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Maintaining Loyal Customers and Customer Service Strategy

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    • 1. Maintaining Loyal Customers CNI’s journey Kenny Ong CNI Holdings Berhad
    • 2. How to fail without trying
    • 3. The Roadmap to Failure Fred Wiersema and Mike Treacy Performance Time Clear Sailing Today’s performance Ad-hoc Tactics Denial & Defense Doom Projections Overdue Failure The Moment of Truth X Performance Freefall Tomorrow’s actual performance Downpresure of Unclear Strategy
    • 4. Denial and Defense
      • “ It’s not really good value our competitor is offering, because it doesn’t include a lot of our features.” - ABC vs Air Asia
      • “ It’s good value but not in our preferred customer market.” - ABC vs Toyota
      • “ Sure they’re hurting us, but with their unfair advantage, what can we do?” – ABC vs MILO
      • “ The rules we are playing by have always worked before” – AMEX vs VISA
    • 5. The Roadmap to Failure Fred Wiersema and Mike Treacy Performance Time Clear Sailing Today’s performance Ad-hoc Tactics Denial & Defense Doom Projections Overdue Failure The Moment of Truth X Performance Freefall Tomorrow’s actual performance Downpresure of Unclear Strategy
    • 6. Ad Hoc Tactics
      • Selectively hold discounts to hold business that has started to go elsewhere
      • Introduce new promotions, terms, conditions, and offers to confuse and cloud the market
      • Beef up customer service by adding people to fix mess-ups and quicken delayed shipments
      • Delay capital investments and adjust accounting methods to portray quarterly financial results more favorably
      • Introduce “new and improved” products that are new in form, but not in substantive ways that are of consequence to purchasers
    • 7. The Roadmap to Failure Fred Wiersema and Mike Treacy Performance Time Clear Sailing Today’s performance Ad-hoc Tactics Denial & Defense Doom Projections Overdue Failure The Moment of Truth X Performance Freefall Tomorrow’s actual performance Downpresure of Unclear Strategy
    • 8. Contents:
      • Agenda:
      • Introduction
      • Philosophy
      • Customer Focus
      • Strategy Example
      • Next Steps
    • 9. Introduction The basis for all our Customer Loyalty strategies
    • 10. Intro: CNI
      • 17 years old
      • Main Board Public Listing: August 2005
      • Products: Consumer Goods and Services
      • Core Business: MLM
      • Others: Contract Manufacturing, Export/Trading, eCommerce
      • Malaysia, Singapore, Brunei, Indonesia, India, China, Hong Kong, Philippines
      • Staff force: ± 500
      • Distributors: ± 250,000
      Malaysia
    • 11. Intro: MLM
      • Sell through people
      • Relationship & people skills
      • Compensation Plan
      • Follow-up
      • Integrity
      • R&D
      • Training
      • Functions & Events
      • Tight regulations
    • 12. Philosophy The anchor for all decisions
    • 13. Philosophy:
      • Goods Return Policy
      • “ I don’t care if they return a Goodyear tire. If they said they paid $200, pay them $200.”
      Nordstrom does not sell tires
    • 14. Philosophy
      • “ In business after business, 60% to 80% of lost customers reported on a survey just prior to defecting that they were satisfied or very satisfied .”
      HBR March/April 1996
    • 15. Philosophy
      • “ CNI is more than business.
      • We strongly believe that every individual has the opportunity to attain a better living through CNI.”
    • 16. Philosophy Ultimate Objective of Marketing: “ Get more people, to buy more things, more frequently, at higher prices.” Sergio Zyman “ Retention and Loyalty useless if No Conversion is happening.”
