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All TECHNICAL terms EXPLAINED

  • Account management: Account management is the process of nurturing a company’s customer relationships through dedicated organizations, processes, services, and tools. The long-term goal of account management is the maximization of a customer’s lifetime value.
  • Account plan: The account plan, sometimes also called customer development plan, is a systematic tool for the strategic analysis of a customer and their decision-making process. This analysis enables selling organizations to define goals, strategies, and actions to retain and grow the account.
  • Account sponsor: The account sponsor is typically a high-level executive who supports the account manager in the strategic management of a customer. As such, the account sponsor provides the necessary budget and resources, mediates potential conflicts, and represents the significance of that customer at board level.
  • Account team: Account management requires the successful cooperation of an interdisciplinary team of experts from various functions such as sales, business development, marketing, product management, and customer service. The (key) account manager is the central interface that orchestrates all activities within the team.
  • Buying center: A buying center is comprised of all members of an organization who are involved in the buying process for a particular product or service. A strategic analysis of the different functions, roles, goals, and relations as well as decision-making processes amongst individual stakeholders enables selling organizations to improve stakeholder engagement and negotiation. 
  • Customer churn: Customer churn, also known as the attrition rate, is the percentage of customers who stop doing business or stop using a company’s products or services during a given period of time. Specialized customer churn management systems explore the reasons for attrition and can predict impending customer churn based on customer behavior.
  • Customer life-time value (CLV): The CLV enables a prediction of the net profit generated from the entire past and future relationship with a customer. This KPI is commonly used in account management, as all investments into a client relationship must ultimately pay off in the form of increased long-term value from this customer.
  • Customer loyalty: Customer loyalty is the result of a positive customer experience and manifests itself in the predisposition to engage with a company, repeatedly purchase and use their products, as well as refer their brand.
  • Customer retention: Customer retention refers to the activities companies use to decrease customer churn. While customer retention describes the abilities or actions of companies to prevent customers from switching to the competition, customer loyalty describes the behavioral predisposition of a customer to do business with a company.
  • Customer satisfaction: Customer satisfaction is a concept aimed at measuring the feelings, emotions, and attitudes customers have towards a company’s products, services, and capabilities. Common ways to measure customer satisfaction include the Net Promoter Score (NPS) and the Customer Satisfaction Score (CSAT).
  • Cross-selling: Cross-selling is the process of marketing and selling additional products or services to a customer that complement the products they are buying in order to increase revenues. In practice, cross-selling is often realized through bundle pricing. 
  • Engagement plan: An engagement plan translates the strategic insights from an account plan into operative customer measures and actions. Engagement plans typically include stakeholder-specific actions and communication measures aimed at building trust, nurturing relationships and improving customer satisfaction. 
  • Gatekeeper: A gatekeeper controls the flow of information into and within a buying center by actively filtering and selecting the forwarded information. Even though a gatekeeper’s involvement in the buying process is indirect, they have a significant impact on the buying decision. Common gatekeepers are secretaries or assistants.
  • Hit rate: This KPI measures the ratio of submitted commercial offers to received customer orders. As such, the hit rate provides an indicator of the strength of a company’s customer-specific value proposition and resulting sales efficiency. 
  • Key account manager: Key accounts are typically the biggest and most valuable customers of a company. Compared to traditional account managers, key account managers are in charge of a smaller number of strategic accounts that are organizationally more complex to manage but also yield a greater value potential for the company.
  • Net promoter score (NPS): The NPS estimates a customer’s satisfaction based on how likely they are to recommend a company or a product on a scale from 0 to 10 at various stages of the customer journey. It is calculated by subtracting the percentage of detractors (scores 0-6) from the percentage of promoters (scores 9-10).
  • Share of wallet: This KPI measures the share of a selling organization in the total purchasing volume of a customer. This metric is often used in account management as it indicates the competitive strength of a company for a given customer and product compared to other different suppliers.
  • SWOT analysis: ASWOT analysis is a strategic tool to assess the Strengths, Weaknesses, Opportunities, and Threats of a company or a single product or service. As this analysis can also be carried out for single customers, it plays a central part in strategic account planning. 
