Transcript PowerPoint 프레젠테이션

CRM and Loyalty
2001017 Kim, Mi Young
eCommerce ICE720, 2002
Contents
Part 1. Customer Relationship
Part 2. Customer Loyalty
Part 3. Approach to Loyalty Program
Part 4. Loyalty Program case study
Part 5. Summary and Conclusions
Part 6. References
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Part 1. Customer Relationship
1.
CRM
2.
Relationship Marketing
3.
CRM and Behaviour Type
3
What is CRM?
What is CRM?
Simply stated, Customer Relationship Management (CRM) is about
finding, getting, and retaining customers.
CRM is at the core of any customer-focused business strategy and
includes the people, processes, and technology questions associated
with marketing, sales, and service. In today's hyper-competitive world,
organizations looking to implement successful CRM strategies need to
focus on a common view of the customer using integrated information
systems and contact center implementations that allow the customer to
communicate via any desired communication channel. Lastly, CRM is a
core element in any customer-centric eBusiness strategy.
From www.realmarket.com
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Effect of CRM
repurchase
Loyal
customization
Increase
revenue
Satisfaction
Good word
of mouth
Creating new
customer
Brand switch
Losing customer
Service/
Product
Decrease
Revenue
dissatisfaction
Bad word
Of mouth
losing potential
customer
CS Guarantees Company’s Revenue?
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CRM and Customer Loyalty
Acknowledgement about Relationship
Products
CM
(Customer
Management)
Control
Result
Secret
Sales Volume
Departure
Customers
Route
Communication
Continuity
Public
CRM
(Customer
Relationship
Management)
Destination
Loyalty
There is always the risk that a customer will defect when a competitor offers better
value or a wider range of value added options. -> Loyalty Programs must motivate loyal
buyers to repurchase.
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Relationship Marketing
Profit in business comes from repeat customers, customers that boast about your product and
service, and that bring friends with them ( cited in Lowernstein, 1995)
Relationship Marketing
•
Focuses on getting and keeping customers
•
Concerned with customer loyalty
•
Aimed at developing long-term, cost-effective links between an
organization and its customers
•
All customer relationships are worth keeping
Customer retention
•
Impact on profitability and past research has claimed that it can be 5 times
more expensive to obtain a new customer.
•
The Pareto rule
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Customer satisfaction and Behaviour type
Proliferation of Loyalists
Hostages
Possibility of
Loyalist
(expectation
< experience)
Terrorists
Who’ve had Bad Experiences
with the Company
&
The Company didn’t respond to them.
Defectors
1
Strong dissatisfaction
2
Mercenaries
(Expensive to Acquire,
Quick to Depart)
Competitors’ discounts
offering or benefits
3
so – so
4
(10~50%)
5
Strong satisfaction
Source :Keki R. Bhote, “Beyond Customer Satisfaction to Customer Loyalty”, 1996
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Why customers leave even they are satisfied?
In US, survey of CS about Cars, Almost 90% of answers are satisfied.
Repurchase rate of same brand car company is below 30%.
•Hard for finding rule of relationship between CS
and customer break away.
•CS does not guarantee repurchase of
customers
Customer loyalty is needed.
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CS strategy
Step #1
Issue Discovery
Customer DB
analysis/
Define
marketing
issues
Step #2
Value Identification
Customer
investigation/an
alysis
Step #3
Needs Differentiation
Customer Segmentation
Customer’s needs
finding / customer
value
segmentation
Step #4
Customization
Product/service,
channel, reward
strategy
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Part. 2 Customer Loyalty
1.
What is Customer Loyalty?
2.
Customer Satisfaction Strategy
3.
Why Customer Loyalty?
4.
Case Study (online and offline)
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What is Loyalty?
The key to the successful adoption of relationship marketing lies in the building of
client loyalty in dynamic business environments. (Morris, 1999)
In a business context loyalty has come to describe a customer’s commitment to
do business with a particular organization, purchasing their goods and services
repeatedly, and recommending the services and products to friends and
associates. (Barnett,2000)
Loyal Customer can mean a consistent source of revenue over a period
of many years. However, this loyalty cannot be taken for granted. It will
continue only as long as the customer feels they are receiving better
value than they would obtain from another supplier.
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Relationship between Loyalty and Profitablity
Relationship between CS and C Loyalty
100
90
80
70
60
50
40
30
20
10
0
Loyalty (Retention Rate (%)
Indexed Customer Satisfaction Rating (%)
Why Customer Loyalty?
X
X
X
XX
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X X
X
X
10
20
30
40
50
60
70
Customer Loyalty Rating (%)
80
90
100
95
90
X
X
85
80
5
X
X
X
X
X
10
X
X
X
X X
X
X
X
X X
X
X
15
20
25
Profitability (%)
Source : Keki R. Bhote. “Beyond customer satisfaction to customer loyalty”, 1996
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X
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How to build Loyalty?
Framework of building Loyalty
Drivers
CRM
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Phased Elements
Degree of
Relationship
Improving
Core Products/Service
Innovation of Channel Mgmt.
Customer
Satisfaction
Attitude,
not Action
Reward Program
/Continuing Campaign
Repurchase
/ Cross-selling
Action, not Affinity
(Artificial Loyalty)
(CR Strategy)
Trust/
Intimacy
Recognition
of Relationship,
Referral
Customer
Loyalty
Case Study: Amazon.com (online case)
Customer Strategy
Building customer loyalty
•Suggest and find what customers wants
positively
•Differentiated customer value
suggestion
•Remind customers of relationship and be
concerned about customers continuously
•Intensify reward program
•Never forget customers who visit before
Mi’s Gold Box
without any input
my information
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Case Study: ScrubaDub (offline case)
•Automotive carwash business: Differentiated strategy based on CRM
•Differentiated approach to Customers: focus on quality than customer quantities
Investigated all costs in terms of customers washing times and expenditure per
customers
•Findings
1. 75% of whole customers are below 6 times, low visit rate in a year.
