loyalty consolidated final
TRANSCRIPT
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Consumer Behavior
LoyaltyPrepared by:
Asmaa El-Hefnawy Mohesn KhairAllah
Islam Bassem Nader Natout Mohamed Abo-Elkomsan
Professor: Ehab Mohamed Abou Aish
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Loyalty Definition & ModelComplementary theories of customer loyalty
Loyalty Programs
Building Loyalty Strategies
Market Share Strategies
Loyalty & Profit
Agenda
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Consumer Behavior Imperatives
Consumer Behavior
Imperatives
Loyalty Switching Satisfaction
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Loyalty Definition & Model
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Customer Loyalty Definition
Nonrandompurchase overtimeof one brand from a
set of brands by aconsumer usingdeliberate
evaluation process
Loyal customers buymore, buy longerand tell more people- that's truecustomer loyalty."
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Aims of customer LoyaltyPrograms
Sales Revenue
Increased byraisingpurchase rate
or amount
Customer Base
Maintained bybuilding acloser bond
between thebrand& existingcustomer
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Customer Loyalty Models
An attitude that sometimesleads to a relationship with brand
Expressed in terms of revealed
behavior pattern of pastpurchase
Buying moderated by individualscharacteristics, circumstances,
purchase situation
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Attitudinal-loyalty to the brand
mainly seen as single brand loyalty
Strong attitude &positive believes
towards the brandOther influence
An attitude thatsometimes leads to a
relationship with brand
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Behavioral-loyalty to the
brands,mainly dividedto few brands
Habitualrevealed
behavior
Satisfactoryexperience &
weak
commitment tobrands
Expressed in terms ofrevealed behavior
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Buying moderated byindividuals characteristics,
purchase situation
Co-
determinantsof buyingbrands
Purchasesituation,varietyseeking
Individualscharacteristics
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Attitude Approach
Behavioral Focus Approach
Contingency Approach
Complementary theories of customer loyalty
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Attitude Approach
Aim to increase sales by enhancing beliefsabout the brand
Strengthening the emotional commitmentof customers to their brand
This is through persuasive advertising and
personal service programs
Finally marketers bond customer to theirbrands
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Contingency Approach
Marketers work on unusual factors such asextending working hours, having 24 hourscustomer support
they also offers price promotions, deals andspecial offers
Marketers create the above contingencyfactors to attract customer loyalty ratherthan developing loyalty programs
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Summary of approachesCBC : Customer Brand CommitmentCBA : Customer Brand AcceptanceCBB : Customer Brand Buying
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LOYALTY PROGRAMS
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Examples of loyalty programs
Loyalty program from anindividuals prospective
Loyalty program from amarket prospective
Loyalty program andprofitability pitfalls
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Loyalty program froman individuals
prospective
Loyaltyprogram
forindividualcustomer
is the
Vehicle to
Increase single brand loyalty
Decreases price sensitivity
Induce customer resistance to counter
offers or counter arguments Dampen the desire to consider alternative
brands
Encourage word of mouth support and
endorsement
Attract larger pool of customers
Increase the amount of product bought
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Loyalty program from amarket prospective
There arefour
differentstrategies
To try to grow the size of the brand
To create a niche brand
Big brands to become a super-loyalty
brands DJ effect is to exploit the desire of
customers for change-of-pace
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Factorsaffectingloyalty
programs
Provide vast amount of data
Few of this programs collect data about thecomplete customer experience
Data come from two sources Evaluation on sales effectiveness of loyalty
program are often based on a poor quasi-experimental design
The choice of benchmark
Loyalty program andprofitability pitfalls
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Assessing customer loyalty
Assessing loyalty programs
Assessing major traps
The choice of benchmark
Whither loyalty programs
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Level of Loyalty programs
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Building Loyalty Stratgy
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Action Outline
4. Measure effects of program and redesign
Maintain constant communication with your loyal customers
Monitor costs and results of your program
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
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
1. Select your market segment Identify most valuable customers (what criteria?)
Identify customerswho might become valuable
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Building Strategy- GraphicDepiction
Product
Performance
Service
Performance
Employee
Performance
Customer
Satisfaction
Retention /
Loyalty
Revenue /
Profit
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Difficulty in Building true loyalty
According to a report from Mintel Research: Only 15% of all grocery shoppers are completely loyal to
the store where they do their main grocery shopping
29% use one other store
22% use two others
Men are more likely than women to be loyal to a singlestore
46% of men shop in just one or two main stores
This study helps us to understand that merelyspending millions does not creates Loyalty. Acontinous approach is essential.
C
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Customer Recognition
Customer Recognition is an important aspect of anybusiness or for any Organization.
With each loyalty programs Recognition aspect comesinto pivotal role.
Each customer wants an attention or recognition whomhe/she enters into relation with.
The recognition can be TangibleorIntangible. Dont underestimate Customer recognition.
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Economic Value of a Loyal Customer
Understanding loyalty program economics is essential.
A loyalty program incurs a cost to an organizationwhich is of prime importance as running these
programs is isnt cheap.