  • Value proposition: The value proposition explains the major benefits a company promises its customers with a particular product or service. As such, it explains how the use and features of their products or services address their customers’ problems, wants, and needs.  
  • Artificial intelligence: AI is the ability of a computer to perform tasks commonly associated with intelligent beings. Through the use of intelligent algorithms, which can discover patterns or learn from past experience, businesses processes can be automated and optimized. 
  • AI-based segmentation: Leveraging intelligent algorithms for the purpose of customer segmentation removes inherent human biases and can help find hidden patterns in customer data that humans may be unable to spot. AI-based segmentations are more dynamic and scalable than traditional segmentations.  
  • Cookies: Cookies are text files containing small pieces of data that are stored on a user’s computer by his web browser. There are different types of cookies serving different purposes, from the proper functioning of a website, to the identification of users, and the personalization of browsing experiences. 
  • Cluster analysis: A cluster analysis is a statistical technique used to group objects with similar characteristics based on the observed values of several variables. Common business applications for cluster analyses include the segmentation of markets, customer portfolios, and sales transactions.
  • Customer care framework: The term customer care framework describes the set of guidelines that a company adopts to serve a particular customer segment or a particular customer. These guidelines encompass for example the resources, service levels, or commercial terms that are to be adopted for a given customer. 
  • Customer intelligence: Customer intelligence describes the process of collecting, contextualizing, and analyzing data regarding customer characteristics, needs, and behaviors. Customer intelligence enables organizations to extract actionable insights from customer data in order to enhance customer understanding and long-term value creation.
  • Customer relationship management (CRM): CRM is a strategic approach for the planning, control, and execution of all customer processes, relationships, and interactions within an organization. The implementation of a dedicated CRM software is an important instrument to manage the entire end-to-end customer life cycle.
  • Customer segmentation model: A segmentation model describes the rules through which customers are scored across a set of variables. Translating customer data into a customer scoring, the segmentation model builds clusters of customers with homogeneous profiles, that can later be addressed with cluster-specific marketing and sales measures.
  • Customer segmentation variables: The characteristics of customers that are used to cluster them into homogeneous groups are called segmentation variables. Depending on the goal and type of the segmentation, variables can describe either geographic, firmographic, behavioral, or need-based characteristics.
  • Data pool: A data pool is a central repository of data where different parties within or across organizations can obtain, maintain, and exchange information. Data pooling describes the process of merging data sets from different sources into a single data pool. 
  • Descriptive analytics: Descriptive analyses are used to describe and summarize historical and present data sets. Providing insights into what has happened in the past, descriptive analytics are often deployed as a precursor to diagnostic or predictive analytics, which attempt to explain why it happened or predict what will happen in the future.
  • Diagnostic analytics: With the help of diagnostic analyses, it is possible to clarify causes and effects as well as identify correlations and patterns between variables. Companies opt for this method of data analysis to gain deeper insights into a particular problem, for instance when examining market demand or explaining customer behavior.
  • ERP systems: An enterprise resource planning system, or ERP system for short, is used to provide cross-functional support for all the business processes running in a company. It integrates a variety of business applications and operational data that are processed and stored in a central database.
  • Gatekeeper: Controlling the flow of information into and within the buying center by actively filtering and selecting information that is forwarded, the gatekeeper has a crucial role in the buying center. Even though the gatekeeper’s involvement in the buying process is indirect, their influence on the purchase decision is significant. Common gatekeepers are secretaries or assistants.
  • Minimum viable product: In agile development, a minimum viable product (MVP) is an instrument for minimizing risk during the development of products, services, or business models. It is product created with limited efforts, but with enough features to validate and improve a product idea through early user feedback.
  • Predictive analytics: Predictive analyses use statistical modelling and machine learning techniques to predict future trends and events based on historical data. By predicting potential scenarios of the future, this type of analysis enables strategic decisions, for instance through predicting customer demand at different price points.   
  • Prescriptive analytics: Prescriptive analyses deal with the question of how different actions affect a result and what is the optimal course of action in a given situations. Even though prescriptive algorithms open up the possibility of automated decision making through data-informed recommendations, they cannot fully replace human discernment as of today. 
