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MM 5th Week Lecture

The document discusses customer loyalty and retention strategies. It defines customer loyalty and examines behavioral and attitudinal loyalty. It also explores what affects customer loyalty like satisfaction, trust, habit and history. The document then discusses reasons for lost customers and strategies to retain customers like welcome programs, reliability, responsiveness and recognition.

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innocent angel
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35 views34 pages

MM 5th Week Lecture

The document discusses customer loyalty and retention strategies. It defines customer loyalty and examines behavioral and attitudinal loyalty. It also explores what affects customer loyalty like satisfaction, trust, habit and history. The document then discusses reasons for lost customers and strategies to retain customers like welcome programs, reliability, responsiveness and recognition.

Uploaded by

innocent angel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Customer Loyalty

and
Retention Strategies

Customer Retention Strategies 吳明泉博士 2007 1


Outline
 Definition of Customer Loyalty
 What Affects Customer Loyalty
 Relationship programs
 Customer life cycle
 Reasons for Lost Customers
 Customer Retention Strategies
 Problem Identification and Management
 Conflicts and customer complaints
Customer Loyalty and Retention Strategies 吳明泉博士 2009 2
Customer loyalty
Customer’s commitment or attachment to a
brand, store, manufacturer, service
provider, or other entity.
 A behavior toward the product
 An attitude to behave

Customer Loyalty and Retention Strategies 吳明泉博士 2009 3


Behavioral brand loyalty

 Measured by proportion of purchase


Undivided loyalty AAAAAAAAAA
Occasional switcher AAABAAACAA
Switched loyalty AAAAAABBBB
Divided loyalty AAABBBAABB
Indifference ABCDADCDBD

Customer Loyalty and Retention Strategies 吳明泉博士 2009 4


Churn rate or Attrition Rate
 The rate at which new customers try a
product or service and then stop using it in a
given period of time.
 Retention rate = 1 – the attrition rate..

Customer Loyalty and Retention Strategies 吳明泉博士 2009 5


Problems with behavioral approach

 A customer may be making a repeat


purchase not because of any true loyalty or
commitment,
 But because of convenience, price,
availability, or inertia due to habit.
 Inertia suggests a low sensitivity to the
brand since purchases are made without a
real motive for the choice.

Customer Loyalty and Retention Strategies 吳明泉博士 2009 6


Attitudinal brand loyalty

Include favorable attitude that reflects a


preference or commitment expressed over
time. Emotional attachment, evaluation

Customer Loyalty and Retention Strategies 吳明泉博士 2009 7


Types of Loyalty

 No loyalty
 Inertial loyalty or spurious loyalty
 Latent loyalty
 Premium loyalty

Customer Loyalty and Retention Strategies 吳明泉博士 2009 8


Customer Loyalty and Retention Strategies 吳明泉博士 2009 9
Relationship commitment

 An enduring desire to maintain a valued


relationship

Loyal customers
 high in repeat purchase behavior and
 strong in attitude

Customer Loyalty and Retention Strategies 吳明泉博士 2009 10


Transaction vs. relational continuum
Transaction Relational

Objective Make a sale Create a customer

Characteristic Anonymity interdependence

Criteria of success Volume price, new Value


customer enhancements,
repeat exchange
Interaction tone Sale as a Sale as an
conquest, discrete agreement,
event continuing process
Customer Loyalty and Retention Strategies 吳明泉博士 2009 11
What affects customer loyalty

Customer Loyalty and Retention Strategies 吳明泉博士 2009 12


Customer satisfaction

Customer Loyalty and Retention Strategies 吳明泉博士 2009 13


Customer satisfaction

 A post-purchase or post-choice evaluation


that results from a comparison between
those pre-purchase expectation and actual
performance
 Satisfied customers may not be loyal
customers.

Customer Loyalty and Retention Strategies 吳明泉博士 2009 14


Emotional Bonding

 Brand affect, brand equity

 Company attachment

 Establish feelings of closeness, affection,


trust, and respect.

Customer Loyalty and Retention Strategies 吳明泉博士 2009 15


Trust

 Willingness of customer to rely on the


organization.
 Reduces uncertainty/risk
 Honest, fair, and responsible

Customer Loyalty and Retention Strategies 吳明泉博士 2009 16


Choice reduction and habit

 People have tendency to reduce choice.


