Copyright Atomic Dog Publishing, 2004 Chapter Twelve Customer Retention
Copyright Atomic Dog Publishing, 2004 Beyond Customer Satisfaction Brand Loyalty Repeat Purchase Behavior
Copyright Atomic Dog Publishing, 2004 Levels Of Expectations Levels Of Satisfaction Level of Service Quality Adequate Predicted Desired Ideal Excited Pleased Okay Irritated Dissatisfied Angry
Copyright Atomic Dog Publishing, 2004 The Customer Value Package Price Technical S.Q. Functional S.Q. Firm Image Best Combination
Copyright Atomic Dog Publishing, 2004 Six Steps for Developing and Managing the Customer Value Package Determine relative weights customers place on each element. Determine value package company will offer. Corporate objectives and mission should emphasize value package. Communicate value package to company personnel. Develop plans to implement value package. Monitor the marketplace for changes.
Copyright Atomic Dog Publishing, 2004 Customer Value Package Questions to Determine Relative Weights What are minimum requirements to be considered a viable source? What level of performance would give a vendor a competitive advantage? What additional services would provide added value? What problems are experienced now with the current vendor? What needs are not met by the current vendor?
Copyright Atomic Dog Publishing, 2004 Operational Position Future Purchase Behavior Cost Efficiency Service Quality Customization Repeat Purchase Behavior Brand Loyalty
Copyright Atomic Dog Publishing, 2004 Customers Repeat Purchase Behavior Brand Loyalty 1.Offer price incentives. 2.Offer sales promotions. 3.Offer frequency programs. 4.Provide good service. 5.Make the service convenient for the customer. 1.Provide a high level of service quality. 2.Use advertising to promote the firm or brand image. 3.Offer guarantees. 4.Develop relationships with customers. 5.Personalize the service encounter.
Copyright Atomic Dog Publishing, 2004 Compatibility Management 1.Attract a homogeneous group of consumers 2.Prepare for arrival of customers 3.Set acceptable rules of behavior 4.Manage customer-to-customer interactions
Copyright Atomic Dog Publishing, 2004 Compatibility Management Roles Second Stage Environmental Engineer Legislator Third Stage Matchmaker Santa Claus Police Officer Cheerleader
Copyright Atomic Dog Publishing, 2004 Lifetime Value of a Customer Average expenditure Average number of purchases per year Average number of years Consumer customers Business customers Defection rate
Copyright Atomic Dog Publishing, 2004 Value of Customers over Time Replacing a defector with a new customer costs six times more. Customers tend to use a service more over time. Service firms become more efficient in serving a regular customer. Customers refer others to the firm. Firms can increase their prices due to quality, dependable service.
Copyright Atomic Dog Publishing, 2004 Defections Management Don’t try to eliminate all defections Watch for defectors Develop a service recovery program Create zero-defections culture Unconditional guarantee
Copyright Atomic Dog Publishing, 2004 Service Recovery Develop service recovery program Encourage customers to complain Collect data Correct problems that lead to failures Allocate resources to service recovery
Copyright Atomic Dog Publishing, 2004 Relationship Marketing Long-Term Relationship 1.Build brand loyalty 2.Service quality or customization operational positions 3.Meet customer needs 4.Solve customer problems 5.Develop relationships with customers 6.Provide positive benefits to customers