Crm unit ii (building customer relationship management)
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Crm unit ii (building customer relationship management)
- 1. 1 By : Prof. Amit Kumar
- 2. Customer Relationship Management Building Customer Relationship Management IILM-GSM
- 3. Course Contents • Loyalty Building as a Process (CRM Cycle) • Ladder of Loyalty Case-Study: BMW Turns Prospects into Customers • Bonding for Customer Relationship • CRM Framework • Zero Customer Defection • Customer Retention Program Customer Relationship Management Building Customer Relationship Management IILM Graduate School of Management
- 4. Loyalty Building as a Process (CRM Cycle) • The foundation of effective CRM is built on an iterative process of learning & customization. • IDIC framework explain the process of converting existing customer into loyal customer.(IDIC represents four key steps in relationship building process)- 1. Identity 2. Differentiate 3. Interact 4. Customize Customer Relationship Management Building Customer Relationship Management IILM Graduate School of Management
- 5. IILM Graduate School of Management Identity: • This step requires the company to locate & contact a large number of its customers directly and know as much detail about them as possible. • Every interaction with the customer through any channel should be seen as an opportunity to learn about them & this knowledge has to be used to serve them better. Differentiate: • Differentiate on the basis of the value they represent and also on their needs. • Differentiation should help the company tailor its offerings to each customer to reflect their value’s & needs. Customer Relationship Management Building Customer Relationship Management Loyalty Building as a Process (CRM Cycle)
- 6. Relationship Officer:ABN AMRO Slide No : 06 ERP Functional Consultant Interact: • The purpose of interaction is to learn more about the customers starting with more valuable customers. • These interactions can happen when the customer…… Customize: • Step is most critical as it builds upon all the learning about the customers to offer real value to them by tailoring P & S. • It helps customer enjoy a high level of convenience, which can not be easily duplicated by a competitor. Conclusion • The IDIC framework is useful in understanding the process to be adopted for building relationship with existing customer. Customer Relationship Management Building Customer Relationship Management IILM Graduate School of Management Loyalty Building as a Process (CRM Cycle)
- 7. Relationship Officer:ABN AMRO Slide No : 06 ERP Functional Consultant Customer Relationship Management Building Customer Relationship Management CRMBusinessCycleatICICI IILM Graduate School of Management
- 8. Ladder of Loyalty Relationship Officer:ABN AMRO Slide No : 07 ERP Functional Consultant • It is equally important to know the stages through which a prospect becomes a customer and a loyal customer. • Use the concept of ladder of loyalty to explore the complete relationship building process. Prospect Customer Client Supporter Advocate Partner Customer Relationship Management Building Customer Relationship Management IILM Graduate School of Management
- 9. Ladder of Loyalty Relationship Officer:ABN AMRO Slide No : 08 ERP Functional Consultant Prospect: • An individual, which fulfils the requirements of the marketer’s definition of target. Customer: • A prospect who gets attracted by a company’s marketing programme may try out its product & services offerings and becomes a customer. Customer Relationship Management Building Customer Relationship Management IILM Graduate School of Management BMW Turns Prospects into Customers
- 10. Ladder of Loyalty Relationship Officer:ABN AMRO Slide No : 09 ERP Functional Consultant Client: • Customer purchases the product/services more than once. • In several buying situations, customers become clients due to nature of the product or services. • Cross-sell multiple products to an existing customer. e.g. Wells Fargo a leading financial services firm in US sells more than four of its services to each customer. Supporter: • A client becomes a supporter when he is satisfied with the offerings and recommends it to his friends, relatives. • This positive word-of-mouth(WOM) has tremendous positive impact as it helps the company get new customers. Customer Relationship Management Building Customer Relationship Management IILM Graduate School of Management
- 11. Ladder of Loyalty Relationship Officer:ABN AMRO Slide No : 10 ERP Functional Consultant Advocate: • An advocate is a supporter who, in addition to referrals (WOM ), proactively works with the company to improve its P & S. • While developing new products software company regularly depend on the feedback from the lead users of their clients during the Beta test phase. Customer Relationship Management Building Customer Relationship Management IILM Graduate School of Management
- 12. Ladder of Loyalty Partner: • An advocate becomes a partner when they become actively involved in the decisions of the company. • e.g. kind of Relationship exists between P&G and Wal- Mart. Relationship between FedEx and IBM 07/05/15 12 IILM-Graduate School of Management Customer Relationship Management Building Customer Relationship Management
- 13. Ladder of Loyalty Partner: • Relationship exists between P&G and Wal-Mart. Wal-Mart shares the scanner data from its check out counters in its over 4500 stores through the satellite. It helps P&G plan its production, better management of its production runs and keep its inventories low as it no longer depends on sales forecast but actual sales data. Wal-Mart gains as it does not have to keep inventories, get faster replenishments. • Relationship between FedEx and IBM where FedEx stocks IBM’s spare parts in its own warehouses and delivers them across the world on instructions from IBM’s service personnel. 13 IILM-Graduate School of Management Customer Relationship Management Building Customer Relationship Management
- 14. Bonding for Customer Relationship Relationship Officer:ABN AMRO Slide No : 11 ERP Functional Consultant Customer Relationship Management Building Customer Relationship Management IILM Graduate School of Management
- 15. Relationship Officer:ABN AMRO Slide No : 12 ERP Functional Consultant Bonding for Customer Relationship Financial Bonds: • Volume and Frequency Rewards. • Bundle and Cross-Selling • Stable Pricing - Companies also offer the assurance of stable prices or lower price increase than those paid by new customers to retain their old customer. Customer Relationship Management Building Customer Relationship Management One of the biggest disadvantage of the financial bonds is that they can be easily imitated. Also, it attracts a lot of price sensitive customers who switch to a cheaper option at the first available opportunity. Hence this is a weakest bonds. Unfortunately they the most commonly used bonds across industries. IILM Graduate School of Management
- 16. Relationship Officer:ABN AMRO Slide No : 12 ERP Functional Consultant Bonding for Customer Relationship Social Bonds: • Personal Relationships • Continuous Relationships • Social bond among customers Harley Davidson ‘Owners Club’, Hero Honda ‘Passport Program ’, Saturn Performance Club, Various by Volkswagen. Airtel’s ‘Friends and Family rewards program’ creates a social bonding in addition to financial reward received by the customer. Customer Relationship Management Building Customer Relationship Management IILM Graduate School of Management Social events create opportunities for sharing common interests and activities that bring the customers together and keep them from switching. Hence, social bonds are relatively more difficult to break.
