Loyalty and CRM + TB Chapter 12 Flashcards
Lifetime value (LTV)
Measures the total value a customer brings to a firm
Loyal customers have higher LTV
Assessing LTV
Determine costs and revenues for customers from different market segments
Predict future profitability
Measuring LTV
Revenues = application fee + initial purchase
Costs = marketing + credit check + account set up
Value of referrals
% of customers influenced by other customers
Net present value
Sum of anticipated annual values discounted each year into the future
Reasons for customer loyalty
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
3 types of loyalty bonds
Cross-selling and bundling of services
Creating loyalty rewards
Higher levels of loyalty bonds
Wheel of loyalty (3 steps)
Build a foundation of loyalty
Create loyalty bonds
Reduce churn drivers
Building a foundation of loyalty
Segment the market to match customer needs and firm capabilities
Acquire customers who fit core value proposition
Cross-selling and bundling services
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
Creating loyalty rewards
Reward based bonds (can be both financial or nonfinancial or a combination of both)
Intangible rewards for special recognition and appreciation
Building higher-level bonds
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
Ways to reduce churn drivers
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
Common objs of CRM systems (customer POV)
Unified customer interface that delivers customization and personalization
Vast service improvement and increase customer value
Common objs of CRM systems (customer POV)
Unified customer interface that delivers customization and personalization
Vast service improvement and increase customer value