Customer Loyalty

A Loyal Customer is One Who.. even though other options exist  Increasingly buys more and more from a particular supplier  Provides constructive feedback/suggestions Exhibits Psychological Commitment  Wouldn¶t consider terminating the relationship psychological commitment  Has a positive attitude about the supplier  Says good things about the supplier .   Shows Behavioral Commitment  Buys from only one supplier..

Lifetime value of customer Profit from reduced operating costs Profit from price premiums Profit Profit from increased purchases Profit from referrals Base profit Acquisition 0 1 2 3 4 5 6 Year of customer life Source: Service Management Interest Group. Harvard Business School .

resulting ‡ from quality and productivity improvements Attractive value ‡ Retention (quality/cost ratio) ‡ Repeat business Service designed ‡ Referral and delivered to meet targeted customers¶ needs Source: Service Management Interest Group.Drivers of loyalty Service concept: results for Operating strategy and service delivery customers system Internal service quality Employee retention Employee satisfaction Employee productivity Revenue growth External Customer satisfactionCustomer service loyalty value Profitability ‡ ‡ ‡ ‡ ‡ Workplace design Job design and decision-making latitude Employee selection and development Employee rewards and recognition Adequacy of ³tools´ for serving customers ‡ Service ‡ quality/costs to customer. Harvard Business School .

Customer Loyalty Measures    Retention Recency Frequency Longevity Amount Referrals Percent retained over period Most recent event date Average gap/number events over period Start date/total number events Average per order over period Customer gets a customer promotional/ acquisition source    .

Financial Bonds IV.Levels of Retention Strategies Volume and Frequency Rewards Integrated Information Systems Stable Pricing Bundling and Cross Selling I. Structural Bonds Excellent Quality and Value Continuous Relationships Joint Investments II. Customization Bonds Social Bonds Among Customers Anticipation / Innovation Mass Customization Customer familiarity . Social Bonds Personal Relationships Shared Processes and Equipment III.

WAYS TO WOO Types of loyalty program Rewards Program Awards points for purchases. Situation Limited product categories for rewarding customers Need for new customer acquisition Need to differentiate from competitors' brands Situation Product line represents a wide retail selection. value-added benefits and recognition to valued customers . redeemable against new purchases. Points can be exchanged for rewards unrelated to the brand Rebate Program Awards a gift certificate. Partnership Program Rewards a customer's accumulated purchases with a partner company's products or services. Affinity Program Offers special communications. when a customer reaches a spending threshold Appreciation Program Offers a reward selection of your company's products and services in exchange for accumulated points. Situation Only to increase customer LTV Rewards encourage customers to sample other products & services Situation Only to acquire new customers Opportunity to prospect a partner company's database Partner company's have similar TA Situation Brand strongly represents a specific customer lifestyle Customers are interested in learning more about your products Rewards not needed to cultivate long-lasting relationships. Rewards to motivate incremental purchases. Rewards to increase in-store traffic.

1% Customers = 24% revenue 114% ROI 4% Customers = 27% revenue 139% ROI 15% Customers = 29% revenue 74% ROI 80% Customers = 20% revenue 53% ROI .

Contact HHonors  Customer Service Benefits:  HHonors Rate at Shops  Complimentary Sauna  HHonors Meetings  20% Weekend Restaurant Discount  Qualification:  4 qualifying stays  10 qualifying nights  American Express Hilton HHonors Platinum Credit Card membership Benefits:  15% bonus on HHonors Base points  Complimentary Health Club Privileges  VIP-only rewards .Blue Membership  Qualification:   Silver VIP Membership  Enroll online or.

Gold VIP Membership  Diamond VIP Membership  Qualification:     Qualification:    16 qualifying stays 36 qualifying nights 60.000 Base points 50% bonus on HHonors Base points Reservations Guarantee Upgraded Accommodation/Amenities Complimentary Health Club Privileges VIP-only rewards Reward Planner Service  Benefits:      Benefits:       .000 Base points American Express Platinum charge Card membership 25% bonus on HHonors Base points Upgraded Accommodation/Amenities Complimentary Health Club Privileges VIP-only rewards 28 qualifying stays 60 qualifying nights 100.

General benefits            Double Dip® Earnings Style Dedicated HHonors reservation service Expedited Check-In Late check-out upon request Express Check-Out Spouse stays free HHonors Guest Manager Free weekday newspaper Ongoing communications eFolio Online Reward Reservations .


Enrollment form .

Benefits to the Organization     Loyal customers tend to spend more with the organization over time On average costs of relationship maintenance are lower than new customer costs Employee retention is more likely with a stable customer base Lifetime value of a customer can be very high .

and continuity benefits  Contribution to sense of well-being and quality of life and other psychological benefits  Avoidance of change  Simplified decision making  Social support and friendships  Special deals . social.Benefits to the Customer   Inherent benefits in getting good value Economic.

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