Customer Retention Strategies. I.The complete CRM for retaining customers II.Customer retention...

Customer Customer Retention Retention StrategiesStrategies

Customer Retention Customer Retention StrategiesStrategies

I.I. The complete CRM for retaining The complete CRM for retaining customerscustomers

II.II. Customer retention strategyCustomer retention strategy

III.III. Customer complaint managementCustomer complaint management

I. The complete CRM for I. The complete CRM for retaining customersretaining customers

1-1 Customer life cycle1-1 Customer life cycle

1-2 The evolution of relationship marketing 1-2 The evolution of relationship marketing programsprograms

1-1 Customer life cycle1-1 Customer life cycle

customer life-cycle—thecustomer life-cycle—the stages a stages a customer goes through from the time customer goes through from the time before deciding to do business with an before deciding to do business with an organization until he or she decides to organization until he or she decides to stop being a customer stop being a customer Exhibit 6.2: Picturing the Customer Life Exhibit 6.2: Picturing the Customer Life

CycleCycle

1-1 Customer life cycle1-1 Customer life cycle

1-1-1 Acquisition stage1-1-1 Acquisition stage

1-1-2 Retention stage1-1-2 Retention stage

1-1-3 Winback stage1-1-3 Winback stage

1-1-1 Acquisition stage1-1-1 Acquisition stage

acquisition stage—the customer acquisition stage—the customer completes the initial transactional completes the initial transactional exchangeexchange

1-1-2 Retention stage1-1-2 Retention stage

retention stage—implying that the retention stage—implying that the customer is a loyal advocate or at least customer is a loyal advocate or at least intends to repeat another exchange with intends to repeat another exchange with the same organizationthe same organization

1-1-3 Winback stage1-1-3 Winback stage

winback stage—the organization will take winback stage—the organization will take special steps to have a customer enter inspecial steps to have a customer enter into another exchange with the organizatioto another exchange with the organization, if the expected lifetime value is strong n, if the expected lifetime value is strong enoughenough

1-2 The evolution of 1-2 The evolution of relationship marketing relationship marketing programsprograms

1-2-1 Financial relationships1-2-1 Financial relationships

1-2-2 Social bonding relationships1-2-2 Social bonding relationships

1-2-3 Structural-interactive relationships1-2-3 Structural-interactive relationships

1-2-2 Financial 1-2-2 Financial relationshipsrelationships

financial incentives--discounts, product ufinancial incentives--discounts, product upgrades, or prizes that serve as rewards fpgrades, or prizes that serve as rewards for customers who exhibit loyalty or who fror customers who exhibit loyalty or who frequently purchase from the organizationequently purchase from the organization

1-2-2 Social bonding 1-2-2 Social bonding relationshipsrelationships

social bonds—a friendly companionship social bonds—a friendly companionship or an affective tie such as that experiencor an affective tie such as that experienced by Saturn owners who gather to meet ed by Saturn owners who gather to meet other ownersother owners

1-2-3 Structural-1-2-3 Structural-interactive relationshipsinteractive relationships

Structural-interactive relationships—use Structural-interactive relationships—use system design to solve problems, reinforcsystem design to solve problems, reinforce purchases, and recognize the importane purchases, and recognize the importance of each customerce of each customer

II. Customer retention II. Customer retention strategystrategy

customer retention strategy—acustomer retention strategy—a plan identifying plan identifying what basic retention objectives will be pursued what basic retention objectives will be pursued and how they will be achieved in the time and how they will be achieved in the time available available

attrition rate or churn—theattrition rate or churn—the percentage of percentage of customers lost in a given period, typically a yearcustomers lost in a given period, typically a year

retention rate—theretention rate—the percentage of customers percentage of customers expected to keep doing business with the expected to keep doing business with the organization, calculated as 1- the attrition rateorganization, calculated as 1- the attrition rate

