Transcript PPT Chapter 4

Chapter Four
Relationship and Loyalty
Marketing
What is Loyalty and Why is It
Important?
Loyalty defined:
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When the customer feels so strongly that you can
best meet his or her relevant needs, your
competition is virtually excluded from the
considered set, and the customer buys almost
exclusively from you — referring to you as “their
restaurant” or “their hotel.”
Winning maximum share of heart, mind and wallet.
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What is Loyalty and Why is It
Important?
Relationship marketing
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Benefits of loyalty
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The process of identifying and creating mutual value for
customers that you share over the relationship’s lifetime
Levitt’s definition compares the relationship to a marriage
Financial importance of maintaining and creating new
customers
Loyal customers use word-of-mouth to promote a product or
brand
Different from traditional marketing
Marketing Essentials in Hospitality and Tourism:
Foundations and Practices by Shoemaker & Shaw
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What is Loyalty and Why is It
Important?
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Drawbacks of Frequency:
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Exclusive focus on behavior ignores the
emotional and psychological factors that
build real commitment
Without that commitment the customer
focuses on “the deal,” not the brand or
product relevance
Marketing Essentials in Hospitality and Tourism:
Foundations and Practices by Shoemaker & Shaw
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© 2008 Pearson Education, Upper Saddle River, NJ 07458.
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How It Plays Out
Traditional
Frequency
Real
Loyalty
Objectives
Build traffic,
sales and
profits.
Build sales,
profits and the
brand.
Strategy
Incentive
repeat
transactions.
Build personal
brand
relationship.
Focus
A segment’s
behavior and
profitability.
An individual’s
emotional and
rational needs,
and their value.
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Maintaining a Good Relationship
with the Customer
Model of service relationships
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Antecedents that affect trust and
commitment
Consequences that result from trust and
commitment
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Customer Relationship
Management
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Creating improved shareholder value
through relationships with customers
and customer segments
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Lifetime Value of a Customer
Definition
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The net profit received from doing business
with a customer during the time that the
customer continues to buy from your business
Profitability increases over the life of the
relationship, due to positive word of mouth
Customer loyalty ladder
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Moving a customer from a state of awareness
to brand advocacy
Marketing Essentials in Hospitality and Tourism:
Foundations and Practices by Shoemaker & Shaw
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© 2008 Pearson Education, Upper Saddle River, NJ 07458.
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Exhibit 4-8; The
Consumer
Buying Process
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© 2008 Pearson Education, Upper Saddle River, NJ 07458.
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Exhibit 4-6; Profits through a hotel guest’s life
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© 2008 Pearson Education, Upper Saddle River, NJ 07458.
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Building Loyalty
Evolution of customer loyalty
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Sales
Targeted promotions
Frequency promotions
Brand relationships
Knowledge relationships
Marketing Essentials in Hospitality and Tourism:
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© 2008 Pearson Education, Upper Saddle River, NJ 07458.
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Exhibit 4-9: The Evolution of Building Loyalty
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© 2008 Pearson Education, Upper Saddle River, NJ 07458.
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Building Loyalty
The loyalty circle
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Process
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Value
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Communication
Marketing Essentials in Hospitality and Tourism:
Foundations and Practices by Shoemaker & Shaw
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© 2008 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Exhibit 4-10; The Loyalty Circle
Marketing Essentials in Hospitality and Tourism:
Foundations and Practices by Shoemaker & Shaw
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© 2008 Pearson Education, Upper Saddle River, NJ 07458.
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Building Loyalty
Frequent guest programs
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Not the same as loyalty programs
Any program with guest rewards that
can be redeemed for free or discounted
products or services
Can be one part of a loyalty program
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Foundations and Practices by Shoemaker & Shaw
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© 2008 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Building Loyalty
What loyalty
programs don’t
do:
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Not a “quick
fix”
Not a
promotion
Marketing Essentials in Hospitality and Tourism:
Foundations and Practices by Shoemaker & Shaw
What makes loyalty
programs work:
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Database, communication,
meaningful rewards,
simplicity, attainability,
sustainability, measurability,
management,
manageability, profitability
© 2008 Pearson Education, Upper Saddle River, NJ 07458.
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Customer Complaints and
Service Recovery
Customer complaints
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Inevitable, healthy, opportunities, marketing
tools, advertising
TARP research study on complaint handling
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50% of consumers complain to front line staff
1-5% of those go to management
Complaint rates vary by type of problem
Twice as many people are told about a bad
experience over a good one
Tip of the iceberg phenomenon
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Foundations and Practices by Shoemaker & Shaw
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© 2008 Pearson Education, Upper Saddle River, NJ 07458.
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Exhibit 4-11; Tip of the Iceberg Phenomenon
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Foundations and Practices by Shoemaker & Shaw
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© 2008 Pearson Education, Upper Saddle River, NJ 07458.
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Customer Complaints and
Service Recovery
What to do about it?
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This is marketing’s task
Make it easy for customers to complain
Make it known where and how to
complain
Do something about the complaint if it is
reasonable
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Foundations and Practices by Shoemaker & Shaw
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© 2008 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Customer Complaints and
Service Recovery
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Effective complaint handling, from A Complaint is
a Gift:
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Say “thank you”
Explain why you appreciate the complaint
Apologize for the mistake
Promise to do something about it immediately
Ask for necessary information
Correct the mistake
Check customer satisfaction
Prevent future mistakes
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Foundations and Practices by Shoemaker & Shaw
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© 2008 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Marketing Essentials in Hospitality and Tourism:
Foundations and Practices by Shoemaker & Shaw
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© 2008 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Employee Relationship Marketing
or Internal Marketing
Definition
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Apply marketing principles to those who
serve the customer (directly or indirectly)
and build a mutual bond of trust with them
To create a customer, must create employee
value
Lower employee turnover relates to higher
profits
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Foundations and Practices by Shoemaker & Shaw
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© 2008 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Employee Relationship Marketing
or Internal Marketing
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Noncontact employees
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All employees are part of the marketing effort
Employees need to understand how their
job and actions effect the customer
Employees need to be kept up to date on
important information
Success ultimately lies with management
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Foundations and Practices by Shoemaker & Shaw
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© 2008 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.
Class Discussion
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Name two products or services to which
you consider yourself extremely loyal.
What has produced that loyalty?
How frequently do you buy this product
or service?
What do you tell your friends about this
product or service?
What do you tell your family?
Marketing Essentials in Hospitality and Tourism:
Foundations and Practices by Shoemaker & Shaw
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© 2008 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.