1. Chapter 10: Encouraging Customer Loyalty

2. Learning Outcomes 10-1 Establish and maintain trust with customers.
10-2 Explain customer relationship management and explain its importance to quality service.
10-3 Develop the service provider characteristics that will enhance customer loyalty.
10-4 Describe the provider’s responsibility for establishing and maintaining positive customer relationships.
This chapter discusses strategies to encourage loyal customers.

3. Learning Outcomes
10-5 Identify strategies that can be used to make customers feel like they are number one.
10-6 Discuss strategies that can enhance customer satisfaction.
10-7 Define quality service.
This chapter discusses strategies to encourage loyal customers.

4. Trust and Customer Service
Customer loyalty
Trust and customer relationships
LO 10-1
Customer loyalty
Emotional rather than rational
Tied to commitment
Based on customer interest in maintaining a relationship
Trust and relationship
Without trust, no relationship can do well
Word of mouth (positive) usually results in trust
Trust must be earned
Trust doesn’t happen overnight
Every touch point is an opportunity to influence customer loyalty
Customer satisfaction levels have increased since recession

5. Trust and Customer Service
The dimensions of customer trust and loyalty
Experience
Knowledge
Deference
Reference
Glitz
LO 10-1
Dimensions of trust include
Personal experience.
Organizational knowledge (of the company).
Deference (trust of companies in general).
Reference (what one learns about a company from others).
Glitz (advertising, packaging, and high pricing).

6. Trust and Customer Service
Strategies for Building Trust
Communication
Display caring
Be fair
Admit errors
LO 10-1
Communicate effectively and convincingly
i.e. don’t do one thing but say another
Display caring and concern
This can be done through simple communications with customers
Be fair
Admit errors or lack of knowledge
Ego can make it hard to do this sometimes!
Take responsibility when something doesn’t work right and fix the problem
The best example of this is the tainted Tylenol in 1982-they took swift action and spent lots of money to correct this problem
BP oil spill in 2010, the company was slow to take action and responsibility
Trust your customers
Most customers aren’t out to rip you off! Most have valid concerns
Keep your word
If you promise it, deliver it

7. Trust and Customer Service
Strategies for Building Trust
Trust your customers
Keep your word
Provide peace of mind
Take responsibility for customer relationships
Personalize your approach
Keep and open mind
Individualize service
LO 10-1
Trust your customers
Most customers aren’t out to rip you off! Most have valid concerns
Keep your word
If you promise it, deliver it
Provide peace of mind
Be positive and assertive
Take responsibility for customer relationships
Be caring and have the best interest of the customer at heart
Personalize your approach
Know customer names and recognize them
Help customers feel accepted
Keep an open mind
Make it a habit to assess attitude
Individualize service
Handle every situation different, depending on the customer
Find out what their needs are and meet those needs

8. Trust and Customer Service
Strategies for Building Trust
Show respect for the customer
Elicit feedback
LO 10-1
Show respect for the customer
When addressing the customer, use his or her last name and title. (If you are on the telephone, write down the customer’s name along with other pertinent information so that you do not forget.)
Stop talking when the customer begins to speak.
Take time to address the customer’s questions or concerns.
Return calls or messages within reasonable amounts of time.
Show up on time for scheduled meetings.
Do what you promised to do, and do it right the first time, within the agreed-upon time frame.
Elicit customer input
Try to get feedback from customers and make positive changes that will enhance the customer experience
Ways to gather feedback
Comment cards
Toll free numbers
Verbal comments
Follow up phone surveys
Service contact surveys
Internet surveys
Exit interviews
Focus groups
Sales and service records

9. Customer Relationship Management
What is CRM?
CRM Concept
Fostering relationships with CRM
LO 10-2
Customer Relationship Management
CRM
Get to know customers and their needs better
Software helps you to better keep track of customer needs
Helps manage relationships as people move into different areas of the organizations you serve (in a B2B situation)
The CRM concept involves
Operational (involving sales and service representatives).
Collaborative (involving Interaction with customers through such means as .
Web pages and automated voice response, or AVR, systems.
Analytical (involving analyzing customer data for efforts like marketing and financial forecasting).
Fostering customer relationships
Seems to be forgotten
High maintenance and transaction fees charged by financial institutions.
High fees charged by hotels for local calls.
Exorbitant fees charged by airlines for ticket changes and baggage.
Inability for existing cell phone customers locked into contracts to get the same deals as new customers.
Cancellation fees by doctors’ and dentists’ offices regardless of the reason.
Restocking fees charged by many online retailers for returned items.
for air and water for vehicles at a gas station.