- 17. Relationship Officer:ABN AMRO Slide No : 13 ERP Functional Consultant Bonding for Customer Relationship Customization Bonds: • Customer intimacy Marriott Hotels knows likes, dislikes & special habits of ‘C’, Information are shared across its hotels worldwide • Mass Customization - Providing tailored P/S with little additional effort & cost- effective production and using communication technologies. - At its special outlets, Levis gives customers the option to buy jeans made to their own specifications. Customer Relationship Management Building Customer Relationship Management IILM Graduate School of Management
- 18. Relationship Officer:ABN AMRO Slide No : 13 ERP Functional Consultant Bonding for Customer Relationship Customization Bonds: • Mass Customization National Bicycle Corporation, Japan, can potentially make over eleven million varieties of bicycle using flexible manufacturing systems and make delivery in two weeks. MyCNN.com or MyBBC.com or MyDELL.com are examples of information services provided over the internet which help the surfers customize the services to meet their specific requirements. Customer Relationship Management Building Customer Relationship Management IILM Graduate School of Management
- 19. Relationship Officer:ABN AMRO Slide No : 13 ERP Functional Consultant Bonding for Customer Relationship Customization Bonds: • Mass Customization Reflect.com markets customized skincare, hair care, fragrances and color cosmetics over the internet. ‘One-of-a-kind products for One-of-a-kind YOU’ ‘We will recustomize your product until it is right or we will refund your money’. Customer Relationship Management Building Customer Relationship Management IILM Graduate School of Management Customization bond is difficult to break as the customer would need to start from scratch and teach the new potential provider even if the provider has the capability to meet the customer’s requirements.
- 20. Relationship Officer:ABN AMRO Slide No : 13 ERP Functional Consultant Bonding for Customer Relationship Structural Bonds: • Integrated information system • Shared Processes and Equipments • Joint Investments • AMEX’s Structural Bond formation through TRS • FedEx’s Structural Bond formation through PowerShips Customer Relationship Management Building Customer Relationship Management Structural bond is the strongest bond and hence the most difficult to break. IILM Graduate School of Management Partnership
- 21. Relationship Officer:ABN AMRO Slide No : 13 ERP Functional Consultant Bonding for Customer Relationship Conclusion: • As the organization moves from level 1 to 4, they observe: - The bonds become stronger. - Customer loyalty increases and the opportunities and scope of reaping the benefits of relationship marketing increases. • In B2B contexts, we also see the presence of other kinds of bonds such as legal, planning and technical bonds. Customer Relationship Management Building Customer Relationship Management IILM Graduate School of Management
- 22. CRM Framework Relationship Officer:ABN AMRO Slide No : 14 ERP Functional Consultant In competitive markets even satisfied customer switch or defect to competitive offers. Since loyal customers are more profitable for any organization, there is a need to identify better predictors of loyalty. Indicators of relationship strength like trust, satisfaction & commitment are better predictors of loyalty and by including these in customer satisfaction surveys, managers can modify service delivery with a focus on customer loyalty. Customer Relationship Management Building Customer Relationship Management IILM Graduate School of Management
- 23. CRM Framework Relationship Officer:ABN AMRO Slide No : 15 ERP Functional Consultant Relationship Stages Psychological Steps Switching Satisfaction Trust Commitment Loyalty Prospect Customer Client Supporter Advocate Partner Initiation Development Maintenance/ Enhancement Major Role Minor role Psychological Steps Across Relationship stages Customer Relationship Management Building Customer Relationship Management IILM Graduate School of Management
- 24. CRM Framework Relationship Officer:ABN AMRO Slide No : 16 ERP Functional Consultant Switching: • Switching is very common in the initial stages of a relationship process. • Initial interactions & experiences determine whether the customer is willing to continue or not. • In cellular service industry,the first two weeks were more crucial. • In health fitness industry,clubs provide personal trainer when the customer signs up. This is to encourage the customer to start using the service. Subsequently the customer is signed up for an extended period of time. • This prevents switching at least in the short term. Customer Relationship Management Building Customer Relationship Management IILM Graduate School of Management
- 25. Relationship Officer:ABN AMRO Slide No : 16 ERP Functional Consultant Satisfaction: • Satisfaction is a complex emotion, which depends on the offer characteristics,expectations and usage situations. • Customer are satisfied when the performance of P/S matches or exceed their expectations. • Satisfaction is an important intermediate step in relationship building process and many of the satisfied customers will become clients. Customer Relationship Management Building Customer Relationship Management CRM Framework IILM Graduate School of Management
- 26. Relationship Officer:ABN AMRO Slide No : 16 ERP Functional Consultant Satisfaction: Customer Relationship Management Building Customer Relationship Management CRM Framework IILM Graduate School of Management
- 27. Relationship Officer:ABN AMRO Slide No : 17 ERP Functional Consultant Trust: • Satisfaction over multiple interactions lead to a stage where the customer begins to have faith in the offerings and its consistency in performance. • Trust is defined as the willingness to rely on an exchange partner in whom one has confidence. Customer Relationship Management Building Customer Relationship Management CRM Framework IILM Graduate School of Management