    • 17. Philosophy
      • Loyalty is Useless…
      • Virtual Consumption vs. Real Consumption
    • 18. Philosophy
      • Loyalty is misleading…
      • Heavy Consumption ≠ Loyalty
      • Loyalty ≠ Heavy Consumption
      *Today’s focus is on Loyalty, not Consumption. *To increase consumption, refer Marketing
    • 19. Philosophy
      • Loyalty = Relationship (something like Dating)
      • Loyalty ≠ Points
      • Loyalty ≠ Redemption
      • Loyalty = Get more people, to buy more, more frequently, at higher prices
    • 20. Customer Focus Keeping an eye on the right thing
    • 21. Focus
      • Targeting
      • Alignment
    • 22. Focus: Segment & Target
      • Know your “Customer”
      • User
      • Distributor
      • Leaders
      • Super Leaders
      • DCO
      • SPO
      • Corporate
    • 23. Focus: Segment & Target
      • Targeting based on Value of the Customer:
      • Value of Customer = RFM = Recency x Frequency x Monetary
    • 24. Focus: Segment & Target
      • Targeting based on Value of the Customer:
      Present Value Potential Value Low High High Maximize No action Micro Support Conversion
    • 25. Focus: Segment & Target Loyalty Experience Swing Former Opposition
    • 26. Loyalty 1: Experience
      • Loyalty = Experience vs. Expectations
      Solution Strategy: Value Disciplines
    • 27. Loyalty 1: Experience
      • "Exactly what I need"
      • Customized products
      • Personalized communications
      • "They're very responsive"
      • Preferential service and flexibility
      • Recommends what I need
      • "I'm very loyal to them"
      • Helps us to be a success
      "They are the most innovative" "Constantly renewing and creative" "Always on the leading edge" "A great deal!" Excellent/attractive price Minimal acquisition cost and hassle Lowest overall cost of ownership "A no-hassles firm" Convenience and speed Reliable product and service Product Leadership Operational Excellence Customer Intimacy
    • 28. Loyalty 1: Experience * Treacy & Wiersema, The Discipline of Market Leaders , 1995 Product/Service Attributes Relationship Image
    • 29. Loyalty 1: Experience * Treacy & Wiersema, The Discipline of Market Leaders , 1995 Product/Service Attributes Price Quality Time Selection √ √ Smart Shopper Relationship Image Operational Excellence : Quality and selection in key categories with unbeatable prices
    • 30. Loyalty 1: Experience * Treacy & Wiersema, The Discipline of Market Leaders , 1995 Product/Service Attributes √ Brand Time Function √ √ Best Product Relationship Image Product Leadership: Unique products and services that push the standards
    • 31. Loyalty 1: Experience * Treacy & Wiersema, The Discipline of Market Leaders , 1995 Product/Service Attributes √ √ √ √ Service Trusted Brand Relationship Image Customer Intimacy: Personal service tailored to produce results for customer and build long-term relationships Relations
    • 32. Loyalty 2: Swing
      • Loyalty = Best alternative at the current moment until I find another alternative
      Solution Strategy: Base Retention
    • 33. Loyalty 2: Swing
      • Swing Customers are “loyal” because:
      • Individual Relationships
      • Convenience (at that point in time)
      • Tied-up
      • Product Uniqueness
      • Promotions
      • No better alternative
      • Downlines
      • No known alternative
      • Psychologically lazy
    • 34. Focus: Corporate Alignment Financial “ To satisfy our stakeholders, what Financial objectives must we accomplish?” Internal Process “ To satisfy our customers, in which internal business processes must we excel?" Customer “ Who are our target customers? What is our value proposition?” Learning & Growth “ What capabilities and tools do our employees require to help them execute our strategy?
    • 35. Focus: Corporate Alignment Financial Learning & Growth Internal Process Customers / Distributors Revenue Growth Productivity Market Value Department Operations Supplier & Alliances External Involvement Target Markets Products/ Services Channel Strategies Human Resources Technology Information & Intelligence Systems & Processes
    • 36. Focus: Corporate Alignment Financial Learning & Growth Internal Process Customers / Distributors Profit after Tax. Revenue. Cash-to-cash cycle. Operating cash flow Customer Complaints. Customer Acquisition Rate. Product Availability. Product Quality & Service. Renewal Annual Subscription. Distributor Rank Achievement. No. of Active Distributor. No. DC/Regional Sales. Distributor with commission Customer Database Availability. Accuracy of Forecast Planning. Continuous Improvement. Response Time to Customer Needs. Perfect Order Fulfillment. Inventory Turnover. Number of Effective Sponsoring Program. On Time Delivery. No. of Effective Training. Number of Effective A&P % of staff evaluated on Core Competency Framework. % of staff with Career Development Plans. No. of training hours completed per staff. % of staff with access to strategic information. Q12 Index. % staff evaluated on Culture alignment
    • 37. Strategy Example What we have done and why
    • 38. Strategy
      • Mamak stall
    • 39. Strategy
      • Value Disciplines
      • Base Retention
      • 4-wheels
    • 40. Strategy: Value Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution)
    • 41. Zig Ziglar
      • “ Most prospects that don’t buy are confused about the offer”
    • 42.
      • Product Leadership
      • New, state of the art products or services
      • Risk takers
      • Meet volatile customer needs
      • Fast concept-to- counter
      • Never satisfied - obsolete own and competitors' products
      • Learning organization
      Strategy: Value Disciplines
      • Operational Excellence
      • Competitive price
      • Error free, reliable
      • Fast (on demand)
      • Simple
      • Responsive
      • Consistent information for all
      • Transactional
      • 'Once and Done'
      • Customer Intimacy
      • Management by Fact
      • Easy to do business with
      • Have it your way (customization)
      • Market segments of one
      • Proactive, flexible
      • Relationship and consultative selling
      • Cross selling
    • 43.
      • Operational Excellence
          • Move know-how from top performing units to others
          • Benchmark against best in class
          • Ensure operations training for all employees
          • Use disciplines like TQM for continuous learning to reduce costs and improve quality
      Strategy: Value Disciplines
    • 44. Strategy: Value Disciplines
      • Customer Intimacy
          • Capture knowledge about customers
          • Understand customer needs
          • Empower front line employees
          • Ensure that everyone knows the customer
          • Make company knowledge available to customers
    • 45.
