CUSTOMER RELATIONSHIPS AS AN ASSET

CHRIS GREENWOOD, SENIOR TOURISM INSIGHT MANAGER

AN LOCHAN UAINE, AVIEMORE

CBP CONFERENCE– NOVEMBER 2017

LOYALTY IN A FICKLE WORLD

• Successful businesses are built on

developing customer loyalty.

• Research demonstrates that customer

retention has a lower outlay and higher

value than customer acquisition.

• What is it worth to build customer loyalty

over attracting new customers?

CUSTOMER RELATIONSHIPS AS AN ASSET

BEGINNING WITH SOME FACTS

60-70% – Probability of selling to an existing customer

5-20% – Probability of selling to a new prospect

10 times – How much more a loyal customer is worth

compared to their first purchase

25%-95% – Potential increased profits by raising retention

rates by 5%

6-7 times – How much more expensive to acquire a new

customer than keep an existing one

89% – Of companies see customer experience as a key

factor in driving loyalty and retention

CUSTOMER RELATIONSHIPS AS AN ASSET

Strathspey Steam Railway, Boat of Garten

BEGINNING WITH SOME FACTS

49% – Volume of visitors who have holidayed in

Cairngorms before and wanted to return.

24% – Volume of visitors who have holidayed in

Scotland before and wanted to return.

66% – Of visitor survey respondents rated their

overall experience of Cairngorms 9 or 10 out of 10 (average score 8.9/10)

71% – Of visitor survey respondents are extremely

likely to recommend Cairngorms as a destination – based on a rating of 9 or 10 out of 10 (average score 9.1/10)

CUSTOMER RELATIONSHIPS AS AN ASSET

Loch Morlich, Cairngorms

THE TYRANNY OF CHOICE

• Does greater choice encourage disloyalty?

• Research shows that there can be too

much choice.

• The evidence was in the Jam….!

• The idea of freedom of choice is appealing

but

• Consumers welcome direction of decision

making.

CUSTOMER RELATIONSHIPS AS AN ASSET

Jams and preserves at The House of Bruar

MOST EFFECTIVE CHANNELS FOR ACQUISITION AND RETENTION

CUSTOMER RELATIONSHIPS AS AN ASSET

Channels used most for

Acquisition

Channels used most for

Retention

Websites 89% Email 56%

Email 81% Social Media 37%

Social Media 72% Content Marketing 32%

Direct Mail 66% Referral Marketing 26%

Search Engine Optimisation 65% Search Engine Optimisation 13%

Web Banners 60% Display Advertising 12%

Mobile Devices 34% Mobile Advertising 8%

JUDGING THE LIFETIME

VALUE OF CUSTOMERS

CUSTOMER RELATIONSHIPS AS AN ASSET

Loch Insh, CAirngorms

WORKSHOP

CUSTOMER RELATIONSHIPS AS AN ASSET

• If we seek retention & acquisition and loyalty & referrals:

• How do we determine which customers are valuable?

• What questions should we ask ourselves when

addressing value and loyalty?

• What can we do practically to maximise impact?

HOW COULD WE CALCULATE CLV?

CUSTOMER RELATIONSHIPS AS AN ASSET

• Calculating CLV is straightforward but

may be restricted to your data

availability.

• More realistically you need:

• Average Spend – how much a

customer spends at one time on

average.

• No Repeat Sales – how frequently

your customer makes a purchase

again in a year – think segments!

• Retention Time – How long you

expect a customer to stick around –

historic data?

• Gross Margin – its revenue minus

operating costs expressed as a %.

Customer Lifetime Value CLV =

[Average Spend] x

[No Repeat Sales] x

[Retention Time] x

[Gross Margin] x

e.g.

£110 x 0.5 x 10 x 5%* = £27.50 (Leisure)

£110 x 2.0 x 03 x 5%* = £33.00 (Business)

ITS NOT JUST IN THE NUMBERS.

• Focusing just on profitable customers may

be counter-productive.

• Measuring Social Impact and Social

Influence is also important.

• On average 1 dissatisfied customer tells

around 9-15 people.

• 13% of dissatisfied customer tell more

than 20 people.

• And then there are online reviews…

CUSTOMER RELATIONSHIPS AS AN ASSET

Loch Morlich

EXAMINING CUSTOMER VALUE AND LOYALTY

CUSTOMER RELATIONSHIPS AS AN ASSET

Complete the sentence –

“Our Customers become much more valuable when…”

EXAMINING CUSTOMER VALUE AND LOYALTY

CUSTOMER RELATIONSHIPS AS AN ASSET

Complete the sentence –

“Our Customers become much more valuable when…”

They buy more stuff

They pay more

They reliably come back to us

They’re loyal to the brand

EXAMINING CUSTOMER VALUE AND LOYALTY

CUSTOMER RELATIONSHIPS AS AN ASSET

Complete the sentence –

“Our Customers become much more valuable when…”

They buy more stuff

They pay more

They reliably come back to us

They’re loyal to the brand

They give

us good

ideas

They

reduce

our costs

They

eulogise for

us on social

media

They

collaborate

with us

They try

new

products

They

introduce

us to new

customers They

share

their data

with us

EXAMINING CUSTOMER VALUE AND LOYALTY

CUSTOMER RELATIONSHIPS AS AN ASSET

Now think about the sentence –

“Our best customers become much more valuable when…” And

“Our typical customers become much more valuable when…”

IN CONCLUSION

“The best investment you can make in

measuring customer lifetime value is to make

sure you’re investing in your customers’

lifetime value.”

Michael Schrage

MIT Sloan School’s Centre for Digital Business

CUSTOMER RELATIONSHIPS AS AN ASSET

Glen Ord, the nearest distillery to Inverness & Loch Ness

THANK YOU

QUESTIONS?

CUSTOMER RELATIONSHIPS AS AN ASSET

ROTHIEMURCHUS FOREST, AVIEMORE

All The VisitScotland Visitor Survey Reports:

http://www.visitscotland.org/research_and_statistics/visitor_research/all_markets/scotland_vi

sitor_survey.aspx

Cairngorms Visitor Survey

Report: http://www.visitscotland.org/pdf/ScotlandVisitorSurveyRegionalSummaryCairngorms

NationalPark.pdf