10. Customer Relationship Management
The benefits of CRM
Costs
ROI
Loyalty
Profitability
Targeted marketing
LO 10-2
Benefits of customer relationship management
Less need to obtain new customers through marketing, since current customers are aware of offerings and take advantage of them.
Reduced marketing costs, since direct mail, follow-up, and other customer recruitment activities are reduced.
Increased return on investment (ROI), since marketing can target specific customer needs.
Enhanced customer loyalty due to pricing and product service offerings that meet current customer needs.
Elevated profitability due to increased sales, customer referrals, and longer customer retention during life cycle.
Targeted marketing based on statistics on which customers buy more and on high-ticket item sales
Technical Assistance Research Program (TARP) research shows it is much more expensive to earn a new customer than keep an old one
High cost of dissatisfied customers

11. Channel Partnerships The Role of Channel Partnerships
Types of Channel Relationships
Transactional
Tactical
Strategic
LO 10-3
The role of Channel Partner Relationship
Partners can help gain access to new customers
Lower costs without having to merge or acquire more assets
Types of channel partnerships
Transactional or indirect
This type of organization provides a distribution outlet or link for your company’s products and services
Tactical
Partnerships where processes are intricate meshed and interdependent (i.e. Best Buy and a cell phone provider that sells there)
Strategic
Signing of agreements that creates a long term alliance
Airlines often do this with other airlines

12. Service Provider Characteristics
Characteristics that affect customer loyalty
Responsiveness
Adaptability
Communication skills
Decisiveness
Enthusiasm
LO 10-3
Provider characteristics affecting loyalty
Responsiveness
Feeling appreciated
Listening to complaints and fixing the problem
Attend to customers promptly
Adaptability
Work with people who do not have the same beliefs as you
Communication skills
Ability to read, write and listen to customers
Decisiveness
Ability to listen and then make a decision which results in actions
Enthusiasm
People want to do business with people who want to work there
Enthusiasm on the part of the customer service professional can make the customer excited about the product, too.

13. Service Provider Characteristics
Characteristics that affect customer loyalty
Ethical Behavior
LO 10-3
Ethical behavior
Many organizations have codes of ethics to guide ethical behavior
Examples of unethical and ethical behavior
Before someone complains, companies voluntarily recall a product that it discovered was defective or potentially dangerous.
A manager who notifies a customer when he or she finds out that an employee has lied to or deceived the customer.
An employee who reports a theft carried out by another employee.
A truck driver who tracks down the owner of a parked car at a mall to identify herself as the person who accidentally scraped a bumper while making a delivery.
A cab driver who finds a wallet in his taxi and turns it in.
Providing or substituting an inferior or more expensive product for an advertised name brand item.
Providing inferior or nonstandard parts or repairs on a service call but charging for factory parts.
Misleading a customer about what is covered on an extended home warranty in order to sell a policy and make a commission.
Failing to adhere to local, state, or federal regulations (e.g., dumping hazardous waste, such as petroleum or pesticide products, in unauthorized areas or collecting sales taxes but failing to report the taxes).
Lying to a patient about why they have to wait so long before being seen by a technician, nurse, doctor (e.g., the medical professional came in late or returned late from lunch).

14. Service Provider Characteristics
Characteristics that affect customer loyalty
Taking initiative
Knowledge
Perceptiveness
Ability to plan
Problem solving ability
Professionalism
LO 10-3
Taking initiative
Doing something even if you aren’t asked to do it
Knowledge
Know about the product you are working with
Perceptiveness
Understanding and seeing when a customer has a need
Awareness of other people’s feelings
Ability to plan
Also, deal with situations that are unexpected (contingency plans)
Planning process model
Set a goal
Examine and evaluate the situation
Identify alternatives
Select the best alternative
Create an implementation plan
Problem solving ability
Professionalism

15. Making the Customer Number One
Service churn
Define
Initial contact
Rapport
Identify/satisfy needs
Exceed expectations
Follow up
LO 10-4
Making the customer number one
Service churn
Customers switching back and forth due to price
Make positive initial contact
In other words, make a good first impression
Establish rapport with the customer
In this case, when something goes wrong, the customer will be more willing to work with you on it since they feel a kinship
Identify and satisfy needs quickly
Exceed expectations
Follow up

16. Customer Service Strategy
Increased satisfaction = increased profits
Tips
LO 10-5
Enhancing Customer Satisfaction as Strategy
Increasing customer satisfaction means to increase profits
Tips
Pay attention to customer so you can address needs
Only deal with one customer at a time
Know your customers
Give customers special treatment-make sure they know they are special
Take time to address needs
Do something unexpected
Handle complaints effectively
Sell benefits, not features
Know your competition

17. Customer Service Strategy
Quality
Define
Total Quality Management (TQM)
LO 10-6 and 10-7
Strive for Quality
TQM and continuous quality improvement
Used in industries to label the goal of improvement
Small business perspective
Most jobs lost in 2008 were in small firms
Customer service initiatives don’t have to cost lots of money