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Transcript of 3rd lec CRm
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Building CustomerRelationship Management
Part -IIPrepared By:
Prof. Rupali Rajesh
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Role of satisfaction in the retention process
Product, Peripheral, Ambience, Psychic
satisfaction.These components of satisfaction contributetowards total satisfaction, which has direct
linkage to customer retention. Therefore organization has to carefully
monitor the level of satisfaction that theircustomers are enjoying, and initiatemeasures to enhance the level ofsatisfaction.
Which is done on continuous basis.
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There is a direct correlation betweensatisfaction and retention,
Because even a satisfied customer canjoin the attrition process, when the
changes his expectation in terms of the
various components of satisfaction.
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Role of Satisfaction in the Retention
Process
The level of satisfaction can becategories into following levels:-
Expected satisfaction:Must becondition the customerexpects from a product performance.Those attributes contributing to
expected satisfaction must bepresent. In the absence of that, thecustomer will be dissatisfied.
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Desired satisfaction:
Preferred condition the customer
expects. However the presence orabsence of the attributes contribute to
preferred satisfaction will have no
effect on the level of satisfaction.
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Exciting satisfaction:
Condition in which the presence of
certain attributes leads to a surprising
attractive performance. The presence
of these attributes will further add tothe level of satisfaction.
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Role of satisfaction in the retention
process
The customer, whom an organizationcan retain by rendering expected
satisfaction, cannot continue to be
retained when the customer changeshis satisfaction level from expected
to desired level and further from
desired level to exciting level.
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Role of satisfaction in the retention process
A well- structured customer care programmewill go a long way in gradually furthering thecustomer satisfaction in tune with theirexpectations.
Customer care that exceeds customer
expectation will lead to higher rate of retention.And in the absence of customer are, customerswill be dissatisfied and will be left with 3options:
RejectionPostponement
Substitution
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Retention Centered Organization
Features of Customer Retention CenteredOrganization are listed below:-
Should be a learning organization, learning
from the view point of customerspreferences, competitor's strategies,
technology advantages, social, cultural
changes, life style, Spending and
consumption patterns and the like.
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Ok, How about this motto If you are unhappy for any reasons,
we will feel really bad.
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Should assume the characteristics ofa market leader rather than being its
follower. Those organizations simply
following the business practices andstrategies of a market leader would
find it difficult to have retention of
customers.
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Retention Centered Organization
Organizations are expected to be much more
innovative in its overall approach. It includes thecustomers needs are constantly changing, astatic approach will not be helpful in renderingcustomer satisfaction. Innovation, in terms of
marketing mix, relationship- building methods,incentives and regards to customers would bemore helpful to retain customers.
It must develop an effective customer careprogramme. Each customer expects himself tobe treated with courtesy.
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Retention Centered Organization
Effective complaints managementsystems. The efficiency involved inmanaging complaints will have impacton the retention rate.
Should focus on maximum satisfaction,while minimizing the response time.Every customer has a level ofacceptable tolerance time, within whichhe wants his complaints to be rectified.
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Retention Centered
Organization Should develop the culture of total
employees involvement towards
providing total satisfaction to customers.
They expects their needs to be satisfiedin total and not partially. For which
should motivate each employees by
impressing upon them the need for theircommitment in rendering total customer
satisfaction.
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Retention Centered Organization
Should formulate businessstrategies which are customercentric. They must look at the
business through its customersviewpoint and operate as acustomer driven organization rather
than resource driven.
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Retention Centered Organization
Must have the mechanism totrack attrition signals as early aspossible and suggest suitable
remedial measures. Attritionfactors identified would providedirections for improving
measures towards customerretention.
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Retention Centered Organization
Should focus attention on formercustomers and lost customers. Someorganizations consider former (Past)customers as lost customers but thefact is that all the former customersneed not be lost customers.
Effective measures are to be put forth toconvert former customers and lostcustomers into present customers.
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Retention Centered
Organization
Should practice total quality marketingwith emphasis on internal marketing.