 There can be a switch cost associated with
change to the unfamiliar, untried, or the
new. There may be cost in time, money, and
risk

Customer Loyalty and Retention Strategies 吳明泉博士 2009 17


History with the company

 Corporate Image
 Contacts and purchase history
 Service experience
 Intergeneration influence

Customer Loyalty and Retention Strategies 吳明泉博士 2009 18


Multi-faced loyalty

Customer loyalty to:


 Brand: promotion
 Product: production
 Company: public relations
 Price: discounts, coupons
 Places: ease, convenience
 Variety: new options, variations,

Customer Loyalty and Retention Strategies 吳明泉博士 2009 19


Guidelines for enhancing loyalty

Customer Loyalty and Retention Strategies 吳明泉博士 2009 20


Customer Loyalty and Retention Strategies 吳明泉博士 2009 21
Reasons for Lost Customers
 Dissatisfaction
 Relative Advantage
 Conflict
 Loss of Trust
 Cease to need
 Novelty Seeking

Customer Loyalty and Retention Strategies 吳明泉博士 2009 22


Customer Retention Strategies

 Welcome
 Reliability
 Responsiveness
 Recognition
 Personalization
 Reward Strategies

Customer Loyalty and Retention Strategies 吳明泉博士 2009 23


A welcome strategy
The organization’s appreciation for the
initiation of a relationship.
• Creating a delightful surprise, making a good
first impression
• First touch: additional customer information
• Reassure the buyers that they have made the
correct choices.

Customer Loyalty and Retention Strategies 吳明泉博士 2009 24


Reliability

The organization can repeat the exchange


time and time again with the same satisfying
results.
– Keep promise
– Ensure consistent quality
– Continuous promotion is still the key.

Customer Loyalty and Retention Strategies 吳明泉博士 2009 25


Responsiveness
 The organization shows customers it really
cares about their needs and feelings.
 Loyal employees create loyal customers.
Internal marketing.
 Customer-contacted employees should
have the authority as well as the
responsibility for date to date operational
activities and CRM decision.

Customer Loyalty and Retention Strategies 吳明泉博士 2009 26


Recognition
 Special attention or appreciation that
identifies someone as having been known
before.
 People respond to recognition.
 Recognition and appreciation help
maintain and reinforce relationships.

Customer Loyalty and Retention Strategies 吳明泉博士 2009 27


Personalization
Use CRM system to tailor promotions and
products to the specific customers.
 Offer engine: take customer data after it is
analyzed and applies it to create the offer
or message that is appropriate to the
individual customer. Ex., My site, Click
stream analysis, free ride, etc.

Customer Loyalty and Retention Strategies 吳明泉博士 2009 28


Access strategy
 Identify how customers will be able to
interact with the organization.
 General contact, product return, technical
report, service representative, change a
mailing address
 Is the access quick and easy?

Customer Loyalty and Retention Strategies 吳明泉博士 2009 29


A Communication process

Customer Loyalty and Retention Strategies 吳明泉博士 2009 30


Problem Identification and Management

tell the company than switch to a competitor


or tell someone else. Acting rather than
reacting.
 Build numerous mechanism for identifying
customer problems.
– Customer satisfaction survey
– Mysterious shoppers
– Websites, other contacts points

Customer Loyalty and Retention Strategies 吳明泉博士 2009 31


Dealing with complaints

Having the skill to interact with different types of


people. Trained in methods of interaction and in
different style of communication.
 Be customer-centric. Let the customers know that
they have been understood.
 Express regret
 Resolve conflict
– Accommodation, Compromise, Termination
 Follow-up and prevent recurrence
 Keep in touch and listen to customer
Customer Loyalty and Retention Strategies 吳明泉博士 2009 32
Resolve conflict
A disagreement in which the views of the
customer and the organization appear to
be incompatible.
 Accommodation: a settlement that
emphasizes cooperative behavior.
 Compromise: mutually acceptable middle
ground that is somewhat satisfactory to
both parties.
 Termination

Customer Loyalty and Retention Strategies 吳明泉博士 2009 33


 Assignment

Multi Faced Loyalty


Example of tv ads for each
loyalty

Customer Loyalty and Retention Strategies 吳明泉博士 2009 34

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