Loyalty and CRM + TB Chapter 12 Flashcards

1
Q

Lifetime value (LTV)

A

Measures the total value a customer brings to a firm
Loyal customers have higher LTV

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2
Q

Assessing LTV

A

Determine costs and revenues for customers from different market segments
Predict future profitability

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3
Q

Measuring LTV

A

Revenues = application fee + initial purchase
Costs = marketing + credit check + account set up

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4
Q

Value of referrals

A

% of customers influenced by other customers

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5
Q

Net present value

A

Sum of anticipated annual values discounted each year into the future

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6
Q

Reasons for customer loyalty

A

Confidence benefits
Correct performance
Trust in provider
Lower purchase anxiety
Confirmed expectations
Social benefits
Friendship relationship with service provider
Special treatment
Better price
Exclusive promotions
Extra services
High priority

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7
Q

3 types of loyalty bonds

A

Cross-selling and bundling of services
Creating loyalty rewards
Higher levels of loyalty bonds

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8
Q

Wheel of loyalty (3 steps)

A

Build a foundation of loyalty
Create loyalty bonds
Reduce churn drivers

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9
Q

Building a foundation of loyalty

A

Segment the market to match customer needs and firm capabilities
Acquire customers who fit core value proposition

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10
Q

Cross-selling and bundling services

A

Makes switching a major effort that a customer is unwilling to go through unless extremely dissatisfied
Customers benefit from buying various services from the same provider
eg: shaw

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11
Q

Creating loyalty rewards

A

Reward based bonds (can be both financial or nonfinancial or a combination of both)
Intangible rewards for special recognition and appreciation

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12
Q

Building higher-level bonds

A

Social bonds - based on personal relationships
Customization bonds - customized service for loyal customers
Structural bonds (b2b) - align customers way of doing things with supplier’s own processes

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13
Q

Ways to reduce churn drivers

A

Deliver quality service
Reduce inconvenience and non-monetary costs (time, effort)
Have fair and transparent pricing
Save teams - specially trained call center staff to deal with customers who want to end business with firm
Implement effective complaint handling and service recovery procedures
Increase switching costs

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14
Q

Common objs of CRM systems (customer POV)

A

Unified customer interface that delivers customization and personalization
Vast service improvement and increase customer value

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15
Q

Common objs of CRM systems (customer POV)

A

Unified customer interface that delivers customization and personalization
Vast service improvement and increase customer value

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16
Q

Common objs of CRM systems (company POV)

A

Better segment, tier customer base and target promotion
Implement churn alert systems if customers are in danger of defecting

17
Q

5 parts of CRM systems

A

Strategy development process
Value creation process
Multi channel integration process
Performance assessment process
Information management process

18
Q

Strategy development

A

Assessment of business strategy
Guides development of consumer strategy

19
Q

Value creation process

A

Translates business and customer strategies into specific value propositions for both customers and firm
Dual creation of value - customers need to participate in CRM to receive value from firm CRM initiatives

20
Q

Multichannel integration process

A

Serve customers well across many interfaces
Offer unified interface that delivers customization

21
Q

Information management

A

Collect customer information from all channels
Integrate it with other relevant information
Make useful information available to the frontline
Create and manage data repository, IT systems, etc

22
Q

Performance assessment process

A

Is CRM system creating value for key stakeholders?
Are marketing and service standard objs being achieved?

23
Q

Common failures in CRM

A

Viewing CRM as a technology initiative
Lack of customer focus
Insufficient appreciation of customer LTV
inadequate support from top management
Failing to re-engineer business processes
Underestimating data integration challenges