According to a study by Mckinsey & Companyestimated for any Fortune 500 organization aprograms 1st year cost makes up for a large amountsimultaneously costing in marketing and maintenance.
Understanding the economic value of your customers,not just your loyal customers can save tremendous
amounts of revenue and effort.
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Future of Loyalty Programs
Companies should look for ways to differentiate their loyaltyprograms while balancing the revenue and the costs.
Focus should be made more specific or segmented liketargeting life-style, or interests.
Concentrating resources on high potential and high valuecustomers.
Organization's focus should be on broadening customerrelationship rather than rewarding.
Coalition programs a new trend will be seen as new conceptin the loyalty programs.
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Contd ...
Thus we have seen that loyalty programs are ofimmense value to any organization irrespective ofgeographical distribution.
Providing a better product an impeccable serviceshould be the major objective for any organization.
Recognizing the customer and his spending behaviorcan enable to make more specific rewarding structure.
Loyalty programs should not be limited to Rewardingbut to broaden relationship with the customer andoffering them more liberty.
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Market Share Strategies
Loyalty & Profit
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Market Share Strategies
Managerial Strategy
Retain Existing MarketGenerate New Customers
Increase customerloyalty andsatisfaction
Erect switchingbarriers
Capture share fromcompetitors
Expand marketsize
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Loyalty and Profit
Quality
Satisfaction
Loyalty
Profit
LoyaltySatisfactionQuality
Guaranteedcustomer base
Greater retentionHigher premiums
More accurate
budgeting
Increased
purchasing
Higher margins
More strategicplanning
Higher pricetolerance
Higher reputation
Decreasedmarketing costs
Higher firm specificadvertising vigilance
Higher awareness
Higher competitiveinsulation
More positive wordof mouth
Lower newcustomers costs
Higher market
expectations
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The Value of Loyalty
150 top satisfaction dealers were compared tobottom 150
Higher salesperson retention
30 % lower in advertising costs
Higher profit
Higher ROI
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The Value of a Lost Customer
According to a study conducted by
Visits 4 times more
Spending 1000$ per visit
Profit margin is 60%
Potential profit is 2400$
2400$ loss if not satisfied
C t l P ti f L t
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Conceptual Perspective of a LostCustomer
Profitimpact
Word ofmouth
Newcustomer
status
OutcomeBehaviorLostcustomer
status
Out productcategory
Essentiallysatisfied
Betteralternative
NegativeNegativeLost forgood
NoneNo contact
NegativeNone
Positive
AgitatedUnknown
Enthused
FailedReinstated
Transformed
Recovery
ComplainedDissatisfied
Identified
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Case Study
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43
Jetstar Airways is a low-cost airline headquartered in Melbourne.
It operates an extensive domestic network as well as regional andinternational services.
Its main base is Melbourne Airport.
Parent company Qantas also has stakes in sister companies JetstarAsia and Valuair in Singapore
INTRODUCTION
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Key Points
No CRM
Lack of Technological related Infrastructure
No Segmentation of IA customers No govt. support
Innovators but overtaken by Competitors
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Customer Service Standards
No Service Manuals
Avg. of 4 complaints daily
5% of Dissatisfied Customers voice their
dissatisfaction. Poor Complaint Handling Procedures
Complaint handling through Excel
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CUSTOMER SATISFACTION
SURVEY
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Customer Satisfaction Survey Results
Correlation between frequency of Travel with IAand Overall Customer Satisfaction.
Correlation between the years of travel with IAand Overall Customer Satisfaction.
No Correlation between the sex and age of thecustomer and Overall Customer Satisfaction.
Correlation b/w Overall Customer Satisfaction
and Business Class Travelers
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7
27
18
26
3
0
5
10
15
20
25
30
Overall Customer Satisfaction
VeryDissatisfied
Dissatisfied
Neutral
Satisfied
Very Satisfied
Customer satisfaction and the
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Customer satisfaction and the
effect on customer loyalty
Poor Fair Good ExcellentSatisfaction Score
100
80
60
40
20
10Zone of defection
Zone of indifference
Zone of loyalty
Loyalty(Retention)
Source: JL Heskett, The Service Profit Chain; The Free Press; New York 1997
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0
5101520
253035
Customer
Relations
TravelAgents
Punctualityof
Flights
Responseto
Queries
Complaint
resolution
Responsiveness
toenquiries
ValueforMoney
Customer Satisfaction of Individual
Factors
VeryDissatisfied
Dissatisfied
Neutral
Satisfied
Very Satisfied
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Discriminant Analysis Output
1. Bookings
2. Relations
3. Service Quality
4. Value Added
M t I t ti
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FREQUENT FLYER PROGRAM
Management Intervention
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Frequent Flyer Program
Pioneers
Members of FFP: 2,00,000
Quarterly Reports
No additional fares on-flight services Add a car and hotel
Book car and accommodation in selected destinations at thesame time as you book your flights!
Free tickets for frequent travelers Additional free luggage coupons
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