- 28. Relationship Officer:ABN AMRO Slide No : 17 ERP Functional Consultant Trust: • The concept of trust is common among marketers in the packaged goods industry which depends on trust to build brand loyalty. Naill Fitzgerald, Chairman-Unilever, suggested that: “ In order to function at all human societies rely on the existence of trust. Good brand invites trust, earn trust, honor trust and reward trust. Good brands guard their reputation with their lives, and if by accident they transgress, they apologize with grace and true humanity,-quickly”. Customer Relationship Management Building Customer Relationship Management CRM Framework IILM Graduate School of Management
- 29. Relationship Officer:ABN AMRO Slide No : 17 ERP Functional Consultant Trust: Customer Relationship Management Building Customer Relationship Management CRM Framework IILM Graduate School of Management
- 30. Relationship Officer:ABN AMRO Slide No : 17 ERP Functional Consultant Commitment: • Commitment to a relationship is defined as an enduring desire to maintain a valued relationship.Therefore commitment exists only when the relationship is considered important. • Trust & commitments are key variables because they encourage marketers to work at preserving the relationship investments with partners/clients. Customer Relationship Management Building Customer Relationship Management CRM Framework IILM Graduate School of Management
- 31. Relationship Officer:ABN AMRO Slide No : 17 ERP Functional Consultant Commitment: It can be operational using the two dimensions of: 1. Attitude towards interacting with each other, and 2. The formation of bonds. The bonds may be legal, planning, knowledge, social, technical and structural in nature. Customer Relationship Management Building Customer Relationship Management CRM Framework IILM Graduate School of Management
- 32. Relationship Officer:ABN AMRO Slide No : 18 ERP Functional Consultant Loyalty: • Loyalty is not simply repeat buying. • Loyalty includes future purchase intentions, complaining and referral behavior (WOM). • In terms of measurement of loyalty, typical questions would refer to: Intention regarding next purchase The number and intensity of complaints Tendency to talk about suppliers to other clients Degree of desire to share positive experience Customer Relationship Management Building Customer Relationship Management CRM Framework IILM Graduate School of Management
- 33. Relationship Officer:ABN AMRO Slide No : 18 ERP Functional Consultant Loyalty: Conclusion: It must be kept in mind that all buyer-seller relationship do not necessarily go through sequentially. In some cases, clients may exhibit a lot of loyalty related behavior when they are satisfied with the performance over multiple interactions. Customer Relationship Management Building Customer Relationship Management CRM Framework IILM Graduate School of Management
- 34. Zero Customer Defection The concern for reducing and eliminating customer attrition emerged from studies that indicate the following: – Customers are profitable over a period of time. – Across industries, profits can increase by 35 to 85 % by increasing customer retention by only 5 %. – About 70 % of customers switch to competitive offerings due to perceived indifference of the current provider. Relationship Officer:ABN AMRO Slide No : 19 ERP Functional Consultant Customer Relationship Management Building Customer Relationship Management IILM Graduate School of Management
- 35. Customer Defection Relationship Officer:ABN AMRO Slide No : 20 ERP Functional Consultant Why Customers Defect ? Perceived Indifference 69 % Move Away 3 %‘Other’ Friendships 4 % Competition 9 % Product Dissatisfaction 14 % Customer Relationship Management Building Customer Relationship Management IILM Graduate School of Management
- 36. Zero Customer Defection Customer who defect can be broadly categorized as : 1. Price Defectors – Who are bargain hunters. 2. Product Defectors – Who not satisfied with existing product. 3. Service Defectors – Dissatisfied with the quality of services. 4. Market Defectors - As they moved away from their previous business. 1. Technology Defect– Shifted to another superior technology. 2. Organizational Def– Individual users who belong to a group may shift to an alternate supplier/service provider because group has switched. 07/05/15 36 IILM-Graduate School of Management Customer Relationship Management Building Customer Relationship Management
- 37. Zero Customer Defection Service Defectors Findings from PIMS (Profit Impact of Marketing Strategy) • Perceived good service provider charge an average 9-10 % more. • They grow two times faster than their competitors. • They improve their market share at an average of 6 % per year. Studied by TRAP (Technical Assistance for Research Programme) • 96 % of unhappy customers never bother to complain. • 71 % of the customers feel their complaint has been handled satisfactorily if they only need to deal with one individual. • If a customer complaint was handled well, 95 % of customers will return to do business with the organization. 37 IILM-Graduate School of Management Customer Relationship Management Building Customer Relationship Management
- 38. Customer Retention Program Every organization should have a customer retention program to reduce customer defection. The steps include- 1. Measure customer retention – most customers defect slowly, be careful in defining customer retention - a dead account with minimal balance has to be treated as a lost customer. 2. Interview former customer – helps in defining why customers defect 3. Analyze complaint and service data – might be due to systemic errors and would need a review of service and complaint handling process 4. Identify switching barriers – through multiple offerings, convenient operating hours or speed of transactions 38 IILM-Graduate School of Management Customer Relationship Management Building Customer Relationship Management
Editor's Notes
- ….as much detail about them as possible. This includes their names,address,phone numbers,account details,habits,preference etc. Customer can be differentiated ……. Value represented is an indication of the customer’s worth to the company.The ideal measure of customer value is the profit contribution.
