Chapter12 Flashcards
Managing Relationships and Building Loyalty
is an old-fashioned word that has traditionally been used to
describe fidelity and enthusiastic devotion to a country, a cause, or
an individual.
Loyalty
included feelings by customers that in an established relationship, there was “less risk of something going wrong”, greater
confidence in correct performance, and the ability to trust the provider.
Confidence benefits
embraced mutual recognition between customers and
employees, being known by name, having a friendship with the service
provider, and enjoyment of certain “social aspects “of the relationship.
Social benefits
included better prices, discounts on special
deals that were unavailable to most customers, extra services, higher
priority when there was a wait, and faster service than most customers.
Special treatment benefits
: These customers form a very small percentage of a
firm’s customer base, but are heavy users and tend to contribute
a large share of the profits. This segment is usually less price
sensitive, but expects higher service levels in return, and it is
likely to be willing to invest in and try new services.
Platinum
They tend to be slightly more price
sensitive and less committed to the firm.
Gold
These customers provide the bulk of the customer base.
Their numbers give the firm economies of scale. Hence, they are
important so that a firm can build and maintain a certain capacity
level and infrastructure, which is often needed for serving gold
and platinum customers well. However, iron customers on their
own may only be marginally profitable. Their level of business is
not enough to justify special treatment.
Iron.
. Customers in this tier tend to generate low revenues for a
firm, but often still require the same level of service as iron
customers, which turns them into a lossmaking segment from a
firm’s perspective.
Lead
Customers will switch if switching costs are high or there are no viable
or convenient alternatives. Extremely dissatisfied customers can turn
into “terrorists” providing an abundance of negative word-of-mouth for
the service provider.
The zone of defection occurs at low satisfaction levels.
is found at moderate satisfaction levels.
Here, customers are willing to switch if they find a better alternative.
The zone of indifference
is located at very high satisfaction levels,
where customers have such high attitudinal loyalty that they do not
look for alternative service providers. Customers who praise the firm
in public and refer others to the firm are described as “apostle”.
The zone of affection
Customers who praise the firm
in public and refer others to the firm are described as “______”.
apostle
is used to describe customers who drop off a company’s radar
screen and transfer their purchases to another supplier.
Not only does a rising defection rate indicate that something is wrong with
quality (or that competitors offer better value), it may also be signaling a
fall in profits.
Big customers don’t necessarily disappear overnight; they often may
signal their mounting dissatisfaction by steadily reducing their purchases
and shifting part of their business elsewhere.
Defection
Non-financial rewards
Soft Benefits
Financial rewards
Hard Benefits
