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Customer Retention Strategies
 

Customer Retention Strategies

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This presentation is all about the Customer Retention Strategies. This may help you in attaining a customer.

This presentation is all about the Customer Retention Strategies. This may help you in attaining a customer.

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    Customer Retention Strategies Customer Retention Strategies Presentation Transcript

    • 11Customer Retention Strategies 吳明泉博士 2007 Customer LoyaltyCustomer Loyalty andand Retention StrategiesRetention Strategies
    • 2Customer Loyalty and Retention Strategies 吳明泉博士 2009 OutlineOutline  Definition of Customer LoyaltyDefinition of Customer Loyalty  What Affects Customer LoyaltyWhat Affects Customer Loyalty  Relationship programsRelationship programs  Customer life cycleCustomer life cycle  Reasons for Lost CustomersReasons for Lost Customers  Customer Retention StrategiesCustomer Retention Strategies  Problem Identification and ManagementProblem Identification and Management  Conflicts and customer complaintsConflicts and customer complaints
    • 3Customer Loyalty and Retention Strategies 吳明泉博士 2009 Customer loyaltyCustomer loyalty Customer’s commitment or attachment to aCustomer’s commitment or attachment to a brand, store, manufacturer, servicebrand, store, manufacturer, service provider, or other entity.provider, or other entity.  AA behaviorbehavior toward the producttoward the product  AnAn attitudeattitude to behaveto behave
    • 4Customer Loyalty and Retention Strategies 吳明泉博士 2009 Behavioral brand loyaltyBehavioral brand loyalty  Measured byMeasured by proportion of purchaseproportion of purchase Undivided loyalty AAAAAAAAAAUndivided loyalty AAAAAAAAAA Occasional switcher AAABAAACAAOccasional switcher AAABAAACAA Switched loyalty AAAAAABBBBSwitched loyalty AAAAAABBBB Divided loyalty AAABBBAABBDivided loyalty AAABBBAABB Indifference ABCDADCDBDIndifference ABCDADCDBD
    • 5Customer Loyalty and Retention Strategies 吳明泉博士 2009 Churn rate or Attrition RateChurn rate or Attrition Rate  The rate at which new customers try aThe rate at which new customers try a product or service and then stop using it in aproduct or service and then stop using it in a given period of time.given period of time.  Retention rate = 1 – the attrition rate..Retention rate = 1 – the attrition rate..
    • 6Customer Loyalty and Retention Strategies 吳明泉博士 2009 Problems with behavioral approachProblems with behavioral approach  A customer may be making a repeatA customer may be making a repeat purchase not because of any true loyalty orpurchase not because of any true loyalty or commitment,commitment,  But because of convenience, price,But because of convenience, price, availability, oravailability, or inertiainertia due to habit.due to habit.  Inertia suggests a low sensitivity to theInertia suggests a low sensitivity to the brand since purchases are made without abrand since purchases are made without a real motive for the choice.real motive for the choice.