Effective internal marketing practiced
would indicate the quality standard ofthe organization's internal customers.
This would enable to initiate steps to
improve the practice, procedure,process and performance of people
associated with external customers.
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Retention Centered Organization
Should encourage all employeestowards active listening to customersgrievances. For this purposespecialized skills may be imparted byproviding special training.
To encourage active listeningorganization can develop onassistance of technology and can gofor call centers, answer centers, 24hours customer response centers etc.
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Retention Centered Organization
To regular research shouldencourage hands on research on
customer related problems and
there must be active deployment
of customer data. This helps to
minimize attrition
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Retention Centered Organization
Should encourage regular customercontact prgrammes. This would enable
customers to take active part in the
organization's activities and that willlead towards customer partnership.
Should think in terms of customer
segment specific strategies whichwould focus the attention of specific
requirements of each segment.
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Retention Centered Organization
Should develop effectivecommunication systems with internal
customers (employee), intermediate
customers (middlemen), and externalcustomers (end users). Ineffective
communication will have serous
negative impact on customerretention.
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Relationship through loyalty
Building Customer Loyalty is the basic platform
of relationship formation.In a highly competitive and challengingbusiness environment, organizations are reallyblessed if they are fortunate to have loyal
customers in their customer inventory.In short, having loyal customers will service asa sustainable competitive edge to theorganization concerned in the present daycontext.
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Relationship through loyalty
The discussion has been presented under thefollowing heads:-
1.Understanding brand
2.The process of brand choice
3.Customer loyalty and the types4.Loyalty towards brands
5.The brand switching behaviour
6.Towards reaching loyal customers
7.The loyal customer ladder8.Why does an organization need loyal
customers?
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1. Understanding Brand
It is essential to understand everything about a
brand. Brand plays a key role towards attracting and
retaining sustainable relationships with customers.
It represents the combination of tangible and
intangible attributes of a customer looking for
satisfying his core as well as augmented needs.
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2. Process of brand choice
The process of brand choice is a purposeful
action plan of selecting a specific brand from
the total brands available. It includes the
following sequence.
Total brands
Awareness brands
Considered brands
Choice brands
Decided brand
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Process of brand choice
The criteria that guides the action plan is matching
the expectations of customer with what the brandcould offer.
The process of brand choice broadly categorized intointernal factors and external factors:-
Internal Factors:- These factors emerge from orwithin the customer concerned and they include:
Perception
Motives
Personality Self-image
Attitude
Learning etc.
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Process of brand choice
External Factors:- These factors emerge from an
environment external to the customer concerned andthey include:
Culture
Group behavior
Family
Economic status
Lifestyle
Communication, etc.
In addition to the above, age, sex, location factors, marital
status, occupational status etc., of the customers
concerned also influence the brand selection process.
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3. Customer loyalty and the types
Loyalty may be defined as a willful, voluntary,
repeated choice of a specific brand of a productor type of service. It caters to fulfilling aparticular category of need.
In case of one-time purchase, loyalty could beexplained in terms of the extent of commitmentto the brand selected, the positive attitudedeveloped towards using the brand selectedand the positive image the customer projectsabout the brand he owns.
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Customer loyalty and types
Loyalty in sense is a willful commitment to the
brand in view of perceived satisfaction. The actionof loyalty is a positive, repeated behaviour of
preferring one brand of a product from among the
several brands available.
Customer loyalty may fall into several types it includes:-
Loyalty towards brands
Loyalty towards stores
Loyalty towards organization Loyalty towards sales persons and
Loyalty towards any other related aspect in the process of
purchase and consumption.
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Customer loyalty and types
Loyalty towards brand is the committed willful
option for a specific brand. It is what
customers normally develop with specific
references to a brand.
The process of brand loyalty is illustratedbelow:-
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Customer loyalty and types
Brand Awareness
Brand Familiarity
Brand Recognition
Brand Image Formation
Brand Conviction
Brand Selection
Brand Loyalty
Brand Non-recognition
Brand Rejection
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4. Loyalty towards brands
The process of achievement of brand loyalty
starts with awareness of the fact that thebrand is available. Creating such sense ofbrand awareness is one of the majorresponsibilities of the marketer.