II. Customer retention II. Customer retention strategystrategy

There are a number of reasons why There are a number of reasons why customers terminate relationships.customers terminate relationships. Exhibit 6.3 Reasons for lost customersExhibit 6.3 Reasons for lost customers

II. Customer retention II. Customer retention strategystrategy

2-1 The welcome2-1 The welcome

2-2 Reliability2-2 Reliability

2-3 Responsiveness2-3 Responsiveness

2-4 Recognition2-4 Recognition

2-5 Personalization2-5 Personalization

2-1 The welcome2-1 The welcome

welcome strategy—acknowledges the welcome strategy—acknowledges the organization’s appreciation for the organization’s appreciation for the initiation of a relationship or for the initiation of a relationship or for the exchange, in essence, a thank you exchange, in essence, a thank you

cognitive dissonance—acognitive dissonance—a psychologically psychologically uncomfortable post-purchase feeling or uncomfortable post-purchase feeling or "buyer's remorse," that can follow a "buyer's remorse," that can follow a commitment to purchasecommitment to purchase

2-2 Reliability2-2 Reliability

reliability—the organization can repeat reliability—the organization can repeat the exchange time and time again with the exchange time and time again with the same satisfying resultsthe same satisfying results

2-3 Responsiveness2-3 Responsiveness

responsiveness—theresponsiveness—the organization shows organization shows customers it really cares about their customers it really cares about their needs and feelingsneeds and feelings

internal marketing—publicinternal marketing—public relations relations efforts aimed at employees who have efforts aimed at employees who have contact with the ultimate consumer or contact with the ultimate consumer or who have a direct effect on the who have a direct effect on the consumer’s satisfaction with the productconsumer’s satisfaction with the product

2-4 Recognition2-4 Recognition

recognition—special attention or recognition—special attention or appreciation that identifies someone as appreciation that identifies someone as having been known beforehaving been known before

2-5 Personalization2-5 Personalization

personalization—thepersonalization—the organization can organization can use its CRM system to tailor promotions use its CRM system to tailor promotions and products to the specific customer, and products to the specific customer, often using offer engines to use customer often using offer engines to use customer data to create an offer or message that is data to create an offer or message that is appropriate to the individualappropriate to the individual

2-5 Personalization2-5 Personalization

Access Strategy and Customer-Initiated Access Strategy and Customer-Initiated CommunicationCommunication access strategy—definesaccess strategy—defines how customers will be able to how customers will be able to

interact with the organization, the ease of contact, returning interact with the organization, the ease of contact, returning products, talking with support services products, talking with support services

communication—thecommunication—the process of exchanging information with process of exchanging information with and conveying meaning to othersand conveying meaning to others Exhibit 6.4: Traditional Communication ProcessExhibit 6.4: Traditional Communication Process

customer-initiated communication process—the traditional customer-initiated communication process—the traditional receiver, that is the customer to whom information is to be receiver, that is the customer to whom information is to be communicated, begins the process by searching for communicated, begins the process by searching for informationinformation Exhibit 6.5: Customer Initiated CommunicationExhibit 6.5: Customer Initiated Communication

priority access—customers are provided withpriority access—customers are provided with a special number a special number or another channel to gain quick access to the organizationor another channel to gain quick access to the organization

2-5 Personalization2-5 Personalization

Reward StrategyReward Strategy rewards program—provides the best customers with rewards program—provides the best customers with

preferential treatment or special incentives such as preferential treatment or special incentives such as priority access, thank you gifts, or other incentivespriority access, thank you gifts, or other incentives

partnership management programs—customers can partnership management programs—customers can earn additional points by making purchases from earn additional points by making purchases from other organizations, such as linkages between other organizations, such as linkages between airlines, hotels, and rental car companiesairlines, hotels, and rental car companies

Switching CostsSwitching Costs switching costs—financial penalties, time loss, or switching costs—financial penalties, time loss, or

psychological barriers to exit a programpsychological barriers to exit a program

III. Customer complaint III. Customer complaint managementmanagement

3-1 Problem identification3-1 Problem identification

3-2 Factors influencing a customer’s 3-2 Factors influencing a customer’s decision to complaindecision to complain