    • 7Customer Loyalty and Retention Strategies 吳明泉博士 2009 Attitudinal brand loyaltyAttitudinal brand loyalty Include favorable attitude that reflects aInclude favorable attitude that reflects a preference or commitmentpreference or commitment expressed overexpressed over time. Emotional attachment, evaluationtime. Emotional attachment, evaluation  No loyaltyNo loyalty  Inertial loyalty or spurious loyaltyInertial loyalty or spurious loyalty  Latent loyaltyLatent loyalty
    • 8Customer Loyalty and Retention Strategies 吳明泉博士 2009 Relationship commitmentRelationship commitment  An enduring desire to maintain a valuedAn enduring desire to maintain a valued relationshiprelationship  Loyal customers, high in repeat purchaseLoyal customers, high in repeat purchase behavior and strong in attitudebehavior and strong in attitude
    • 9Customer Loyalty and Retention Strategies 吳明泉博士 2009 Transaction vs. relational continuumTransaction vs. relational continuum TransactionTransaction RelationalRelational ObjectiveObjective Make a saleMake a sale Create a customerCreate a customer CharacteristicCharacteristic AnonymityAnonymity interdependenceinterdependence Criteria of successCriteria of success Volume price, newVolume price, new customercustomer ValueValue enhancements,enhancements, repeat exchangerepeat exchange Interaction toneInteraction tone Sale as aSale as a conquest, discreteconquest, discrete eventevent Sale as anSale as an agreement,agreement, continuing processcontinuing process
    • 10Customer Loyalty and Retention Strategies 吳明泉博士 2009 What affects customer loyaltyWhat affects customer loyalty
    • 11Customer Loyalty and Retention Strategies 吳明泉博士 2009 Customer satisfactionCustomer satisfaction
    • 12Customer Loyalty and Retention Strategies 吳明泉博士 2009  A post-purchase or post-choice evaluationA post-purchase or post-choice evaluation that results from athat results from a comparison betweencomparison between those pre-purchase expectation and actualthose pre-purchase expectation and actual performanceperformance  Satisfied customers may not be loyalSatisfied customers may not be loyal customers.customers.  Xerox’s finding: satisfaction rating 4 is sixXerox’s finding: satisfaction rating 4 is six times more likely to switch to others thantimes more likely to switch to others than rating 5.rating 5. Customer satisfactionCustomer satisfaction
    • 13Customer Loyalty and Retention Strategies 吳明泉博士 2009 Emotional BondingEmotional Bonding  Brand affect, brand equityBrand affect, brand equity  Company attachmentCompany attachment  Establish feelings of closeness, affection,Establish feelings of closeness, affection, trust, and respect.trust, and respect.  IT may limit emotional bonds. PersonalIT may limit emotional bonds. Personal contacts, non-verbal signals, friendships,contacts, non-verbal signals, friendships, and personal interactions are criticaland personal interactions are critical elements.elements.
    • 14Customer Loyalty and Retention Strategies 吳明泉博士 2009 TrustTrust  Willingness of customer to rely on theWillingness of customer to rely on the organization.organization.  Reduces uncertainty/riskReduces uncertainty/risk  Honest, fair, and responsibleHonest, fair, and responsible
    • 15Customer Loyalty and Retention Strategies 吳明泉博士 2009 Choice reduction and habitChoice reduction and habit  People have tendency to reduce choice.People have tendency to reduce choice.  There can be a switch cost associated withThere can be a switch cost associated with change to the unfamiliar, untried, or thechange to the unfamiliar, untried, or the new. There may be cost in time, money,new. There may be cost in time, money, and riskand risk
    • 16Customer Loyalty and Retention Strategies 吳明泉博士 2009 History with the companyHistory with the company  Corporate ImageCorporate Image  Contacts and purchase historyContacts and purchase history  Service experienceService experience  Intergeneration influenceIntergeneration influence
    • 17Customer Loyalty and Retention Strategies 吳明泉博士 2009 Multi-faced loyaltyMulti-faced loyalty Customer loyalty to:Customer loyalty to:  Brand: promotionBrand: promotion  Product: productionProduct: production  Company: public relationsCompany: public relations  Customers: meeting, chats, reunionCustomers: meeting, chats, reunion  Price: discounts, couponsPrice: discounts, coupons  Places: sounds, excitementPlaces: sounds, excitement  Variety: new options, variations,Variety: new options, variations,
    • 18Customer Loyalty and Retention Strategies 吳明泉博士 2009 Guidelines for enhancing loyaltyGuidelines for enhancing loyalty
    • 19Customer Loyalty and Retention Strategies 吳明泉博士 2009 Relationship programsRelationship programs  Financial IncentivesFinancial Incentives  Social BondingSocial Bonding  Structural-interactionStructural-interaction
    • 20Customer Loyalty and Retention Strategies 吳明泉博士 2009 Financial IncentivesFinancial Incentives  Increased customer loyalty to price,Increased customer loyalty to price, incentivesincentives – Frequent flyer/reader/buyer/visitors… Rewards.Frequent flyer/reader/buyer/visitors… Rewards. – Discounts, product upgrades, awards, prizesDiscounts, product upgrades, awards, prizes – Related products or providers expand the netRelated products or providers expand the net  Relationships concentrate exclusive onRelationships concentrate exclusive on incentives tend to be weak. Averageincentives tend to be weak. Average American Consumer: 3.5 programsAmerican Consumer: 3.5 programs
    • 21Customer Loyalty and Retention Strategies 吳明泉博士 2009 Social BondingSocial Bonding  Refers to a friendly companionship, trust,Refers to a friendly companionship, trust, and ties. Increased customer loyalty to theand ties. Increased customer loyalty to the organizationorganization – ConnectionsConnections – Personal insight, recognition, mutual affectionPersonal insight, recognition, mutual affection – Interpersonal interactions expand the linkInterpersonal interactions expand the link
    • 22Customer Loyalty and Retention Strategies 吳明泉博士 2009 Structural-interactionStructural-interaction  Use system design to solve problems,Use system design to solve problems, reinforce purchases, and recognize thereinforce purchases, and recognize the importance of each customer.importance of each customer. – Systemic mass personalization….Systemic mass personalization…. – ManagementManagement – Cultivation, simulationCultivation, simulation – Artificial intelligence continues the connectionsArtificial intelligence continues the connections  Increased customer loyalty to theIncreased customer loyalty to the experience.experience.