- When customer making a purchase, using a servive or making a complaint…it can be down through the formal survey, telephone interaction or self channel services like web, call centers ot atm in banking services.
- Suspect can be anyone
- For example, a cellular service provider may segment the market and target executives in blue chip companies with special offer. ..a netbook manufacturer like acer, samsung may target the management students in top 50 business schools with unique offers
- A customer becomes a client when he/she purchases the product/services more than once. …nature of the product or services. e.g. purchase of durable product like PC, TV, Car, purchase of services like banking,insurance.. Customer can also become clients when organizations cross-sell multiple products to an existing customer. e.g. Wells .. Opposite to supporter.. A typical dissatisfied customer will tell eight to ten people about his or her experience . When org cross selling… Cross-selling is defined by the Oxford English Dictionary as "the action or practice of selling among or between established clients, markets, traders, etc." or "that of selling an additional product or service to an existing customer". In practice businesses define cross-selling in many different ways. Elements that might influence the definition might include: the size of the business, the industry sector it operates within and the financial motivations of those required to define the term. The objectives of cross-selling can be either to increase the income derived from the client(s) or to protect the relationship with the client(s). The approach to the process of cross-selling can be varied. Unlike the acquiring of new business, cross-selling involves an element of risk that existing relationships with the client could be disrupted. For this reason it is important to ensure that the additional product or service being sold to the client(s) enhances the value the client(s) get from the organization. Contents [hide] Examples Cross-selling of professional services See also References [edit] Examples [edit] Cross-selling of professional services Benefits that can accrue to the customer include the efficiency and leverage that result from using a single supplier for multiple products. When buying complex professional services, like consulting needed to make and integrate an acquisition, using one firm reduces the finger pointing that is common when a problem occurs in an area that straddles two or more services; if only one firm is responsible, finger pointing is eliminated. For the vendor the benefits are also substantial. The most obvious example is that revenues go up. There are also efficiency benefits in servicing one account rather than several. Often most importantly, vendors that sell more services to a client are harder for a competitor to displace. The more a client buys from a vendor, the higher the switching cost. Though there are few ethical issues with most cross selling, in some cases they can be huge. Arthur Andersen's dealings with Enron provide a highly visible example. It is commonly felt that the firm's objectivity, being an auditor, has been compromised by selling internal audit services and massive amounts of consulting work to the account. Though most companies want more cross-selling, there can be substantial barriers, including: A customer policy requiring the use of multiple vendors. Different purchasing points within an account, which reduce the ability to treat the customer like a single account. The fear of the incumbent business unit that their colleagues would botch their work at the client, resulting with the loss of the account for all units of the firm. Broadly speaking, cross-selling takes three forms. First, while servicing an account, the product or service provider may hear of an additional need, unrelated to the first, that the client has and offer to meet it. Thus, for example, in conducting an audit, an accountant is likely to learn about a range of needs for tax services, for valuation services and others. To the degree that regulations allow, the accounts may be able to sell services that meet these needs. This kind of cross-selling helped major accounting firms to expand their businesses considerably. Because of the potential for abuse, this kind of selling by auditors has been greatly curtailed under the Sarbanes-Oxley Act. Selling add-on services is another form of cross-selling. This happens when a supplier shows a customer that it can enhance the value of its service by buying another from a different part of the supplier's company. When you buy an appliance, the salesperson will offer to sell you insurance beyond the terms of the warranty. Though common, this kind of cross-selling can leave a customer feeling poorly used. The customer might well ask the appliance salesperson why he needs insurance on a brand new refrigerator. Is it really likely to break in just nine months? The third kind of cross-selling can be called selling a solution. In this case, the customer buying air conditioners is sold a package of both the air conditioners and installation services. The customer can be considered buying relief from the heat, contrary to just air conditioners. AIDA is an acronym used in marketing that describes a common list of events that are very often undergone when a person is selling a product or service: A - Attention (Awareness): attract the attention of the customer. I - Interest: raise customer interest by focusing on and demonstrating advantages and benefits (instead of focusing on features, as in traditional advertising)[1]. D - Desire: convince customers that they want and desire the product or service and that it will satisfy their needs. A - Action: lead customers towards taking action and/or purchasing. Nowadays some have added another letter to form AIDA(S): S - Satisfaction - satisfy the customer so they become a repeat customer and give referrals to a product. Marketing today allows a diversty of products. Using a system like this, allows a general understanding of how to target a market effectively. A.I.D.A however is an acronym that is necessary to learn in marketing. Moving from step to step you lose some percent of prospects. This process is shown as "AIDA Inverted Triangle" figure. To improve AIDA Inverted Triangle sometimes it's recommend to split AIDA formula into two pair of promotional steps: 1) Attention + Interest 2) Desire + Action
- As a conclusion we can say that the advocate and partners..are mostly visible in the B2B market..not in the B2C.
- As a conclusion we can say that the advocate and partners..are mostly visible in the B2B market..not in the B2C.
- Volume and Frequency Rewards This bonds tie in the customer through financial incentives-lower prices for volumes. Loyalty program such as frequent flyer program, reward program of hotel and credit cards are frequency rewards. Bundle and Cross-Selling - In case of Magazine subscription, Internet Services & Telecom Stable Pricing - Companies also offer the assurance of stable prices or lower price increase than those paid by new customers to retain their old customer.