Brand identity plays a key role towardcreating brand awareness. It must berepeatedly communicated so that, it would
help in building awareness among targetcustomers.
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4. Loyalty towards brands
Brand familiarity includes the brand name,symbol, designs, marks etc.
Brand recognition in this process brand
loyalty how brand is positioned is anotherimportant aspect. Each brand assumes abrand personality and as already mentionedeach customer would tend to match his self-image with the brand personality.
4 L lt t d b d
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4. Loyalty towards brands
How the brand is positioned will help towards
framing specific image of the brand and differentprospective customers would perceive thatimage differently.
The prospective customers moves further in the
section process namely brand acceptancewhich means accepting the various tangible andintangible core as well as augmented benefitsoffered by the brand. It includes :-
Hardcore Loyalists Softcore Loyalists
Switchers
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4. Loyalty towards brands
The hardcore loyalists:
Those who maintainundivided loyalty with
regard to their band
choice. They would
restrict their brandchoice to one or
selected few brands and
normally would both
switch brands.
E.g.
X,X,X,Y,Y,Y,Z,Z,Z,X
..
The softcore loyalists:
Those who divide theirloyalty among few
available brands and
select one or the other
brand from among theirchoice of brands.
E.g.
X,Y,Z,YXZ,ZYX,YXZ
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The switchers: The group of customers whodo not maintain loyalty. They prefer
accepting the available brand without any
restriction. E.g.
XZYYZXYZYZYZYZYXX.
Loyalty towards stores:
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Loyalty towards stores:
Loyalty towards stores:
It refers to the loyalty developed with referenceto the point of purchase.
It includes the location of the store, the
incentives schemes offered, terms of sales,sentiments attached, previous experiences,etc.
matter in developining and maintaining loyalty
towards the store concerned.
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Loyalty towards an organization
It might willfully offer to accept whatever productor service is offered by the organization.
He has developed a definite confidence in the
offerings of the organization. Such a loyalty is aresult of the organizations image, thecustomers long association with theorganization, the performance of the
organization, bad experience gained from thecompetitor organizations, and so on.
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Loyalty towards the sales persons:
Customers would build loyalty towardssalesperson in view of the total satisfactionenjoyed by the customers from the salespersons
concerned.The total satisfaction from salespersons is aresult of the services, the confidence offered,pleasant manners, knowledge, helpful tendency,
advice and guidance they offer, their sense ofrecognition, and similar other factors.
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5. Brand switching Behaviour The behavioral action of the customers worth
reference to their choice of brand.
Factors are responsible in initiating the brandswitching Behaviour. These include: Dissatisfaction with present brand
Change in fashion
Promises made by competitors Change in the perceived benefits
Personal characteristics of the customer concerned
Pressure of salespersons and so on
Personal reasons.
Must consistently make this type of analysis andformulate suitable strategies to retain theircustomers loyalty.
6 Towards Reaching Loyal Customers
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6. Towards Reaching Loyal Customers
The reach of loyal customers involves a
sequence of actions, starting with identification
of the right market for the product concerned.
Market Identification
Segmented and targeted market
Prospective Customers
Customers
Loyal customers
Loyal Customer Ladder
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Loyal Customer Ladder
Customerbychance
Customerby Occasion
Customer byChoice
Customer byRepetition
Customer byLoyalty
L l C t L dd
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Loyal Customers Ladder
A customer reaches the status of a loyal
customer by passing through a series of stages:
Customer by chance: The customers by ownattempts a prospective customer buys the
brand and thereby he becomes the customer bychance.
Customer by occasion: An occasional
customer. May have a preferred set of brandsalready. Would include the present brand alsoin his preferred set and show interest towardsbuying this brand.
