Customer Loyalty and

Customer Retention

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Outline• Definition of Customer Loyalty• What Affects Customer Loyalty• Relationship programs• Customer life cycle• Reasons for Lost Customers• Customer Retention Strategies• Problem Identification and Management• Customer complaints

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Customer loyaltyCustomer’s commitment or attachment

to a brand, store, manufacturer, service provider, or other entity.

• The ultimate goal of customer loyalty programs is happy customers who will return to purchase

again and persuade others to use that

company's products or services.

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Customer Loyalty Process”Key Elements

• Ongoing process to capture and utilize the Voice of the Customer1. Listen to key customers2. Understand the messages3. Focus on opportunities4. Take Action

• Using a company-wide model for “Customer Loyalty”– Measures the strength of the customer relationship

• Delivers credible, actionable information and is linked to other key business processes– Strategy development/validation– Customer segmentation (needs based)– Continuous Improvement

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Brand loyalty

• When consumers become committed to your brand and make repeat purchases over time. Brand loyalty is a result of consumer behavior and is affected by a person’s preferences.

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Relationship commitment

• An enduring desire to maintain a valued relationship

• Loyal customers, high in repeat purchase behavior and strong in attitude

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What affects customer loyalty

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Customer satisfaction

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Customer satisfaction

• Customer satisfaction, shown by the difference between customer expectations and buying before purchasing the next performance reaction.

• Ensuring customer satisfaction is a key issue for businesses. Because customer satisfaction creates loyalty.

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Emotional Bonding

• Brand affect, brand equity

• Company attachment

• Establish feelings of closeness, affection, trust, and respect.

• Needs, wants, desires

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Trust

• Willingness of customer to rely on the organization.

• Reduces uncertainty/risk

• Honest, fair, and responsible

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Choice reduction and habit

• People have tendency to reduce choice.

• There can be a switch cost associated with change to the unfamiliar, untried, or the new. There may be cost in time, money, and risk

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History with the company

• Corporate Image

• Contacts and purchase history

• Service experience

• Intergeneration influence

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Relationship programs• Customer relationship management,refers to

reliable systems, processes, and procedures that allow companies to better manage customer relationships.

• A successful customer relationship plan can manage all business-related operations and interactions with customers simultaneously.

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Customer life cycle

ACTIVATION• WELCOME CALLS

• START-UP INSTRUCTIONS

• ADDRESS CHANGES

• ACTIVATION CONFIRMATIONS

SERVICE• OUTAGE AND RESTORATION NOTIFICATIONS

• PROACTIVE SERVICE ALERTS

• SCHEDULING AND CONFIRMING APPOINTMENTS

RETENTION• RENEWAL REMINDERS

• UP-SELL AND CROSS-SELL PROGRAMS

• PROMOTIONS AND SPECIAL OFFERS

COLLECTION• LATE PAYMENT REMINDERS

• FIRST- AND THIRD-PARTY COLLECTIONS

• ACCOUNT RESOLUTION

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Reasons for Lost Customers• Dissatisfaction• Conflict• Loss of Trust• Cease to need• Novelty Seeking• Too high of a price• Poor product performance• Poor customer service

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Customer Retention Strategies

• Welcome

• Reliability

• Responsiveness

• Recognition

• Personalization

• Reward Strategies

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A welcome strategy

The organization’s appreciation for the initiation of a relationship. • Creating a delightful surprise, making a

good first impression• First touch: additional customer

information• Reassure the buyers that they have made

the correct choices.

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Reliability

The organization can repeat the exchange time and time again with the same satisfying results.

– Keep promise– Ensure consistent quality – Continuous promotion is still the key.

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Responsiveness

• The organization shows customers it really cares about their needs and feelings.

• Loyal employees create loyal customers. Internal marketing.

• Customer-contacted employees should have the authority as well as the responsibility for date to date operational activities and CRM decision.

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Recognition

• Special attention or appreciation that identifies someone as having been known before.

• People respond to recognition.

• Recognition and appreciation help maintain and reinforce relationships.

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Personalization

Use CRM system to tailor promotions and products to the specific customers.

• Offer engine: take customer data after it is analyzed and applies it to create the offer or message that is appropriate to the individual customer.

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Reward strategies

• Customer reward programs are serious business, and if you want to grow your best customers and reap the benefits of true loyalty, you need an outstanding customer reward strategy.

• A loyalty rewards card program is a good way to start.

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Problem Identification and Management

• The best of all possibilities is to identify and eliminate problems before they impact your customers.

• Build numerous mechanism for identifying customer problems.– Customer satisfaction survey– Websites, other contacts points

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Customer Complaints

• Level of dissatisfaction• Attrition of blame• Cost/benefits of actions• Personal characteristics:

– highly educated, – self-confident, – aggressive, – Older women.

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Ali KAYTAN

Gizmen NALBANTLI