CUSTOMER LOYALTY 1

CUSTOMER LOYALTY CARDS Britannia to offer £40m loyalty bonus                        CUSTOMER LOYALTY CARDS

Components of a loyalty system The right customers Lifetime products and services Loyal employees Measures of loyalty

The Service-Profit Chain Operating Strategy and Service Delivery System Employee Retention Revenue Growth Internal Service Quality Employee Satisfaction External Service Value Customer Satisfaction Customer Loyalty Employee Productivity Profitability retention repeat business referral workspace design job design employee selection & development employee rewards and recognition tools for serving customers service concept results for customers service designed and delivered to meet targeted customers’ needs

The Heskett-scheme Apostles Hostages Loyalty (Retention) Mercenaries 100 % Zone of affection 80 % Hostages 60 % Zone of indifference Loyalty (Retention) -- monopoly __ normal competition 40 % Mercenaries Zone of defection Terrorists 20 % Indifferents 1 extremely dissatisfied 2 somewhat dissatisfied 3 slightly dissatisfied 4 satisfied 5 very satisfied Satisfaction Measure 1

The Virtuous Circle of Loyalty Deliver Superior Value Continuous investment in hard-to-match capabilities Increase customer satisfaction Demonstrate trustworthiness Increase customer loyalty Tighten connections 4

When are loyalty programs successful? Use rewards to strengthen the value proposition Change customer behaviour Learn more about your customer: the learning relationship

The Relationship Spectrum Transactional exchanges Value-adding exchanges Collaborative exchanges Anonymous transactions/ Automated purchasing Complete collaboration and integration of supplier with customer or channel partner 3

Devising a Relationship Strategy Understand the sources and consequences of customer retention “What is loyalty?” Identify the reasons for defections “Why do customers switch?” Select the customers to retain “Which customers are valuable?” Design programs to enhance the value proposition and create barriers to imitation “How can we gain an advantage?” Align the organisation to retention as a top priority How will we implement the strategy?” Monitor performance and collect feedback for continuous improvement programs “How are we doing?” 6

The Price of Loyalty The programs are expensive Loyalty programs take on a life of their own once they start Despite their number and apparent popularity with customers, these programs often fail to increase customers’ loyalty

Loyalty and customer satisfaction Satisfied customers will spread the word Service is the key to customer loyalty Customer service beyond the sale Make a difference with an extra-special touch

Loyalty and customer satisfaction Know your products What your customers want Discover customers' buying styles Know your products Along with a professional appearance, a caring attitude and product knowledge, salespeople must have the ability to uncover customers' intangible needs and find out what they really want. Your goal is to find something in the store that will meet the needs of your customers. Probing is a technique for finding out what customers want. There are four basic types of probes that work in different situations and with different customer types: Open-ended questions will result in customers giving you a cluster of facts, opinions and some feelings. These types of questions start with "How," "Why," "What," and "Tell me more." Pauses are deliberate, short silences. The salesperson maintains eye contact, asks an open-ended question and then pauses, or begins a statement and pauses before finishing it (such as, "You are going to wear this dress to ?"). Thoughtful statements show customers that you are listening and that your take their feelings seriously. These statements are especially useful for soothing an angry customer so that you can begin to solve the problem. ("I'm sure that was annoying.") Summary statements put information into a condensed form that shows you have understood what the customer said. They bring the crucial points into focus. Summary statements give customers a chance to agree or to add something to the information. ("So, you're looking for a blue suit that's not too tailored.")

Loyalty and customer satisfaction Not all satisfied customers stay with their supplier Solution: go beyond customer satisfaction Rapport:和谐 Develop the rapport that will make that your customers adore you.