Building and Maintaining Customer Relationships

Building and Maintaining Customer Relationships1Topics CoveredRelationship MarketingRetention StrategiesLoyalty programs Benefits of Relationship MarketingTargeting profitable customers

2At Your Service Spotlight: Wine for DudesWhere customer service is King!Full service website Quarterly newslettersocial networkingWord of mouth marketing Dudes of Fortune Quiz Challenge

Personal relationships with customers Accommodates individual needsCustomized group tours

Encourages repeat customers Company merchandise as giftsDudes Dollars trip vouchers Customer service recovery: wine heals all wounds

3Relationship marketing A form of marketing that attracts customers, retains them, and enhances their satisfaction.

Less expensive to attract repeat customers Dramatic increases in profits Spend twice as much gross income Enhancing customer satisfaction includes:Nurturing individual relationships Making customers feel unique Making customers feel singled out for attentionLoyalty programs

4Customer Relationship Management Model

Figure 1 (Source: Based on Winer, 2001)5Levels of retention strategies

Figure 2 (Source: Adapted from Zeithaml and Bitner, 2000)6Industry growth in loyalty programsSocial media Experiential benefitsCustomized reward programs Matched benefits across brandsCoalition modelCorporate-wideAcross brands

Hybrid approaches

72008-2010 loyalty program memberships growth in US

Table 1 (Source: Based on Hlavinka and Sullivan, 2011)8Hospitality and tourism loyalty programsFrequent flyer rewards Repeat customers Highest fare holdersElite status customers Co-branded credit cardsIssuers pay carriers for miles awarded Significant income source

Hotel loyalty programs:Complimentary meals, internet accessIncluded in franchise fees Joint programs for smaller brands, boutique hotels Frequent diner programs:Rewards CardsNon-financial incentives e.g. Jump the Line perk Hybrid approaches

9Service loyalty classification scheme

Figure 3 (Source: Adapted from Dick and Basu, 1994)10Snapshot: Legend Golf & Safari ResortGetting to the heart of customer relationship management by focusing on customer preferences.Corporate relationships linked to management strategiesDedicated guest relations managers and frontline employee feedbackCustomer Relationship Management (CRM) strategy Operation Boat Float (OBF). Most Valued Client Customer feedback Attention to unique requirements Rated response

11Benefits of Relationship MarketingCustomers loyalty incentives:High perceived value Get should exceed GiveRewards for loyaltyCompany benefits:Higher profits through retaining customersMore purchases overallMore frequent purchases Lowers operating costsNo acquisition costsIncreases company referrals

12Benefits of relationship marketing

Table 213Targeting profitable customersBuilding and improving upon traditional segmentationStudying loyalty- versus defection-prone customersIdentify profitability bandsIdentify customers most likely to remain loyalDevelop overall strategy around these customersTarget with retention strategies Other customers too costly to retainLittle potential to become profitable

14The 80/20 customer pyramid

Figure 4 (Source: Adapted from Zeithhaml and Bitnen, 2000)15Managing loyalty and profitability

Figure 5 (Source: Adapted from Kumar and Rajan, 2009, p. 5)16A taxonomy of casino customer segments

Figure 6 (Source: Watson and Kale, 2003)17Case Study: Service Excellence at Sheraton Suites.What people really remember is the guest experience.Service interaction key to customer loyalty Carefully selected and trained staffBrand-specific programs Building World Class BrandsStaff empowermentStrong service cultureAwards for service

Relationship marketingTailored to each guest Personable, non-intrusive attentionIts Our Pleasure programStarwood Preferred Guest program Loyalty reward point systemSocial media monitoring18