3-3 What to do when customers complain3-3 What to do when customers complain

3-1 Problem 3-1 Problem identificationidentification

problem management—proactive problem management—proactive approach to allowing customers to voice approach to allowing customers to voice concerns to the organization through concerns to the organization through surveys, mystery shoppers, or other surveys, mystery shoppers, or other meansmeans

3-2 Factors influencing a 3-2 Factors influencing a customer’s decision to customer’s decision to complaincomplain

3-2-1 Levels of dissatisfaction3-2-1 Levels of dissatisfaction

3-2-2 Attribution of blame3-2-2 Attribution of blame

3-2-3 Cost/benefits of actions3-2-3 Cost/benefits of actions

3-2-4 Personal characteristics3-2-4 Personal characteristics

3-2-1 Levels of 3-2-1 Levels of dissatisfactiondissatisfaction

levels of dissatisfaction--range from a levels of dissatisfaction--range from a mild displeasure to ranging angermild displeasure to ranging anger

3-2-2 Attribution of 3-2-2 Attribution of blameblame

attribution theory—people look for attribution theory—people look for explanations for events and occurrences explanations for events and occurrences that they experience—why did this that they experience—why did this occur?occur?

3-2-3 Cost/benefit of 3-2-3 Cost/benefit of actionsactions

cost/benefit perception—when the cost/benefit perception—when the expected benefits of complaining are expected benefits of complaining are high and the expected costs are low, high and the expected costs are low, organizations are more likely to hear from organizations are more likely to hear from dissatisfied customersdissatisfied customers

3-2-4 Personal 3-2-4 Personal characteristics characteristics

Personal characteristics are the demograPersonal characteristics are the demographic and personality characteristics of the phic and personality characteristics of the cusotmer base cusotmer base

3-3 What to do when 3-3 What to do when customers complaincustomers complain

3-3-1 Be customer-centric3-3-1 Be customer-centric

3-3-2 Keep in touch and listen to 3-3-2 Keep in touch and listen to customerscustomers

3-3-1 Be customer-3-3-1 Be customer-centric(1/2)centric(1/2)

customer-centric approach—understand the situation from the customer-centric approach—understand the situation from the customer’s point of viewcustomer’s point of view

Express RegretExpress Regret apology—I am truly sorry this problem occurredapology—I am truly sorry this problem occurred

Resolve Conflict Resolve Conflict conflict—aconflict—a disagreement in which the views of the customer and the disagreement in which the views of the customer and the

organization (e.g., customer service representative) appear to be organization (e.g., customer service representative) appear to be incompatibleincompatible

accommodation—aaccommodation—a settlement of a conflict that emphasizes settlement of a conflict that emphasizes cooperative behavior.cooperative behavior.

compromise—ancompromise—an attempt to find a mutually acceptable middle ground attempt to find a mutually acceptable middle ground that is somewhat satisfactory to both partiesthat is somewhat satisfactory to both parties

termination—thetermination—the organization or the customer ends the relationship organization or the customer ends the relationship and sees no hope of resolving the conflictand sees no hope of resolving the conflict

3-3-1 Be customer-3-3-1 Be customer-centric(2/2)centric(2/2)

Follow-Up and Prevent RecurrenceFollow-Up and Prevent Recurrence closed-look marketing—feedback should be closed-look marketing—feedback should be

part of the training of employees and part of the training of employees and strategy input for managersstrategy input for managers

3-3-2 Keep in touch and 3-3-2 Keep in touch and listen to customerslisten to customers

The quote, “There is nothing permanent The quote, “There is nothing permanent except change.” by Pre-Socratic Greek pexcept change.” by Pre-Socratic Greek philosopher Heraclitus suggests that organhilosopher Heraclitus suggests that organizations must continue to try to listen to thizations must continue to try to listen to the changing voices of the customer base.e changing voices of the customer base.