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Loyal Customer Ladder
Customer by Choice: Customer perceivesthat the brand would satisfy him more as
compared to other brands. Thus, his level of
preferences towards the brand moves
upwards. Customer by Repetition: When customers
choice of the present brand gets repeated
and this would mean that the customerreaches the stage of customer by repetition.
L l C t L dd
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Loyal Customers Ladder
Customer by Insistence: During the repeat
purchase period, depending on the extent ofhis need fulfillment and other associatedfactors, the customer insists upon the samebrand and becomes a customer by insistence.
Customer by loyalty: Slowly moving towardsthe status of undivided loyalty to the brand,and ultimately reaches the status ofcustomers by loyalty that is to be maintainedand improved by means of developingappropriate relationship worth the customersconcerned.
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Customer Chain
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Customer Chain
New customer by chance
Customer by Occasion
Customer by choice
Customer by loyalty
Customer by Insistence
New customer by chance
Disappointed customer
Dissatisfied customer
Lapsed customer
Lost customer
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Why do organizations need loyal
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Why do organizations need loyal
customers
Loyal customers plays six important roles, andthrough each role they contribute effectively:
The partner:- As a partner the loyal customers
involve themselves in the organization's regularactivities. Many companies recruit loyalcustomers in their customer panel and tap theircreativity for application in various activities likenew product development, new promotionstrategy formulation, packages design,developing incentives schemes etc.
Why do organizations need loyal Customers
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Why do organizations need loyal Customers
The advisor:- Give advice about the potential
customers expectations, their expected prices,competitors offering, they helps to increasestrengths of organization, reduces weaknessesetc.
The custodian:- Projects the image of thebrand and the organization.
brand maintains its uniqueness and
contributes in every way towards betterperformance of the organization. Helps todevelop total care programs of anorganization.
Wh d i ti d l l t
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Why do organizations need loyal customers
The Resource Provider:-
Loyal customers are resources they depends
on them with respect to new brands and brandextension programs.
If the hardcore loyal customers are more innumber in the customer inventory, the risk in
relation to all marketing decisions minimum.They provides a simulated experience to theprospective customers.
The Ladder of Loyalty
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The Ladder of LoyaltyPartner: Has the relationship of partner with you
Advocate: Actively recommends you to others.
Does your marketing for you
Supporters: Likes your organization, but onlysupports you passively
Client: Does business with you regularly, but
may be neutral or even negative towards you.
Purchaser: Has only done business once with
you
Prospect: Potential customer who may be
persuaded to do business with you
Why do organizations need loyal
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y g y
customers The change driver and the experience
shaper:-In view of cultural, social, technologicalbackground of the loyal customers, they wouldshow the new directions In which theorganization could diversify in future.
emerge as a customer-driven responsiveorganization capable of providing their customers,
products and services meant for meeting their life-maintenance, life-changing, and life- enhancingrequirements.
Recovery of lapsed customers
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Recovery of lapsed customers
The customer mix of an organization consists of
category: Stable customers
Grooming customers
Seasonal customers
Lapsed customers.
In the context of growing competitions, it isnecessary to focus attention on its lapsed
customers and evolve (change) strategiesdesigned to win them back.
Why do customers defect
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Why do customers defect
The customers specific need has not been fulfilled
They moved over to the different product category Dissatisfied with the elements of marketing mix
Perceived better value for money from thecompetitors offerings
Developed misunderstanding with value deliverysystem
Displeasure at the point of purchase
Dissatisfied with the performance of after salesservices
Induced by chaining life style and stages in the lifecycle.
Personal reasons.
Strategies to prevent defection and
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g p
recover lapsed customers
Total knowledge about customer behaviour Interactive communication system
Special promotion campaign
Developing barriers to exit:- It includesemotional appeal, conformation tospecification, durability, lifetime utility, socialrelationship, flexibility, added value,
commitment, innovative approach, avoidingthreat etc.
Strategies to prevent defection and
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Strategies to prevent defection and
recover lapsed customers
Knowledge about lifestyle and life cycle
Establish measurement system
Attempt to track losses. Customers specificapproach
Customer win-back programmes.
Building customer care team.
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Thank You