- We saw in case of harley davidson..hoggers group or GOA cahpter…in values of RM Personal Relationships - Markets build social bonds with customers by viewing them as ‘clients’ who are not merely nameless faces. They find ways to keep in touch with them interact with them to find their changing needs and offer solution. - It is easy to visualize social bonds of the personal kind in the context of professional service providers (doctors, teachers, accountants) and personal service providers (hairdressers, baby sitters) with their clients. Continuous Relationships - Continuous relationships are provided to customers when companies have stable, long standing dealers who bring in the local market knowledge and maintain close relationships with customers. Social bond among customers - In several cases, social bonding develops among the customers instead of relationship between the company and the customer. This can happen in services where customers interact with each other, e.g. club, gym, library etc. - Marketers like Harley Davidson ‘Owners Club’, Hero Honda ‘Passport Program’, Saturn Performance Club and various club promoted by Volkswagen. - Airtel’s ‘Friends and Family rewards program’ also creates a kind of social bonding in addition to the financial rewards received by the customer.
- Customer intimacy - Learning more and more about the customer and adding those knowledge to organization's marketing department. - Marriott Hotels knows the likes, dislikes & special habits of ‘C’ - Informations are shared across its hotels worldwide Mass Customization - Providing tailored P/S with little additional effort & cost- effective production and using communication technologies. - At its special outlets, Levis gives customers the option to buy jeans made to their own specifications. Mass customization, in marketing, manufacturing, call centres and management, is the use of flexible computer-aided manufacturing systems to produce custom output. Those systems combine the low unit costs of mass production processes with the flexibility of individual customization. "Mass Customization" is the new frontier in business competition for both manufacturing and service industries. At its core is a tremendous increase in variety and customization without a corresponding increase in costs. At its limit, it is the mass production of individually customized goods and services. At its best, it provides strategic advantage and economic value. Mass Customization is the method of "effectively postponing the task of differentiating a product for a specific customer until the latest possible point in the supply network." (Chase, Jacobs & Aquilano 2006, p. 419) The concept of mass customization is attributed to Stan Davis in Future Perfect[1] and was defined by Tseng & Jiao (2001, p. 685) as "producing goods and services to meet individual customer's needs with near mass production efficiency". Contents [hide] Implementation Variants References See also External links [edit] Implementation Many implementations of mass customization are operational today, such as software-based product configurators which make it possible to add and/or change functionalities of a core product or to build fully custom enclosures from scratch. This degree of mass customization has only seen limited adoption, however. If an enterprise's marketing department offers individual products (atomic market fragmentation) it doesn't often mean that a product is produced individually, but rather that similar variants of the same mass-produced item are available. Companies which have succeeded with mass-customization business models tend to supply purely electronic products. However, these are not true "mass customizers" in the original sense, since they do not offer an alternative to mass production of material goods. Service industries are also waking up to the power of a mass customization orientation. Call centres are leveraging agent-assisted voice technology to build pre-programmed, pre-recorded call flows to handle customers' inquiries. The agent executes the process, varying it only as they need to because of something the customer says or needs, as opposed to varying everything, every time.[2]
- The ability to customize presents WOW effect to customer. Amazon.com uses collaborative filtering techniques to anticipate customer needs. When a customer searches for a travelogue e.g. Lonely Planet series on India, alist titled India Travel Pack prepared by Rob McDonald, Travel Editor of Amazon.com also pops up on the screen. Among the 9 items are other readings like Arundhati Roys ‘God of Small Things’ and James O’Reilly’s ‘Travellers Tales India’. Amazon’s CFT uses the knowledge gained by thr purchase behavior of customers with similar profile and requirements to even anticipate the needs of a prospect who registered for using the services and in the process share informations. Customizaion bond is difficult to break as the customer would need to start from scratch and teach the new potential provider even if the provider has the capability to meet the customer’s requirements. However, firms must be careful about trying ustomization bonds. For example, some customers are very clear about the product what they need. They donot appreciate being prompted about other purchases. It is important to understand the psychological profile of the customer before developing customiztion bonds with customers.
- ….. capability to meet the customer’s requirements. However, firms must be careful about trying customization bonds. For example, some customers are very clear about the product what they need. They don't appreciate being prompted about other purchases. It is important to understand the psychological profile of the customer before developing customization bonds with customers. Like Switchers, trusty, commitment, satisfied or loyal are different psychological state of a custonmer. Reflect.com markets customized skincare, haircare, fragnances and color cosmetics over the internet. Set up by the initial funding provided by P&G, Reflect.com provides ‘one-of-a-kind products for One-of-a-kind YOU’ by interacting with its customers through specufic questions composed by its beauty exoerts and research scientists. It ships the product free of cost in US and Canada, and provides a guarantee which states, We will recustomize your product until it is right or we will refund your money’. Set up by the initial funding provided by P&G, Reflect.com provides ‘One-of-a-kind products for One-of-a-kind YOU’ Mass Customization Reflect.com markets customized skincare, hair care, fragrances and color cosmetics over the internet. It provides ‘One-of-a-kind products for One-of-a-kind YOU’ by interacting with its customers through specific questions composed by its beauty exerts and research scientists. It ships the product free of cost in US and Canada, and provides a guarantee which states, ‘We will recustomize your product until it is right or we will refund your money’. Mass Customization - The ability to customize P&S creates WOW effect to customer. Amazon.com uses collaborative filtering techniques (CFT) to anticipate customer needs. When a customer searches for a travelogue e.g. Lonely Planet series on India, a list titled India Travel Pack prepared by Rob McDonald, Travel Editor of Amazon.com also pops up on the screen. Among the 9 items are other readings like Arundhati Roy’s ‘God of Small Things’ and James O’Reilly’s ‘Travelers Tales India’. Amazon’s CFT uses the knowledge gained by the purchase behavior of customers with similar profile and requirements to even anticipate the needs of a prospect who registered for using the services and in the process share informations.
