chapter twelve encouraging customer loyalty. mcgraw-hill/irwin © 2005 the mcgraw-hill companies,...

CHAPTER TWELVE

Encouraging Customer Loyalty

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.

12-2

LEARNING OBJECTIVES

Establish & maintain trust

Develop characteristics that enhance loyalty

Recognize provider’s responsibility

Help customers feel important

Select strategies to enhance satisfaction and build loyalty

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.

12-3

Relationships

are Built

on Trust!

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.

12-4

IIMPORTANCE MPORTANCE OOF F LLOYALTYOYALTYCost 5 times more to acquire new customers

50% of consumers will complain to frontline

75% complain in B2B

Small-ticket = 96% do not complain

Large-ticket = 50% complain to frontline

Large-ticket = 5-10% escalate to mgt

50% simply go away

Tell up to 16 friends

Businesses lose 10-15 per yearSource: TARP

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.

12-5

SSTRATEGIES TRATEGIES FFORORBBUILDING UILDING TTRUSTRUST

Communicate effectively & convincingly

Display caring

Be fair

Admit errors/lack of knowledge

Trust customers

Keep your word

Provide peace of mind

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.

12-6

Customer Relationship Management (CRM) involves identifying customer needs, understanding and influencing customer behavior through ongoing communication strategies in an effort to acquire, retain, and satisfy the customer. The ultimate goal is customer loyalty.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.

12-7

BBENEFITS ENEFITS OOF F CCRMRM

Less need to obtain new customers

Reduced marketing costs

Increased ROI

Enhanced loyalty

Elevated profitability

Targeted marketing

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.

12-8

AADDRESSING DDRESSING CCUSTOMER USTOMER NNEEDSEEDS

To feel welcome

To be understood

To feel comfortable

To feel appreciated

To feel important

To be respected

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.

12-9

PPROVIDER ROVIDER CCHARACTERISTICS HARACTERISTICS AAFFECTING FFECTING LLOYALTY (1)OYALTY (1)

Responsiveness

Adaptability

Communication skills

Decisiveness

Enthusiasm

Ethical behavior

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.

12-10

CCHARACTERISTICS HARACTERISTICS AAFFECTING FFECTING LLOYALTY (2)OYALTY (2)

Initiative

Knowledge

Perceptiveness

Planning ability

Professionalism

Problem-solving ability

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.

12-11

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.

12-12

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.

12-13

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.

12-14

PLANNING PROCESS MODELPLANNING PROCESS MODEL

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.

12-15

Identify the problem

Generate ideas

Evaluate alternatives

Choose among alternatives

Implement chosenalternative

Learn from feedback

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.

12-16

BBE E RRESPONSIBLE ESPONSIBLE FFOR OR RRELATIONSHIPSELATIONSHIPS

Personalize approach

Listen actively

Keep open mind

Individualize service

Show respect

Elicit input

Use effective closing statements

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.

12-17

EELICITNG LICITNG CCUSTOMER USTOMER IINPUT (1)NPUT (1)

Customer comment cards

Toll-free numbers

Verbal comments

Telephonesurveys

Service contact surveys

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.

12-18

EELICITING LICITING CCUSTOMER USTOMER IINPUT (2)NPUT (2)

Exit interviews

Shopper/customer surveys

Focus groups

Sales and service records

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.

12-19

MMAKING AKING TTHE HE CCUSTOMER USTOMER #1#1

Positive initial contact

Establish rapport

Identify/satisfy needs

Exceed expectations

Follow up

Encourage return

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.

12-20

RRELATIONSHIP-ELATIONSHIP-RRATINGATINGPPOINT OINT SSCALECALE

Exemplary = 4

Above average = 3

Average = 2

Below average = 1

Unsatisfactory = 0

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.

12-21

EENHANCING NHANCING SSATISFACTION (1)ATISFACTION (1)

Pay attention

One customer at a time

Know your customers

Give special treatment

Service at least adequately

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.

12-22

EENHANCING NHANCING SSATISFACTION (2)ATISFACTION (2)

Do the unexpectedHandle complaints effectivelySell benefits not featuresKnow your competition

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.

12-23

RRATER ATER MMODELODEL

Reliability

Assurance

Tangibles

Empathy

Responsiveness