Therefore, rest 25% are visit rate over 60%
2. Segmented 5 level in terms of annual visit rate
(the lowest level /low level/average/high level/the highest level)
Between visit rates and spending money, there is relationship something.
3. So, relationship marketing need to invest high on customers who has low revenues
and invest low vice versa.
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ScrubaDub Strategy
Who is the highest value customer?
-> high visit rates customer
Not a customer who owns a large car
★ high income customers
★ Jeep or compact car owners
★ A driver who has a car below 3 year
Relationship marketing
•New display design Offer resting place with free coffee, snacks
•Building Personal relationship
•Increasing staffs at peak time for saving customer waiting time
•Discount scheme(Offering free washing coupon)
•Car washing guarantee
(free car washing if there is rainy or snowy within 3 days after car washing)
Effects: average growth rate 12.5% (cf. others: 7%)
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Part 3. Approach Customer Loyalty Programs
1.
Loyalty programs
2.
Strategic reward programs
3.
Core strategies building reward programs
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Loyalty program: Reward
The plan objectives for this program are:
1.
Effectiveness, cost savings, profitability, etc.
2.
Develop a greater sense of concern and loyalty about the company or brand
3.
Strengthen communications between customers and companies.
4.
Provide financial rewards to customers who have demonstrated performance or
contribution
5.
Enhance the Company’s ability to meet or exceed its target goals.
Campaign and Reward
•Discrete Communication
Model
• individual Approach
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•Continuous Communication
Model
Loyalty
• Mass Approach
Reward types
Type of reward
Directly
Supports
Value
Proposition
Other
indirect
Types
of reward
Airline Mileage,
Coupon
Promotion
(Price)
Lotteries
(Instant Scratchies)
Multi-product
Frequent-buyer
Delayed
Immediate
Timing of Reward
“ Dowling.,Mark Uncles, 1997”
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Continuity
Reward
4 characters to differentiate
4 Attributes
(Accomplishment)
• Points acquisition
• Reward offering cycle and
Getting Reward gifts
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(Continuity)
• Not for short term events
• Induce repurchase
(Attraction)
• Based on customer needs
for offering rewards
• Offering diverse
Reward options
(Acquisition)
• For acquiring
new customer
• For acquiring customers
from competitors
Loyalty Program Reward Schedules
(A) Typical Response Functions
(Airlines Mileage Card)
 Airlines often use a variation of this
scheme where an economy class airfare
attracts 1 point per kilometer or dollar spent
Access to
Rewards
point
#of $Spent
Accumulated
Spending
(GM Auto Card)
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(B) An Alternative Response Function
(Citibank)
 Citigold banking, Citibanking , General
 DB According to Household ( offspring
get same level with parents)
Part 4. Case Study: One of International Hotel in NZ
Background: in Palmerston North, NZ
1. Location
A provincial city, with approximately 75,000 people
It is not a major destination for international visitors to NZ. But it does host a large number of conferences each year
2. Objective
The one of an international larger chain of hotels.
The business manager believes that if it were not for the revenue from the other facilities, the hotel would struggle to
remain open on accommodation revenue alone.
3. Marketing
Corporate marketing programs initiated by head office have not always worked in the hotel, so local marketing
initiatives have been launched in Palmerston North.
Some specific events marketing to improve its weekend occupancy rates and this seems to have been successful.
Follow-up letters.
The latest marketing push= a Gold Card to increase new customers and entice past customers to return.$39.50,
provides various discounts and special occasion offers
4. Methodology: A mail survey was sent to all customers on the hotel Gold Card DB. A 4 page questionnaire to 700
customers.
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Data Analysis and discussion
Card purchase and features
1.
For personal use
2.
Because good range of benefits offered
3.
Because good value for money
•
The data show that 2/3 purchasers were new customers of the hotel.1/3 said they purchased the card
because of persuasive sellers.
•
Purchasers of card were more interested in the local facilities like the, bar, family restaurant and
health club.
•
Percent of respondents using the services was fairly low, except for the family restaurant to cheap
deals. As a customer retention strategy its success is therefore doubtful.
•
There were a number of comments from respondents that referred to their dissatisfaction. Customers
are unlikely to return or become loyal if they are dissatisfied with the service provided. (Dube, 1994)
This highlights the point that satisfaction is not an accurate indicator of customer loyalty.
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Part 5. Summary & Conclusion
Summary
The customers of the hotel who purchased a card and responded to the questionnaire, exhibit the
characteristics of Morgans “mercenaries” (1996 ).
High satisfaction, low to medium loyalty and low commitment to the company. In order to succeed,
loyalty programs need to develop “loyalists” (Morgan, 1996)- customers who have high
satisfaction, high loyalty and who will stay and be supportive of the company.
Conclusion
The hotel case study: to build customer loyalty and therefore retention by selling a discount card
in Palmerton North.
Discount card does not appear to increase customer loyalty and that many customers buy the
card because they perceive it to be good value for money.
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Part 6. References
•Dowling, Uncles 1997, “ Do customer loyalty programs really work?”,
Sloan Management Review, Vol. 38
•McIlroy, Barnett 2000, “ Building customer relationships: do discount cards work? ”
Managing Service Quality Journal Vol. 10 2000
•Gustafsson 2000, “ Improving Customer Satisfaction, Loyalty, and Profit” Jossey-
Bass Inc.
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Q&A
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