- P & A Dept in AMEX (book page link in this amex logo)..case is …Personnel & Administration The partnership betwwen walmart and P&G described in partner (ladder of loyalty) is an example of structural bonding through IIS, SPE and Joint investments. (AMEX’s Structural Bond formation through TRS) American Express bonds with its customers through the use of its debit cards and the Travel Related Services (TRS). TRS takes care of all the travel and stay needs of executives belonging to its corporate clients. TRS personnel, in many cases operating out of the client’s premises, arrange visa, passport, and bookings for airline, taxi and hotels at special prices through arrangements with all their partners, thus, providing a ‘one-stop-shop’ and hassle free experience for the executive as well as the client organization. When the executives travels, all the expenses are paid through the AMEX debit card. It does not stop here. AMEX then consolidates the travel and entertainment (T & E) expenses and present it to the client organization in the format that its accounting/financial system requires- executive wise, location wise, budgeted Vs actual. Thus, AMEX provides good service value and builds strong structural bonds with its customers through TRS. ( FedEx’s Structural Bond formation through PowerShips) Federal Express ties its customers with its PowerShips- free computers at client sites to store addresses and shipping data, print mailing labels, and help track packages. The client saves time and keep track of daily shipping records.
- The bonds become stronger. Structural bonds are stronger than customization bonds, customization bonds are stronger than social and financial bonds. As the bonds become stronger, customer loyalty increases and the opportunities and scope of reaping the benefits of
- In cellular service industry,the first two weeks were more crucial. Most custoemr need a lot of handholding, support and technical help to start using the services. If it is handled well, customers are likely to continiue using the service.
- Wow effect
- KIWI PUMPS in Gujrat has adopted ISO 9001:2000 system and the main aim is to take care of the CUSTOMER SATISFACTION. CUSTOMER FOCUS: Materials are supplied as per the customers order, viz., - Quantity. - Variety. - Timely dispatched. - Type of packing. - Transport Selection. SPECIAL REQUIREMENT OF CUSTOMER: In addition to our regular products, request for special products are received. It is the endeavor of the company to see that special characteristics are in built into the products, to satisfy the specific requirement of the customer. Some of the special requests are :- - Size of end connection. - Special packaging requirement. - Special colours of paints used etc. CUSTOMER GRIEVANCES: As with the business, certain grievances would also be arising. Prompt action is taken to remove any irritants so that grievances are reduced at the first place. Main grievances that the unit gets are : Supply of material at short notice period in the season. We do inform, the customers, the minimum time required to supply the materials. Quality related problems are very few and the reasons are1. Quality raw materials are used.2. Proper processes are adopted at different stages of manufacture etc. CUSTOMER FEEDBACK: As a part of ISO-9001:2000 system, the company collects feedback from the customers at regular intervals. Such feedbacks are by various methods, viz., - By sending a standard format & collecting the data. - From our marketing personnel, while they interact with customers during tours. - As and when the customers visit the unit. We also send the information, such as ACTION TAKEN, based on the feedback received from various sources.The company receives CUSTOMER PROPERTY, such as LABLES, INSTRUCTION BOOKLETS which are to used before dispatching the products. The company takes care of keeping such property, safely.
- Trust is a major brick in the foundation of interpersonal relationships, whether it is between parents and children, friends, or lovers. It is just as easy to build trust as it is to break it down on a daily basis. If your interpersonal relationships are plagued by that deadly element called “suspicion,” then you might find success if you put effort toward trust-building. Here are 7 steps to build trust STEP 1) Envision Trust Clarify exactly what you want. Get motivated with a clear picture of the value of building trust. Affirm what it will take to create trust. Start with the end in mind. STEP 2) Listen Fully Allow yourself to listen completely to others. Listening leads to understanding which causes trust. Use what you hear to adjust your trust-building activities. Keep opening yourself and listening. STEP 3) Open Yourself Discover what it takes for you to be open with others in your workplace. Build inner compassion for those you fear or dislike. Reveal more of yourself and model the openness you desire from others. STEP 4) Appreciate Others Learn how to appreciate others effectively such that you encourage desired behaviours and strengthen mutual trust. Notice the enormous impact of appreciation. STEP 5) Be Reliable and Consistent Upgrade your reliability and consistency to sustain high trust levels. Raise your awareness of your behaviours that threaten trust. Learn valuable techniques for reducing your own unintended breaking of trust. STEP 6) Converse Frankly Plan and carry out constructive conversations with key people with whom you are building trust. Build stronger foundations of trust. Mend past misunderstandings. Engage in building trust. STEP 7) Notice the Difference Become aware of the subtle and the obvious changes you have created throughout the course. Celebrate your success! Thank yourself. Be grateful for the challenges and the support you received. Commit to continuing to build trust.