    • 23Customer Loyalty and Retention Strategies 吳明泉博士 2009 Customer life cycleCustomer life cycle
    • 24Customer Loyalty and Retention Strategies 吳明泉博士 2009 Reasons for Lost CustomersReasons for Lost Customers  DissatisfactionDissatisfaction  Relative AdvantageRelative Advantage  ConflictConflict  Loss of TrustLoss of Trust  Cease to needCease to need  Novelty SeekingNovelty Seeking
    • 25Customer Loyalty and Retention Strategies 吳明泉博士 2009 Customer Retention StrategiesCustomer Retention Strategies  WelcomeWelcome  ReliabilityReliability  ResponsivenessResponsiveness  RecognitionRecognition  PersonalizationPersonalization  Reward StrategiesReward Strategies
    • 26Customer Loyalty and Retention Strategies 吳明泉博士 2009 A welcome strategyA welcome strategy The organization’s appreciation for theThe organization’s appreciation for the initiation of a relationship.initiation of a relationship. • Creating a delightful surprise, making a goodCreating a delightful surprise, making a good first impressionfirst impression • First touch: additional customer informationFirst touch: additional customer information • Reassure the buyers that they have made theReassure the buyers that they have made the correct choices.correct choices. • Treat like a first date. Don’t overdo it!Treat like a first date. Don’t overdo it!
    • 27Customer Loyalty and Retention Strategies 吳明泉博士 2009 ReliabilityReliability The organization can repeat the exchangeThe organization can repeat the exchange time and time again with the same satisfyingtime and time again with the same satisfying results.results. – Keep promiseKeep promise – Ensure consistent qualityEnsure consistent quality – Continuous promotion is still the key.Continuous promotion is still the key.
    • 28Customer Loyalty and Retention Strategies 吳明泉博士 2009 ResponsivenessResponsiveness  The organization shows customers it reallyThe organization shows customers it really cares about their needs and feelings.cares about their needs and feelings.  Loyal employees create loyal customers.Loyal employees create loyal customers. Internal marketing.Internal marketing.  Customer-contacted employees shouldCustomer-contacted employees should have the authority as well as thehave the authority as well as the responsibility for date to date operationalresponsibility for date to date operational activities and CRM decision.activities and CRM decision.
    • 29Customer Loyalty and Retention Strategies 吳明泉博士 2009 RecognitionRecognition  Special attention or appreciation thatSpecial attention or appreciation that identifies someone as having been knownidentifies someone as having been known before.before.  People respond to recognition.People respond to recognition.  Recognition and appreciation helpRecognition and appreciation help maintain and reinforce relationships.maintain and reinforce relationships.
