals are used. About three-quarters of the main car and truck manufacturers use chemical management services. 

Customer Service and Service Contracts It is important to choose a vendor that has a good customer service track record. Contact other laboratory directors and supervisors to ascertain their experience with the vendors that service their laboratories. Also, the cost of a service contract will need to be factored into the laboratory operating budget after the acquisition of an automated staining platform. 

Market analysis Product design R D Raw materials energy acquisition Manufacturing processing Transportation distribution Product usage Post-use disposition Customer environmental requirements Redesign for compliance Cost versus function versus environmental impacts Compliance costs resource productivity Palletization efficiency/space utilization Cost versus function versus environmental impacts Disposal cost/potential liability... 

Currently, specialty chemical players too are benefiting from better industry conditions, significant cost improvement efforts by many players, and a very cautious stance on investments and acquisitions over the last few years. However, we predict that the pre-1997 glory days will never return. Rapid commoditization of parts of the portfolio and relentless price pressure will continue to endanger business models. For some players, a rigorous focus on cost will be the path to success, others - and these businesses will still earn a substantial premium on industry average profitability - will develop true customer solutions. 

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