      • Product Leadership
          • Reduce time to market
          • Commercialize new products fast
          • Ensure that ideas flow
          • Reuse what other parts of the company have already learned
          • Ensure there are multiple sources of funding
      Strategy: Value Disciplines
    • 46. Strategy: Value Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution)
    • 47. Strategy: Value Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution)
    • 48. The McPlaybook*
      • Make it easy to eat
      • 50% drive-thru
      • Meals held in one hand
      • Make it easy to prepare
      • High Turnover
      • Tasks simple to learn & repeat
      • Make it quick
      • “ Fast Food”
      • Tests new products for Cooking Times
      • Make what customers want
      • Prowls market for new products
      • Monitored field tests
      *Adapted from: Businessweek , Februrary 5 th 2007
    • 49.
      • Increase switching costs
        • Complex relationships - they will be reluctant to go through the hassle of undoing those relationships in order to leave
        • Ensure no competitor will be able to come up with a big enough offer to outweigh their switching cost
        • Increase switching cost, by providing valuable, but entangling, services
        • E.g. Telcos, ERP, Microsoft, Consultants
      • Tailor your offering
        • Understand customer behaviors and motivations to personalize experience for its best customers
        • Share of Wallet
        • Information is KING
        • IBM, Amazon
      Strategy: Base Retention
    • 50.
      • Preempt Defections
        • Predict, Response, Execute
        • Keep track of customers’ changing value criteria
        • Be ahead of the customer’s decision cycle
        • Credit cards, Avis
      • Bond with Customers
        • Most customers, under most circumstances, won’t evaluate a full range of alternative products when making a repurchase decision
        • Brands create emotions
        • Need to influence customers to be on your side
        • e.g. Apple, Baby products
      Strategy: Base Retention
    • 51. Strategy: Base Retention
      • Mega packages
      • Community
      • Reward programs (Points)
      • Membership Subscription
      • Email communication
      • Newsletters
      • Personalized alerts
      • Reminder & Gift suggestion
      • Survey
      • Suggestion Box
      • Self Profiles
      • Programs x Lifestyle Matrix
      • Fun, Interactive programs (e.g. design and submit your own: recipe, jewelry, greeting card etc.)
      • Switching Techniques (e.g. Balance Transfer of credit cards)
    • 52. Strategy: 4-Wheels Culture Corporate Objective Corporate Strategy Structure Resources Leadership Person
    • 53. Strategy: Framework
      • Org Structure
      • Job Design
      • C&B
      • Policies & procedures
      • Decision making
      • Job fit
      • Management Systems
      • BSC and KPIs
      • Decentralized & Empower
      Structure
    • 54. Strategy: Framework
      • Tools
      • Physical facilities
      • Peer support
      • Information
      • T&D Programs (internal)
      • ICT Systems
      • eCommerce
      Resources
    • 55. Strategy: Framework
      • Role modeling
      • Vision/Mission/Philosophy
      • Leadership Style
      • F/L importance
      • Delegation & Empowerment
      • C&B, Promotions
      • Sense of Urgency
      • Speak regularly about customers
      Leadership
    • 56. Strategy: Framework
      • Involve everyone in Customer Focus
      • Self managed teams
      • Recognition
      • Recruitment
      • Training
      • Profit sharing
      • Manager’s role
      • Values
      Person
    • 57. Person Development: BES
    • 58. Strategy: Framework
      • Focus point
      • Alignment
      • Quality
      • Innovation & Differentiation
      • Risk taking
      • Performance Management
      • Corporate obsession
      • Decision making
      Culture
    • 59. Strategy: Framework Culture Corporate Objective Corporate Strategy Structure Resources Leadership Person
    • 60. Mistakes and Challenges
      • ISO
      • Separating Sales, Marketing, and DCS
      • New products
      • Misinterpreting customer enthusiasm
      • Lack of Frontliners
      • Backoffice
      • Customers = Frontline
      • Lack of Training
      • ‘ Talent’ Criteria
      • Internal Service
      • Hiring
      • 2 nd level CRM database
      • Balance between Service and Control
      • Feedback from the Field
    • 61. Next Steps
    • 62. Next Steps…
      • CRM
      • DC Online
      • eCommerce
      • Customer Intimacy
      • TNA reduction
      • APQP
      • Branding
      • Loyalty programs
      • Product R&D
      • External networks
      • Field support
      • Upgrade DCs
      • Smoothen supply chain
      • BES
      • Targeted marketing
      For CNI:
    • 63. Next Steps…
      • Customer philosophy
      • Review SOPs
      • Re-orientate staff
      • Training
      • Performance Mgmt System
      • C&B
      • Resources
      • Product Quality
      • Customer Service quality
      • Stop defections
      • Hiring
      • Set standards
      • Make it everyone’s responsibility
      For starting up:
    • 64. Thank You. soft copy of slides: [email_address]