review day 1 difference between frequency and loyalty how crm relates to loyalty evolution of...

Review Day 1

• Difference between frequency and loyalty• How CRM relates to loyalty• Evolution of marketing 4P 7P 14C• Lessons learned from research on loyalty –

both hotels and restaurants• Types of customers (see next slide)

Customer Loyalty and Frequency Marketing (c) Stowe Shoemaker, Ph.D

Not All Customers Are Equal

Unprofitable Profitable

Customers - Future

Unp

rofi

tabl

e

Pro

fita

ble

A B

C D

Cus

tom

ers

- C

urre

nt

unprofitable nowprofitable future

unprofitable nowunprofitable future

profitable nowprofitable futureprofitable now

unprofitable future


Types of LoyaltyButterflies True Friends

Strangers Barnacles

• Good fit between company’s offerings and customers’ needs;•High profit potentialActions:•Aim to achieve transactional satisfaction,not attitudinal loyaltyMilk the accounts as long as they are activeKey challenge is to cease investing soon enough

• Good fit between company’s offerings and customers’ needs;•Highest profit potentialActions:•Communicate consistently, but not too often•Build both attitudinal and behavioral loyalty•Delight to nurture, defend, and retain them

• Little fit between company’s offerings and customers’ needs;•Lowest profit potentialActions:•Make no investments in these relationships•Make profit on every transaction

• Limited fit between company’s offerings and customers’ needs;•Low profit potentialActions:•Measure the size and share of wallet; if low focus on up and cross-sellingIf size of wallet small, impose strict cost controls

From Reinartz and Kumar 2002 Harvard Business Review

HP

LP

ST LT

HP = high profit; LP= low profit; ST =short term; LT= long termCustomer Loyalty and Frequency Marketing (c) Stowe Shoemaker, Ph.D

Review Day 1• Satisfaction and loyalty• Intent to return, satisfaction, and loyalty• Why customers may be loyal but do not return• Measuring the value of customer• Value of word of mouth• Brands and branding• Survey measurement scales• Business models of hotels and how point based

programs drive current model


What to Do When Get Home

1. Review with your staff buyer behavior model2. Review with your staff evolution of

marketing.3. Have staff take each of the 14C’s and apply it

to their department to see how the department can move customer to loyalty

4. Discuss frequency versus loyalty with staff



5. Discuss components of loyalty and develop list of things your firm is doing to create loyalty.

6. Look at each of your customer segments to determine which cell they belong (see slide on page 2 and 3). If possible calculate % of each

7. On surveys, ask questions about overall satisfaction and overall intent to return



8. Cross tab intent to return with satisfaction9. Add questions to survey that will enable firm

to calculate life time value, WOM (both positive and negative, etc.)

10.Go through list of 10 guidelines for building strong brands. Make a list of all the things your firm does to build its brand.

11.Design “leaky bucket” for your firm by segment type.


Review Day 2

• Rosewood Hotels: decision to brand or not to brand

• Calculate the life-time value of a customer: importance of limiting defections and its financial impact

• Importance of asking questions on survey to measure LVC

• Introduced the Loyalty Circle


Review Day 2• Discussed Value and what comprises value• Discussed the four components of a service• Importance of “planning your work” and

“working your plan”• Introduced the Gap Model of Service Quality,

where the GAPS occur and how to close the GAPS



12.Examine your surveys and make sure you include questions to measure life-time value and word of mouth

13.Introduce staff to Loyalty Circle to show them how loyalty can be created

14.Give staff members the survey that pertained to GAP 2. Discuss results and use 14C’s and RATER to improve guest experience



15.Reword questionnaire in GAP 2 from customer’s perspective and administer to your guests. Examine how guests’ and staff perspectives differ, if at all

16.Investigate the listening posts you have created around your property. How are they working? How do you ensure information works its way “up”



17.Examine ways you communicate. Are you providing consistent message? What does your guest “see” when they get your e-mail?

18.Review best practices for communication, which areas need improvement?

19.Use “test and control” groups20.Give your staff following survey21.Incorporate slide 11 in all your surveys


How Well Are You Doing?

• 1 = Not using strategy at all• 2 = Using the strategy but have had problems

implementing it• 3 = Using the strategy but with no noticeable

results• 4 = Using the strategy and have noticed positive

results• 5 = Using the strategy and judge it as a highly

effective tactic for maintaining ongoing communication with customers

From: A Complaint is a Gift


Strategies

• 1. Train staff to view complaints as a gift ___• 2. Market the fact that you are looking for

complaints ____• 3. Evaluate your internal complaint structure ___• 4. Set up listening posts ___• 5. Make customer comment forms available ___• 6. Create staff comment forms to capture

customer complaints ___



Strategies• 7. Let customers complain in private ___• 8. Set up customer confidants ___• 9. Do not be satisfied with the first response

your customers give you ___• 10. Go after the ones that do not respond to your

customer surveys ___• 11. Randomly ask for feedback ___• 12. Ask for value and quality ratings ___• 13. Hang out with your customers ___



Scores• 1. ____• 2. ____• 3. ____• 4. ____• 5. ____• 6. ____• 7. ____

• 8. ____• 9. ____• 10. ____• 11. ____• 12. ____• 13. ____• TOTAL ______

Your Total/65 = _________


Problem Impact Tree

Please indicate if you reported any problems during your visit and how they were resolved. No problems experienced . . . . . . . . . . . . . . . . . . . .1 SKIP X Problems reported and were resolved in a friendly effective manner . . . . . . . . . . . . . . . . . . . . . . 2 Experienced problems, but didn’t report to staff . … 3 Problems reported and were not resolved in a friendly, effective manner. . . . . . . . . . . . . . . . . 4



22.Examine chart on next page: determine the percentage of customers in each cell

23.Examine each component of loyalty circle. Develop list of tactical things firm does to build loyalty. Also ask, what could be done to build loyalty


What are we collecting

Where Who’s collecting

How collecting

What From Who



No Product or Service Failure

Customer does not say anything

Celebration

No Product or Service Failure

Customer dissatisfied and speaks up

Proactive CustomerEducation/Research

Product or Service Failure

Customer does not say anything

Encourage Complaints

Product or Service Failure

Customer dissatisfied and speaks up

Service Recovery


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