chapter four relationship and loyalty marketing. © 2008 pearson education, upper saddle river, nj...

Chapter Four

Relationship and Loyalty Marketing

© 2008 Pearson Education, Upper Saddle River, NJ 07458.

All Rights Reserved.2

Marketing Essentials in Hospitality and Tourism: Foundations and Practices by Shoemaker & Shaw

What is Loyalty and Why is It Important?

Loyalty defined: When the customer feels so strongly that

you can best meet his or her relevant needs, your competition is virtually excluded from the considered set, and the customer buys almost exclusively from you — referring to you as “their restaurant” or “their hotel.”

Winning maximum share of heart, mind and wallet.




What is Loyalty and Why is It Important?

Relationship marketing The process of identifying and creating mutual value for

customers that you share over the relationship’s lifetime

Levitt’s definition compares the relationship to a marriage

Benefits of loyalty Financial importance of maintaining and creating new

customers Loyal customers use word-of-mouth to promote a

product or brand Different from traditional marketing




What is Loyalty and Why is It Important? Drawbacks of Frequency:

Exclusive focus on behavior ignores the emotional and psychological factors that build real commitment

Without that commitment the customer focuses on “the deal,” not the brand or product relevance




How It Plays Out

ObjectivesBuild traffic, sales and profits.

Build sales, profits and the brand.

Real Loyalty

StrategyIncentive repeattransactions.

Build personal brandrelationship.

FocusA segment’s behavior and profitability.

An individual’s emotional and rational needs, and their value.

Traditional Frequency




Maintaining a Good Relationship with the Customer

Model of service relationships

Antecedents that affect trust and commitment

Consequences that result from trust and commitment




Customer Relationship Management

Creating improved shareholder value through relationships with customers and customer segments




Lifetime Value of a Customer Definition

The net profit received from doing business with a customer during the time that the customer continues to buy from your business

Profitability increases over the life of the relationship, due to positive word of mouth

Customer loyalty ladder Moving a customer from a state of

awareness to brand advocacy




Exhibit 4-8; The Consumer

Buying Process




Exhibit 4-6; Profits through a hotel guest’s life




Building Loyalty Evolution of customer loyalty

Sales Targeted promotions Frequency promotions Brand relationships Knowledge relationships




Exhibit 4-9: The Evolution of Building Loyalty




Building Loyalty The loyalty circle

Process

Value

Communication




Exhibit 4-10; The Loyalty Circle




Building Loyalty Frequent guest programs

Not the same as loyalty programs Any program with guest rewards

that can be redeemed for free or discounted products or services

Can be one part of a loyalty program




Building Loyalty What loyalty

programs don’t do:

Not a “quick fix”

Not a promotion

What makes loyalty programs work:

Database, communication, meaningful rewards, simplicity, attainability, sustainability, measurability, management, manageability, profitability




Customer Complaints and Service Recovery Customer complaints

Inevitable, healthy, opportunities, marketing tools, advertising

TARP research study on complaint handling

50% of consumers complain to front line staff 1-5% of those go to management Complaint rates vary by type of problem Twice as many people are told about a bad

experience over a good one Tip of the iceberg phenomenon




Exhibit 4-11; Tip of the Iceberg Phenomenon




Customer Complaints and Service Recovery What to do about it?

This is marketing’s task Make it easy for customers to

complain Make it known where and how to

complain Do something about the complaint

if it is reasonable




Customer Complaints and Service Recovery

Effective complaint handling, from A Complaint is a Gift: Say “thank you” Explain why you appreciate the complaint Apologize for the mistake Promise to do something about it immediately Ask for necessary information Correct the mistake Check customer satisfaction Prevent future mistakes




Employee Relationship Marketing or Internal Marketing

Definition Apply marketing principles to those

who serve the customer (directly or indirectly) and build a mutual bond of trust with them

To create a customer, must create employee value

Lower employee turnover relates to higher profits




Employee Relationship Marketing or Internal Marketing

Noncontact employees All employees are part of the marketing effort

Employees need to understand how their job and actions effect the customer

Employees need to be kept up to date on important information

Success ultimately lies with management




Class Discussion Name two products or services to

which you consider yourself extremely loyal.

What has produced that loyalty? How frequently do you buy this

product or service? What do you tell your friends about

this product or service? What do you tell your family?

chapter four relationship and loyalty marketing. © 2008 pearson education, upper saddle river, nj...

Documents

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