fostering loyal customer relationships

8/14/2019 Fostering Loyal Customer Relationships

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Fostering LoyalFostering Loyal

Customer RelationshipsCustomer Relationships

Duarte B. Morais, Ph.D.Duarte B. Morais, Ph.D.

Assistant Prof. of Recreation, Park and Tourism Mgt.Assistant Prof. of Recreation, Park and Tourism Mgt.

[email protected]

@psu.edu


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Presentation OutlinePresentation Outline

Introductions

Why talk about loyalty

What is a loyal customer

How to foster loyal relationships

1.

2.

3.

4.


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IntroductionsIntroductions1.

www.quintadamata.net


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Why talk about LoyaltyWhy talk about Loyalty

Mature IndustryMature Industry increasing competitionincreasing competition

Focus on getting more customersFocus on getting more customers Market share Vs.Market share Vs. share of customershare of customer

Competitive advantageCompetitive advantage PricePrice

Service qualityService quality

Loyal relationshipsLoyal relationships

2.


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The bottom lineThe bottom line

Reduction of 5% of defective customers may result inReduction of 5% of defective customers may result in

80% increase in profitability80% increase in profitability (Reichheld & Sasser, 1990)(Reichheld & Sasser, 1990)

60% to 80% of lost customers were satisfied60% to 80% of lost customers were satisfied (King, 1996)(King, 1996)

90% of customers who90% of customers who lovelove a company will repeat buta company will repeat but

only 30% of customers whoonly 30% of customers who likelike the company willthe company will

repeatrepeat (Opinion Research Corp.)(Opinion Research Corp.)

20-40% of your customers bring 80% of your profits20-40% of your customers bring 80% of your profits

2.


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What is a Loyal CustomerWhat is a Loyal Customer

Definition:Definition: customers with a longcustomers with a long

record ofrecord ofpurchasespurchases from a preferredfrom a preferred

provider caused by their psychologicalprovider caused by their psychological

andand emotional bondemotional bond with that providerwith that provider

Are there various types of loyalty?Are there various types of loyalty?

3.


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Types of Loyal CustomersTypes of Loyal Customers

Frequency of Purchases

Attachment High loyals Latent loyals

Spurious loyals Low loyals

-

-+

+

3.


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Differentiated Strategy toDifferentiated Strategy toLoyalty SegmentsLoyalty Segments

Not all customers were created equalNot all customers were created equal

High loyals High loyals most profitable, make them feel like familymost profitable, make them feel like family(20% of your customers)(20% of your customers)

Latent loyals Latent loyals find out why they cant come more often,find out why they cant come more often,find other ways they can help, dont discountfind other ways they can help, dont discount

Spurious loyals Spurious loyals come but dont care, make themcome but dont care, make them

connect with you, make them wish for special treatmentconnect with you, make them wish for special treatment

Low loyals Low loyals dont get distracted with them, but makedont get distracted with them, but makesure they are satisfied (approx. 40-60% of yoursure they are satisfied (approx. 40-60% of yourcustomers)customers)

3.

?


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How to foster loyal relationshipsHow to foster loyal relationships

Current loyalty programsCurrent loyalty programs Ineffective in creating a bondIneffective in creating a bond

Most are simply frequency programsMost are simply frequency programs

Make people shop around and look for dealsMake people shop around and look for deals

Make customers price sensitiveMake customers price sensitive

Erode profitsErode profits

We can identify loyal customers but we dontWe can identify loyal customers but we dont

know how to generate customer loyaltyknow how to generate customer loyalty

4.


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The Love TriangleThe Love Triangle

Social Network

CustomerProvider

4.

R.I.M.

B.C.


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R.I.M.R.I.M.

Resource Investment ModelResource Investment Model

Providers

investment of

special resources

Customers

investment of

special resources

Customers

loyalty to

provider

Retribution to

the provider

Protect customers

equity

Loyal relationships facilitatespecial treatment

Morais, Dorsch, & Backman (2004)Morais, Dorsch, & Backman (2004)

4. RIM


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Types of Resources

LoveLove

StatusStatus

InformationInformation

ServicesServices

GoodsGoods

MoneyMoney

4. RIM


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Types of InvestmentsTypes of Investments

GiveGive to your valuable customers to your valuable customers

Make sure that your special customers receive special treatmentMake sure that your special customers receive special treatment

Send cards for birthdays rather than just for the holidaysSend cards for birthdays rather than just for the holidays

Make them feel uniqueMake them feel unique (use name, compliment them for helping)(use name, compliment them for helping)

Educate them about front and back stageEducate them about front and back stage

ReceiveReceive from customers from customers Give them opportunities to get to know you (your staff)Give them opportunities to get to know you (your staff)

Help them become advocates of your companyHelp them become advocates of your company (merchandize, web)(merchandize, web)

Seek their opinionSeek their opinion

Allow them to commit to you with a long term programAllow them to commit to you with a long term program ?

4. RIM


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B.C.B.C.

Brand CommunitiesBrand Communities

Definition:Definition:group of individuals unitedgroup of individuals unitedthrough the consumption of your productsthrough the consumption of your products

Harley-DavidsonsHarley-Davidsons HOGsHOGs

Club MedsClub Meds Gracious MembersGracious Members

CharacteristicsCharacteristics

Communality help and expect help from othersCommunality help and expect help from others

BrandfestsBrandfests are usedare used toto share historyshare history

Keep consuming to stay connectedKeep consuming to stay connected

4. BC


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Building a CommunityBuilding a Community

CommunityCommunity

2.2. Use a newsletter to share news about customersUse a newsletter to share news about customers

3.3. Develop an online forum for customers to stay in touchDevelop an online forum for customers to stay in touch

4.4. Organize annual events by invitation for VIP customersOrganize annual events by invitation for VIP customers

5.5. Facilitate picture / story sharingFacilitate picture / story sharing

6.6. Help customers help each otherHelp customers help each other

7.7. Give a name to the communityGive a name to the community

8.8.

?

4. BC


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Action OutlineAction Outline

1. Select your market segment Identify most valuable customers (what criteria?)

Identify customerswho might become valuable

2. Design a relationship-building service culture

Identify what type of treatment promotes customer loyalty Identify what loyal customers want to give to you

Identify potential for the development of a brand community

3. Implement a loyalty treatment Design specific communication strategy and message

Train staff to understand the importance and the process Create opportunities to invest and receive investments

Generate a sense of community among your customers

4. Measure effects of program and redesign Maintain constant communication with your loyal customers

Monitor costs and results of your program

4.


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The Love TriangleThe Love Triangle

Social Network

CustomerProvider

fostering loyal customer relationships

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