    • 30Customer Loyalty and Retention Strategies 吳明泉博士 2009 PersonalizationPersonalization Use CRM system to tailor promotions andUse CRM system to tailor promotions and products to the specific customers.products to the specific customers.  Offer engine: take customer data after it isOffer engine: take customer data after it is analyzed and applies it to create the offeranalyzed and applies it to create the offer or message that is appropriate to theor message that is appropriate to the individual customer. Ex., My site, Clickindividual customer. Ex., My site, Click stream analysis, free ride, etc.stream analysis, free ride, etc.
    • 31Customer Loyalty and Retention Strategies 吳明泉博士 2009 Access strategyAccess strategy  Identify how customers will be able toIdentify how customers will be able to interact with the organization.interact with the organization.  General contact, product return, technicalGeneral contact, product return, technical report, service representative, change areport, service representative, change a mailing addressmailing address  Is the access quick and easy?Is the access quick and easy?
    • 32Customer Loyalty and Retention Strategies 吳明泉博士 2009 A Communication processA Communication process
    • 33Customer Loyalty and Retention Strategies 吳明泉博士 2009 Organization vs. customer initiatedOrganization vs. customer initiated communicationcommunication  InIn organization-initiated communicationorganization-initiated communication,, organizations must consider the intendedorganizations must consider the intended message, channel (medium), and receivermessage, channel (medium), and receiver characteristics.characteristics.  InIn customer-initiated communicationcustomer-initiated communication,, consider the establishment of toll free calls,consider the establishment of toll free calls, web sites, priority access for providingweb sites, priority access for providing services and collecting customer data.services and collecting customer data.
    • 34Customer Loyalty and Retention Strategies 吳明泉博士 2009 Customer-initiated communicationCustomer-initiated communication
    • 35Customer Loyalty and Retention Strategies 吳明泉博士 2009 Reward strategiesReward strategies  Frequent, best customersFrequent, best customers  Partnership Management ProgramPartnership Management Program  Switching costs: financial penalty, time loss,Switching costs: financial penalty, time loss, psychological barrierpsychological barrier  Termination PenaltyTermination Penalty
    • 36Customer Loyalty and Retention Strategies 吳明泉博士 2009 Problem Identification and ManagementProblem Identification and Management  Rather tell the company than switch to aRather tell the company than switch to a competitor or tell someone else. Actingcompetitor or tell someone else. Acting rather than reacting.rather than reacting.  Build numerous mechanism for identifyingBuild numerous mechanism for identifying customer problems.customer problems. – Customer satisfaction surveyCustomer satisfaction survey – Mysterious shoppersMysterious shoppers – Websites, other contacts pointsWebsites, other contacts points
    • 37Customer Loyalty and Retention Strategies 吳明泉博士 2009 Conflicts and Customer ComplaintsConflicts and Customer Complaints  Level of dissatisfactionLevel of dissatisfaction  Attrition of blameAttrition of blame  Cost/benefits of actionsCost/benefits of actions  Personal characteristics:Personal characteristics: – highly educated,highly educated, – self-confident,self-confident, – aggressive,aggressive, – Older women.Older women.
    • 38Customer Loyalty and Retention Strategies 吳明泉博士 2009 Dealing with complaintsDealing with complaints Having the skill to interact with different types ofHaving the skill to interact with different types of people. Trained in methods of interaction and inpeople. Trained in methods of interaction and in different style of communication.different style of communication.  Be customer-centric. Let the customers know thatBe customer-centric. Let the customers know that they have been understood.they have been understood.  Express regretExpress regret  Resolve conflictResolve conflict – Accommodation, Compromise, TerminationAccommodation, Compromise, Termination  Follow-up and prevent recurrenceFollow-up and prevent recurrence  Keep in touch and listen to customerKeep in touch and listen to customer
    • 39Customer Loyalty and Retention Strategies 吳明泉博士 2009 Resolve conflictResolve conflict A disagreement in which the views of theA disagreement in which the views of the customer and the organization appear tocustomer and the organization appear to be incompatible.be incompatible.  Accommodation: a settlement thatAccommodation: a settlement that emphasizes cooperative behavior.emphasizes cooperative behavior.  Compromise: mutually acceptable middleCompromise: mutually acceptable middle ground that is somewhat satisfactory toground that is somewhat satisfactory to both parties.both parties.  TerminationTermination