Review Day 1 Difference between frequency and loyalty How CRM relates to loyalty Evolution of marketing 4P 7P 14C Lessons learned from research on loyalty – both hotels and restaurants Types of customers (see next slide) Customer Loyalty and Frequency Marketing (c) Stowe Shoemaker, Ph.D

Not All Customers Are Equal Unprofitable Profitable Customers - Future Unprofitable Profitable A B C D Customers - Current unprofitable now profitable future unprofitable now unprofitable future profitable now profitable future profitable now unprofitable future Customer Loyalty and Frequency Marketing (c) Stowe Shoemaker, Ph.D

Types of Loyalty Butterflies True Friends StrangersBarnacles Good fit between company’s offerings and customers’ needs; High profit potential Actions: Aim to achieve transactional satisfaction, not attitudinal loyalty Milk the accounts as long as they are active Key challenge is to cease investing soon enough Good fit between company’s offerings and customers’ needs; Highest profit potential Actions: Communicate consistently, but not too often Build both attitudinal and behavioral loyalty Delight to nurture, defend, and retain them Little fit between company’s offerings and customers’ needs; Lowest profit potential Actions: Make no investments in these relationships Make profit on every transaction Limited fit between company’s offerings and customers’ needs; Low profit potential Actions: Measure the size and share of wallet; if low focus on up and cross-selling If size of wallet small, impose strict cost controls From Reinartz and Kumar 2002 Harvard Business Review HP LP ST LT HP = high profit; LP= low profit; ST =short term; LT= long term Customer Loyalty and Frequency Marketing (c) Stowe Shoemaker, Ph.D

Review Day 1 Satisfaction and loyalty Intent to return, satisfaction, and loyalty Why customers may be loyal but do not return Measuring the value of customer Value of word of mouth Brands and branding Survey measurement scales Business models of hotels and how point based programs drive current model Customer Loyalty and Frequency Marketing (c) Stowe Shoemaker, Ph.D

What to Do When Get Home 1.Review with your staff buyer behavior model 2.Review with your staff evolution of marketing. 3.Have staff take each of the 14C’s and apply it to their department to see how the department can move customer to loyalty 4.Discuss frequency versus loyalty with staff Customer Loyalty and Frequency Marketing (c) Stowe Shoemaker, Ph.D

What to Do When Get Home 5.Discuss components of loyalty and develop list of things your firm is doing to create loyalty. 6.Look at each of your customer segments to determine which cell they belong (see slide on page 2 and 3). If possible calculate % of each 7.On surveys, ask questions about overall satisfaction and overall intent to return Customer Loyalty and Frequency Marketing (c) Stowe Shoemaker, Ph.D

What to Do When Get Home 8.Cross tab intent to return with satisfaction 9.Add questions to survey that will enable firm to calculate life time value, WOM (both positive and negative, etc.) 10.Go through list of 10 guidelines for building strong brands. Make a list of all the things your firm does to build its brand. 11.Design “leaky bucket” for your firm by segment type. Customer Loyalty and Frequency Marketing (c) Stowe Shoemaker, Ph.D

Review Day 2 Rosewood Hotels: decision to brand or not to brand Calculate the life-time value of a customer: importance of limiting defections and its financial impact Importance of asking questions on survey to measure LVC Introduced the Loyalty Circle Customer Loyalty and Frequency Marketing (c) Stowe Shoemaker, Ph.D

Review Day 2 Discussed Value and what comprises value Discussed the four components of a service Importance of “planning your work” and “working your plan” Introduced the Gap Model of Service Quality, where the GAPS occur and how to close the GAPS Customer Loyalty and Frequency Marketing (c) Stowe Shoemaker, Ph.D

What to Do When Get Home 12.Examine your surveys and make sure you include questions to measure life-time value and word of mouth 13.Introduce staff to Loyalty Circle to show them how loyalty can be created 14.Give staff members the survey that pertained to GAP 2. Discuss results and use 14C’s and RATER to improve guest experience Customer Loyalty and Frequency Marketing (c) Stowe Shoemaker, Ph.D

What to Do When Get Home 15.Reword questionnaire in GAP 2 from customer’s perspective and administer to your guests. Examine how guests’ and staff perspectives differ, if at all 16.Investigate the listening posts you have created around your property. How are they working? How do you ensure information works its way “up” Customer Loyalty and Frequency Marketing (c) Stowe Shoemaker, Ph.D

What to Do When Get Home 17.Examine ways you communicate. Are you providing consistent message? What does your guest “see” when they get your ? 18.Review best practices for communication, which areas need improvement? 19.Use “test and control” groups 20.Give your staff following survey 21.Incorporate slide 11 in all your surveys Customer Loyalty and Frequency Marketing (c) Stowe Shoemaker, Ph.D

How Well Are You Doing? 1 = Not using strategy at all 2 = Using the strategy but have had problems implementing it 3 = Using the strategy but with no noticeable results 4 = Using the strategy and have noticed positive results 5 = Using the strategy and judge it as a highly effective tactic for maintaining ongoing communication with customers From: A Complaint is a Gift Customer Loyalty and Frequency Marketing (c) Stowe Shoemaker, Ph.D

Strategies 1. Train staff to view complaints as a gift ___ 2. Market the fact that you are looking for complaints ____ 3. Evaluate your internal complaint structure ___ 4. Set up listening posts ___ 5. Make customer comment forms available ___ 6. Create staff comment forms to capture customer complaints ___ From: A Complaint is a Gift Customer Loyalty and Frequency Marketing (c) Stowe Shoemaker, Ph.D

Strategies 7. Let customers complain in private ___ 8. Set up customer confidants ___ 9. Do not be satisfied with the first response your customers give you ___ 10. Go after the ones that do not respond to your customer surveys ___ 11. Randomly ask for feedback ___ 12. Ask for value and quality ratings ___ 13. Hang out with your customers ___ From: A Complaint is a Gift Customer Loyalty and Frequency Marketing (c) Stowe Shoemaker, Ph.D

Scores 1. ____ 2. ____ 3. ____ 4. ____ 5. ____ 6. ____ 7. ____ 8. ____ 9. ____ 10. ____ 11. ____ 12. ____ 13. ____ TOTAL ______ Your Total/65 = _________ Customer Loyalty and Frequency Marketing (c) Stowe Shoemaker, Ph.D

Problem Impact Tree Please indicate if you reported any problems during your visit and how they were resolved. No problems experienced SKIP X Problems reported and were resolved in a friendly effective manner Experienced problems, but didn’t report to staff. … 3 Problems reported and were not resolved in a friendly, effective manner Customer Loyalty and Frequency Marketing (c) Stowe Shoemaker, Ph.D

What to Do When Get Home 22.Examine chart on next page: determine the percentage of customers in each cell 23.Examine each component of loyalty circle. Develop list of tactical things firm does to build loyalty. Also ask, what could be done to build loyalty Customer Loyalty and Frequency Marketing (c) Stowe Shoemaker, Ph.D

What are we collecting WhereWho’s collecting How collecting WhatFrom Who Customer Loyalty and Frequency Marketing (c) Stowe Shoemaker, Ph.D

No Product or Service Failure Customer does not say anything Celebration No Product or Service Failure Customer dissatisfied and speaks up Proactive Customer Education/Research Product or Service Failure Customer does not say anything Encourage Complaints Product or Service Failure Customer dissatisfied and speaks up Service Recovery From: A Complaint is a Gift