- Zone 1: Unstated/Expected...The Zone of Indifference Literally, this includes all those customer needs and wants that are basic to fulfilling the contract between you and them. For example, customers expect to be treated with courtesy and respect, and would probably be puzzled (and maybe even insulted) if you asked them if this was a need. It of course is, and if you don't meet this need, you will cause DISSATISFACTION. If you meet this basic and obvious need, the best you can hope for is INDIFFERENCE. Zone 2: Stated/Expected...The Zone of Satisfaction This is where your customer actually TELLS you what is important to them. Listen carefully here, as this is a key stepping stone to customer loyalty. Meeting a customer's needs here will cause SATISFACTION, whereas not meeting them will cause DISSATISFACTION. For example, a customer might expect a volume discount on a purchase, but knows that they have to specifically ask (or negotiate) for it. It is an expectation, simply because other organizations that the customer deals with provide this benefit. Zone 3: Stated/Unexpected...The Zone of Delight This is where your customer HOPES for something, ASKS for it, but really does not expect you to provide it. This is your opportunity to provide something beyond their expectations and by so doing will create DELIGHT. For example, a customer might ask for something that is usually available only in a premium priced product. Not providing it will unlikely cause dissatisfaction. Therefore this is an area for particular attention in building a LOYAL customer base. Zone 4: Unstated/Unexpected...The Zone of Loyalty This is an area where your expertise in whatever product or service you provide and the customer's lack of expertise can really pay off! Providing benefits above and beyond what the customer is even aware of can create a LOYAL customer. This requires you to be really proactive in suggesting to customers new innovations that they can really benefit from. Many customers will be even willing to pay extra for this. For example, airbags in automobiles when first introduced were an innovation that saved lives, but customers had no way of asking for this innovation, or expecting it, before it became known to them. All Zones are equally important To get to the Zone of Loyalty, you must first conquer the other zones...there are no short-cuts. If your organization is really good at innovations (the key factor in creating Loyalty), but struggles at reliability (the key factor in creating Satisfaction), then it will end up struggling in all four zones. Loyalty creating innovations are time limited What was once an unstated/unexpected innovation will eventually become unstated/expected...would you now purchase a car without a CD player? Would you even ask the salesperson if it is installed? So maintaining a rate of innovation that matches or exceeds what the market demands is crucial to maintaining customer loyalty. The Grid in practice You may be working on a project team that is charged with the goal of achieving breakthroughs in program, product or service design. So how would you use the grid in such a situation? What design process would you use? A typical process might involve the following steps: Targeting Customers Interviewing Customers Summarizing the Voice of the Customer (Zones 2 and 3) Adding the Voice of the Expert (Zones 1 and 4) Translating into Product or Service Requirements Validating the Requirements Translating into Product or Service Designs Producing, Implementing and Evaluating What to look for There was a time when there was a clear delineation between product based organizations and service organizations. Not any more. Manufacturing organizations know that they can gain an edge by providing superior service, and service organizations know that their 'product' is a human performance, and that they need to excel at it. Each knows that 'performance excellence' is achieved by design and not by default. In any attempt to design or redesign a product/service, in exploring each of the zones, it is useful to have some framework, some standardized way to categorize performance dimensions. The following dimensions have been adapted from the work of Parasuraman et al, in their work on the ServQual model, conveniently remembered by the acronym 'RATER': R eliability Keeping your promise, doing what you said you will do. Doing things right the first time. A ssurance Making the customer feel safe in their dealings with you, being thoroughly professional and ethical. T angibles How the product/service looks to the client, the appearance of personnel and equipment, etc. E mpathy The degree to which the organization and service personnel understand the individual client and their needs, the ability to adapt the service to each client, the willingness to 'go the extra' for the client. R esponsiveness The availability, accessibility and timeliness of the service. The ability to respond to enquiries and complaints in a timely fashion. Each of these dimensions needs to be explored for each of the zones, producing a matrix that captures both the Voice of the Customer (VOC) as well as the Voice of the Expert (VOE): Zone of Indifference(unstated/expected) Zone of Satisfaction(stated/expected) Zone of Delight(stated/unexpected) Zone of Loyalty( unstated/unexpected) ReliabilityVOEVOCVOCVOEAssuranceVOEVOCVOCVOETangiblesVOEVOCVOCVOEEmpathyVOEVOCVOCVOEResponsivenessVOEVOCVOCVOEConclusion All parts of your organization are involved in creating loyal customers...those who produce and deliver your products or services, reliably day in and day out, as well as those who create and bring to market new offerings that delight the customer. Treat them all as members of the same team...the Customer Loyalty Team...and you will reap the benefits well into the future.
- Customer attrition, also known as customer churn, customer turnover, or customer defection, is a business term used to describe loss of clients or customers. Banks, telephone service companies, Internet service providers, pay TV companies, insurance firms, and alarm monitoring services, often use customer attrition analysis and customer attrition rates as one of their key business metrics (along with cash flow, EBITDA, etc.) because the "...cost of retaining an existing customer is far less than acquiring a new one."[citation needed] Companies from these sectors often have customer service branches which attempt to win back defecting clients, because recovered long-term customers can be worth much more to a company than newly recruited clients. Companies usually make a distinction between voluntary churn and involuntary churn. Voluntary churn occurs due to a decision by the customer to switch to another company or service provider, involuntary churn occurs due to circumstances such as a customer's relocation to a long-term care facility, death, or the relocation to a distant location. In most applications, involuntary reasons for churn are excluded from the analytical models. Analysts tend to concentrate on voluntary churn, because it typically occurs due to factors of the company-customer relationship which companies control, such as how billing interactions are handled or how after-sales help is provided. When companies are measuring their customer turnover, they typically make the distinction between gross attrition and net attrition. Gross attrition is the loss of existing customers and their associated recurring revenue for contracted goods or services during a particular period. Net attrition is gross attrition plus the addition or recruitment of similar customers at the original location. Financial institutions often track and measure attrition using a weighted calculation called Recurring Monthly Revenue (or RMR). In the 2000s, there are also a number of business intelligence software programs which can mine databases of customer information and analyze the factors that are associated with customer attrition, such as dissatisfaction with service or technical support, billing disputes, or a disagreement over company policies. More sophisticated predictive analytics software use churn prediction models that predict customer churn by assessing their propensity of risk to churn. Since these models generate a small prioritized list of potential defectors, they are effective at focusing customer retention marketing programs on the subset of the customer base who are most vulnerable to churn.
