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Published by: Rashidi Ali on May 30, 2012
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Fostering Loyal Customer Relationships

Duarte B. Morais, Ph.D.
Assistant Prof. of Recreation, Park and Tourism Mgt.

3. 4. Introductions Why talk about loyalty What is a loyal customer How to foster loyal relationships .Presentation Outline 1. 2.

quintadamata. Introductions www.1.net .

2. share of customer • Competitive advantage – Price – Service quality – Loyal relationships . Why talk about Loyalty • Mature Industry – increasing competition • Focus on getting more customers – Market share Vs.

) • 20-40% of your customers bring 80% of your profits . 1996) • 90% of customers who love a company will repeat but only 30% of customers who like the company will repeat (Opinion Research Corp. 1990) • 60% to 80% of lost customers were satisfied (King. The bottom line • Reduction of 5% of defective customers may result in 80% increase in profitability (Reichheld & Sasser.2.

What to expect from loyal customers • Behaviors: – – – – Come back frequently Buy most expensive products Recommend provider to friends Give important suggestions 2. • Emotions: – – – – Are attached to the provider/staff Trust the provider Resist changing despite competitors’ persuasion Willing to forgive mistakes ? .

3. What is a Loyal Customer • Definition: customers with a long record of purchases from a preferred provider caused by their psychological and emotional bond with that provider • Are there various types of loyalty? .

- Latent loyals Spurious loyals Low loyals - .Types of Loyal Customers + + High loyals Attachment Frequency of Purchases 3.

Differentiated Strategy to Loyalty Segments “Not all customers were created equal” • High loyals – most profitable. make them feel like family (20% of your customers) 3. make them connect with you. don’t discount • Spurious loyals – come but don’t care. make them wish for special treatment • Low loyals – don’t get distracted with them. 40-60% of your customers) ? . find other ways they can help. but make sure they are satisfied (approx. • Latent loyals – find out why they can’t come more often.

How to foster loyal relationships • Current loyalty programs – Ineffective in creating a bond – Most are simply frequency programs – Make people shop around and look for deals – Make customers price sensitive – Erode profits We can identify loyal customers but we don’t know how to generate customer loyalty .4.

M.The Love Triangle Social Network 4. R.I. Provider Customer .

I. Resource Investment Model Retribution to the provider Provider’s investment of special resources Customer’s investment of special resources Protect customer’s equity 4. Dorsch. RIM Customer’s loyalty to provider Loyal relationships facilitate special treatment Morais.R. & Backman (2004) .M.

4. RIM Love Status Services Types of Resources Information Money Goods .

Types of Investments Give – to your valuable customers 1. 2. 4. 3. Give them opportunities to get to know you (your staff) Help them become advocates of your company (merchandize. web) Seek their opinion Allow them to commit to you with a long term program ? . Educate them about front and back stage Receive – from customers 1. RIM Make sure that your special customers receive special treatment Send cards for birthdays rather than just for the holidays Make them feel unique (use name. 2. compliment them for helping) 4. 4. 3.

B. Brand Communities 4.C. BC • Definition: group of individuals united through the consumption of your products – Harley-Davidson’s “HOGs” – Club Med’s “Gracious Members” • Characteristics – Communality – help and expect help from others – Brandfests are used to share history – Keep consuming to stay connected .

5. 4. 7. Use a newsletter to share news about customers Develop an online forum for customers to stay in touch Organize annual events “by invitation” for VIP customers Facilitate picture / story sharing Help customers help each other Give a name to the community … ? . 2. BC Building a Community Community 1. 3.4. 6.

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 4. 2. Measure effects of program and redesign – – Maintain constant communication with your loyal customers Monitor costs and results of your program .Action Outline 1. 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 3. Select your market segment – – Identify most valuable customers (what criteria?) Identify customers who might become valuable 4.

The Love Triangle Social Network Provider Customer .

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