Customer Loyalty and Retention

Question 1

Customer retention?

Answer 1

Focusing the firm’s marketing efforts toward the existing customer base.

Question 2

Loyalty?

Answer 2

Reflects an emotional attachment as well as a business attachment (behaviour) to the service firm.

Question 3

Customer Retention strategies?

Answer 3

Frequency Marketing (a.k.a. ‘loyalty programs’) —> Reward desired behaviour

Relationship marketing*

After marketing –> Emphasising marketing after the initial sale has been made

Service Garuntees

Question 4

Benefits of the Relationship Development Model for Customers

Answer 4

Confidence Benefits

Confidence in correct performance.
Ability to trust the provider.
Lower anxiety when purchasing.
Knowing what to expect and receive.

Social Benefits

Mutual recognition and friendship between service provider and customer.
Familiarity.

Special Treatment Benefits

Discounts not available to most customer.
Extra services.
Higher priority when there is a wait.
Better price?

Question 5

Benefits of the Relationship Development Model Service Providers

Answer 5

Direct financial Benefits

Increased revenues.
Reduced marketing and administrative costs.
Regular revenue stream.

Customer Behaviour Benefits

Strong word-of-mouth endorsements.
Customer voluntary performance.
Social benefits to other customers.
Mentors to other customers.

Human Resource Management Benefits

Easier jobs for employees.
Social benefits for employees.
Employee retention.