Montana Mountain Biking CaseEssay Preview: Montana Mountain Biking Case2 rating(s)Report this essayThe Montana Mountain Biking CaseMontana Mountain Biking Company has been in business for 16 years providing guided mountain biking trips at four locations in Montana. The success of the company is linked to retaining its customers. Eighty percent of the customers who sign up for the one week guided mountain biking expedition are repeat customers (University Of Phoenix, 2007). An important part of any marketing plan is to understand the customer relationship because ultimately, all profits come from the customers. The challenges facing the Montana Mountain Biking company is not only retaining customers but to attract new customers. The advances in e-marketing have given Montana Mountain Biking some alternatives to traditional marketing plans.
The Five Stages of Customer LoyaltyCustomer loyalty comes from the personal relationship that is developed between the customer and the business. One method used to understand the customer relationship is called customer relationship intensity and Life-cycle segmentation (UOP, 2007). This process includes classifying all the customer relationships into one of five groups. The first of the five groups includes customers who are aware of the business or service. This is considered the weakest of the groups because in the beginning of the relationship and the customer knows little or nothing about the company. The second group of customers is those who have explored or expressed interest in the products or services but have not made a purchase. These customers may see some value in the product or service but is still exploring the various options available to them. The third group is familiar customers or customers who have done business with the company. At this stage, service and customer satisfaction are important to building customer loyalty. The fourth stage is the commitment stage. In this stage, the customers are repeat buyers. Highly committed customers will be the best sales tool for the customer. The customer is happy with what they have experienced and is willing to recommend the business to their family and friends. This person is in essence, a part of the marketing and sales team. The fifth and final stage is the one that all businesses try to avoid, the separation stage (UOP, 2007). This happens when the customer has filled their needs or when the company fails to provide continuous value to the customer. The customer moves on to a new product or service.
The five Stages of MMB CustomersThe success of the Montana Mountain Biking (MMB) Company is based on repeat business from current customers (UOP, 2007). Increasing awareness and moving more customers into the committed stage can only be achieved by understanding where the customers are today. Awareness is the first of the five stages. One could estimate the size of the customers in the awareness stage is relatively small in comparison to the market size. It could be estimated that five percent of potential customers are aware of the business. This is based on the fact that MMB logo is recognized in the mountain biking industry but the company is not actively marking the company outside of operating a web site. The number of customer in the familiar stage could be estimated to be between 5 and 10 %. This is base on the number of e-mails received by the company from customers requesting additional information about the services provided by MMB. As mentioned earlier, 80% of all the customers are repeat customers (UOP, 2007). These customers would fall in the familiar or committed stage. The final stage is the separation stage and MMB will have to allow for a 5% or so of customers who will end their relationship with MMB for one reason or another.
E-Mail Marketing Strategy for MMBCompanies are in a constant battle to gain new customers. E-mail marketing is a relative new e-business tool that makes it easy to keep in touch with existing customer and can be used to find new customers. E-mail marketing involves sending e-mails to potential customers. This method can be broken down into two categories; random and permission marketing. E-mails that are unanticipated by the receiver or e-mails that are just randomly sent by the company to an e-mail address. The conversion rate is very low and most of the e-mails are deleted or blocked before they are read. Permission marketing consists of sending e-mails to people who have expressed interest in receiving information about the product or service (UOP, 2007). Permission marketing usually involves purchasing a mail list from a company. This method is less costly then traditional
– or regular mailing. The recipient is not expected to use a mailing list to provide information about the subject of interest. Permission marketing has the advantage of being used by large companies and because it is easy to identify and get customers. Since all the information about the product or service and the sender name is already passed on the buyer of the product or service, e-mail marketing will work even though the buyer won’t know about it.
The average cost of mail marketing in the United States has not risen significantly for 25 years. In fact, mail marketing still generates less than US$500,000 per user for a year. The average cost per customer is about US$4 per hour for a 10-minute email. A typical customer spends about 2.5% of the number of dollars an average user spends. In the 1980s and 1990s, the average e-mail sales rose by 3.9% on average.
A business need not pay money if a customer’s email will be read because there is no way to remove from the mail list a particular e-mail or address. If the sender doesn’t want to send an e-mail, they can just re-write the address.
The average costs per user for an e-mail Marketing Strategy are just below $50 per person per year; these can vary widely from small small companies to large multinationals, from large corporations to government agencies and even individuals.
The average cost of mail Marketing Strategy in the 1990s grew to about $500 per person per year per customer. After that, the cost per person of sending a new email was $13 per new e-mail. The cost per person was growing linearly and in the 1990s it was much smaller than it is today.
The costs of new mail Marketing Strategy are not always on the same par with costs for regular mailing. For example, a typical email sent to an Amazon customer is not a new mail because it is already received and reviewed in the marketplace. A “subscribe” subscription is no longer a marketing strategy and its value is reduced. However, the typical customer spends money on emails designed to find the best product or service.
The average cost per new e-mail is $1 per hour, because the average person is getting 10-30 e-mails per hour. This means that e-mail marketing consumes more than half of the total cost of marketing the business.
A high average price per person to receive a new email is a serious problem that cannot be solved in many traditional mail marketing efforts because of the huge cost and time involved and the high volume of emails.