- Your Fast Guide to “Perceived Indifference” as a viable business strategy? Why is it that 68% of all customers never purchase from us in the first place or never come back once they do visit us – “Perceived Indifference?” Perceived indifference is that attitude that says we do not appreciate our customers, we do not wish to meet their unmet need, and we do not wish to solve their problem. It is an attitude that says “you are an inconvenience to me.” It is a perception (and remember perception is reality for our customers) that customer care is low (if it even exists) on our priority list. STOP – think about this – what would it be worth to us, a business, if we could retain 68% of all customers who choose not to purchase from us? Now, let’s be realistic and say that we are only able to retain ½ of that amount – that is still a 34% increase in customers who would otherwise not have purchased from us in the first place. Being a numbers person it helped me to see the raw data. So here it is: Initial Customer Inquiries:---------------------------------------------------------------------------100Customers Who Purchase: (not all of them buy from us for other reasons!)-----20Customers suffering from Perceived Indifference:-------------------------------------------68Customers Lost for other reasons:---------------------------------------------------------------12TOTAL CUSTOMER CONTACTS----------------------------------------------------------------100 Now, if we can increase our retention/sales rate by overcoming perceived indifference – now take a look at our customer base! Initial Customer Inquiries:--------------------------------------------------------------------------100Customers Who Purchase: (still not all of them buy from us for other reasons!)-54Customers suffering from Perceived Indifference:-------------------------------------------34Customers Lost for other reasons:---------------------------------------------------------------12TOTAL CUSTOMER CONTACT-------------------------------------------------------------------100 We have grown our “customers sold” base by 170%. Imagine what that would do to our bottom line. (Even if we were less optimistic about our success you can see what it would do for increasing our business!) So how do we overcome “Perceived Indifference?” We demonstrate that we are different through something called “Reliable CARE.” Reliable care stands for the “five best ways to keep customers coming back.” These are: “Be Reliable, be Credible, be Attractive, be Responsive, and be Empathic.” Credibility, Attractiveness, Responsiveness, and Empathy are what make up the CARE portion – Reliability is what creates the base. (See citation on book below!) Dr. Michael LeBoeuf, author of How to Win Customers and Keep Them for Life stresses the importance of each of these five areas. He breaks down how we in the customer service industry can make a difference as follows: The secret to winning and keeping customers is to reward them. Forget about selling. People love to buy but hate to be sold. Concentrate on helping the customers buy what’s best for them. (There is a difference!) The greatest customer you’ll ever win is you, because the best salesperson is the true believer. The only two things people ever buy are good feelings and solutions to problems. Whenever you have contact with a customer, you are the company to that customer. To win new customers, ask the golden question: “What’s the unmet want?” To keep them for life, ask the platinum questions: “How are we doing?” and “How can we get better?” Almost every day another business strategy is created based on the latest success story. You cannot open up a business journal without encountering another sensational business example that has spawned the “ultimate business strategy.” Many of these have a great deal of value to us, but how many can we use at once? There are more business strategies out there than we could know and understand in a lifetime. If we really want to succeed we need to learn the best business strategy of all time – delighting our customers. Once we understand that the viability of the business comes from customer loyalty and we understand that “Reliable CARE” is where loyalty begins AND ends, then we can grow our businesses. When we learn and take to heart the strategy of a delighted customer, we are using the best business strategy of them all! The Competition is Cheaper? - No this is not the top reason Switched to a competitor their friend told them about? - No wrong again! Here are the stats... 4% Natural attrition (moved away - passed on etc)5% Referred to a competitor by their friend9% Competitive reasons (price)14% Product/Service dissatisfaction68% Perceived Indifference So what is "Perceived Indifference" I hear you ask? In plain English it means that 68% of customers move away because they think you just don't care enough about them. Now this might not actually be true - you may even have sleepless nights thinking about them - but DO THEY KNOW THAT? A regular e-zine should not be just viewed as an excuse to promote your products or services. It is an exercise in 'stroking your customers' (like you show your pet Cat you care) If you pay particular attention to Personalise it Make It Useful Don't write too much etc... It will serve to bring your business gently back into the consciousness of your customers and 'touching base' with them demonstrates that you value them and care about them. The RATER model, developed by Zeitham et al (1992), defines five dimensions that customers are believed to consider in their assessments of service quality: Reliability . Ability to perform the service dependably and accurately. Assurance. Employees’ knowledge and courtesy and their ability to inspire trust and confidence. Tangibles. Appearance of physical facilities, equipment, personnel and communication materials. Empathy. Caring, individualised attention given to customers. Responsiveness. Willingness to help customers, provide prompt service and solve problems. These five dimensions have been found to be relevant for a wide range of organizations and sectors, although the importance of each dimension will vary from industry to industry. The model is used by organisations to identify and assess customer expectations, to plan and improve services, and to measure customer satisfaction.
- …provider could charge…