Chapter 7 Developing Customer Loyalty Chapter 7 Learning Objectives Understand the concept of relationship marketing. Recognize the distinction between satisfaction and loyalty. Describe the necessary components of a value added service delivery system. Appreciate the importance and role of a recovery system. 2 3 Learning Objective 1 Relationship marketing An organization’s attempt to develop a long-term, cost-effective link with a customer for the benefit of both the customer and the organization Shift from individual transactions to the establishment of longer term relationships Regular, ongoing contact with patients Learning Objective 1 Typology of customer groups Strangers Acquaintances Friends Partners TABLE 7-1 The Relationship Marketing Focus 5 Adapted from Payne, Relationship Marketing, 1995. 6 Learning Objective 1 Relationship marketing Focus on what the customer is buying, not what the organization is providing. Value Empowering employees to meet customer needs Quality focus—beyond the clinical side of service delivery Learning Objective 1 Creating customer bonds Four levels of bonds tie a customer to an organization. 1. Financial 2. Social 3. Customization 4. Structural CRM (customer relationship management)—characterized by user generated content 8 Learning Objective 2 Satisfaction or loyalty? Organizations benchmark, depending on their measurement programs. Must aim for more than satisfaction. Link to loyalty is strongest when satisfaction is high. 8 Open up the floor for discussion based on personal experiences. 9 Learning Objective 2 The customer loyalty pyramid Progression of customer psychological movement toward loyalty Awareness Interest Evaluation Trial Satisfaction Repeat purchase Loyalty 9 See Fig. 7-1, p. 199. 10 Learning Objective 2 The value of loyalty The loyal customer makes frequent and repeat purchases. Is immune from the pull of competition Reduction in acquisition costs 5:1 ratio Lifetime value of customer Referrals, word-of-mouth referral More tolerant if there is a problem 10 Discuss the 5:1 ratio. 11 Learning Objective 3 Creating customer value The customer defines the appropriate service quality and price level. Customer defines the price/value relationship of the service. This value is relative to competitive offerings. FIGURE 7-5 Customer Value Equation 13 Learning Objective 3 Creating customer value (cont.) Health care service value equation Value = Clinical quality provided + process quality –(Price + Service acquisition cost) Clinical quality provided: technology and expertise Process quality: the ease with which a customer can access the clinical quality 14 Learning Objective 3 Conducting a gap analysis Five possible gaps Between expectations of service quality and management perceptions of customer expectations Between management perceptions of customer expectations and service quality specifications Between service quality specifications and service delivery 14 F ...