  • Social listening: Social listening refers to the targeted observation, extraction, and analysis of company, brand, and product references, as well as relevant terms on social media platforms, rating portals, blogs or forums. By analyzing social media sentiments, companies can generate insights used to guide strategies and actions.
  • Bundle pricing: In a bundle pricing strategy, companies offer (or “bundle”) two or more complementary products or services together and sell them at one price. This price is typically lower than the price of the individual components. 
  • Costs of goods sold: COGS are the costs that are directly attributable to goods produced by a company that have now been sold. In addition to production costs, COGs include the costs to serve a customer.
  • Conjoint analysis: A conjoint analysis is a multivariate analysis used to determine customer benefit and willingness to pay. During a special type of survey, companies ask customers to rank separate product features or components in order to determine their preferences and to enable utility-based prices.
  • Contribution margin: The contribution margin is the difference between the price of a product and the variable costs connected to its production and sales process. The contribution margin can help determine the selling price range of a product and the profit levels that can be expected from the sales. 
  • Cost-plus pricing: Under a cost-plus pricing strategy, companies charge a mark-up on the manufacturing costs of their products and services. Depending on how much profit they want to achieve, companies add a fixed margin on top of their variable unit costs. 
  • Competitive pricing: A competitive pricing strategy focuses on prevailing market prices. This means that instead of using the costs of products or customer demand, the prices of competitors are used as benchmark. 
  • Discounts: A discount is a reduction in price from a standardized offer or a list price. While on-invoice discounts such as volume discounts are captured in the invoice price, off-invoice discounts such as discounts for timely payments are not included in the invoice. 
  • Dynamic pricing: Dynamic pricing uses intelligent algorithms and price bots that automatically collect data and adjust prices to reflect the current market situation and customer willingness to pay at the moment of purchase. 
  • Freemium pricing: In freemium pricing, a combination of the words “free” and “premium,” companies offer a free basic version of their product with the hope that users will later pay for access to additional features and benefits. 
  • List price: The list price is typically the reference price shown in official price catalogues or lists. The official list price is different from the price paid by a customer as it is transformed through different on and off-invoice discounts along the price waterfall. 
  • Penetration pricing: Penetration pricing involves offering products at extremely low prices when they are launched in the market in order to create strong purchase and volume incentives. As sales increase, companies often improve their contribution margin per unit to such an extent that the high initial investment eventually pays off.
  • Price controlling:Price controlling describes the management of the end-to-end price process. Price control systems collect and analyze pricing data to monitor the implementation of prices. Through the use of special KPIs, deviations in performance can be tracked and corrective measures initiated.  
  • Price differentiation: Price differentiation aims at maximizing willingness to pay through selling identical products to different market or customer segments at different prices. The most important types of price discrimination are spatial, temporal, personnel, and functional differentiation.
  • Price enforcement: Not all set prices are realized. Price realization or price enforcement is the improvement of price discipline aimed towards a reduction of uncontrolled off-invoice discounts and a uniform implementation of price models and rules.
  • Price setting: Price setting generally describes the process of defining a list price and standard discounts for products and services. The price setting process occurs on three distinct levels: Industry-level, product-level, and transaction level.
  • Pricing strategy: Pricing strategies refer to the processes and methodologies businesses use to set prices for their products and services. Common pricing strategies include value-based pricing, skimming pricing, and bundle pricing. 
  • Price waterfall: A price waterfall is a tool to visualize hidden costs and expenses that impact the realization of prices. The visualization shows how list prices are transformed through various types of margin reductions into net prices that are charged to customers.
  • Skimming pricing: In a skimming strategy, products or services are introduced to market at the highest possible prices and then lowered as the product lifecycle progresses. This strategy allows companies to pass on high start-up costs and cost advantages in the later stages of the lifecycle to their customers. 
  • Value-based pricing: Under a value-based pricing strategy, the prices for products or services are based on the perceived customer benefit rather than on costs incurred or a profit mark-up. When implemented successfully, a value-based pricing strategy can help companies to better exploit the willingness to pay of individual customer segments.
  • Willingness to pay: Willingness to pay is the maximum price a customer is willing to pay for a product or a service. This price reflects the perceived customer benefit and can vary significantly from customer to customer. 
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