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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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


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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.


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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

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