CHAPTER TWELVE Encouraging Customer Loyalty

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved L EARNING O BJECTIVES Establish & maintain trust Develop characteristics that enhance loyalty Recognize provider’s responsibility Help customers feel important Select strategies to enhance satisfaction and build loyalty

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Relationships are Built on Trust!

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved S TRATEGIES F OR B UILDING T RUST Communicate effectively & convincingly Display caring Be fair Admit errors/lack of knowledge Trust customers Keep your word Provide peace of mind

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved C ustomer R elationship M anagement (CRM) involves identifying customer needs, understanding and influencing customer behavior through ongoing communication strategies in an effort to acquire, retain, and satisfy the customer. The ultimate goal is customer loyalty.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved B ENEFITS O F C RM Less need to obtain new customers Reduced marketing costs Increased ROI Enhanced loyalty Elevated profitability Targeted marketing

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved I MPORTANCE O F L OYALTY Cost 5 times more to acquire new customers 50% of consumers will complain to frontline 75% complain in B2B Small-ticket = 96% do not complain Large-ticket = 50% complain to frontline Large-ticket = 5-10% escalate to mgt 50% simply go away Tell up to 16 friends Businesses lose per year Source: TARP

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved A DDRESSING C USTOMER N EEDS To feel welcome To be understood To feel comfortable To feel appreciated To feel important To be respected

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved P ROVIDER C HARACTERISTICS A FFECTING L OYALTY (1) Responsiveness Adaptability Communication skills Decisiveness Enthusiasm Ethical behavior

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved C HARACTERISTICS A FFECTING L OYALTY (2) Initiative Knowledge Perceptiveness Planning ability Problem-solving ability Professionalism

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved PLANNING PROCESS MODEL

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved B E R ESPONSIBLE F OR R ELATIONSHIPS Personalize approach Listen actively Keep open mind Individualize service Show respect Elicit input Use effective closing statements

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved E LICITNG C USTOMER I NPUT (1) Customer comment cards Toll-free numbers Verbal comments Telephone surveys Service contact surveys

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved E LICITING C USTOMER I NPUT (2) Exit interviews Shopper/customer surveys Focus groups Sales and service records

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved M AKING T HE C USTOMER #1 Positive initial contact Establish rapport Identify/satisfy needs Exceed expectations Follow up Encourage return

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved R ELATIONSHIP- R ATING P OINT S CALE Exemplary = 4 Above average = 3 Average = 2 Below average = 1 Unsatisfactory = 0

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved E NHANCING S ATISFACTION (1) Pay attention One customer at a time Know your customers Give special treatment Service at least adequately

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved E NHANCING S ATISFACTION (2) Do the unexpected Handle complaints effectively Sell benefits not features Know your competition

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved R ATER M ODEL Reliability Assurance Tangibles Empathy Responsiveness