Loyalty Consolidated Final

8/3/2019 Loyalty Consolidated Final

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Consumer Behavior

LoyaltyPrepared by:

Asmaa El-Hefnawy Mohesn KhairAllah

Islam Bassem Nader Natout Mohamed Abo-Elkomsan

Professor: Ehab Mohamed Abou Aish


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Loyalty Definition & ModelComplementary theories of customer loyalty

Loyalty Programs

Building Loyalty Strategies

Market Share Strategies

Loyalty & Profit

Agenda


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Consumer Behavior Imperatives

Consumer Behavior

Imperatives

Loyalty Switching Satisfaction


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Loyalty Definition & Model


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Customer Loyalty Definition

Nonrandompurchase overtimeof one brand from a

set of brands by aconsumer usingdeliberate

evaluation process

Loyal customers buymore, buy longerand tell more people- that's truecustomer loyalty."


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Aims of customer LoyaltyPrograms

Sales Revenue

Increased byraisingpurchase rate

or amount

Customer Base

Maintained bybuilding acloser bond

between thebrand& existingcustomer


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Customer Loyalty Models

An attitude that sometimesleads to a relationship with brand

Expressed in terms of revealed

behavior pattern of pastpurchase

Buying moderated by individualscharacteristics, circumstances,

purchase situation


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Attitudinal-loyalty to the brand

mainly seen as single brand loyalty

Strong attitude &positive believes

towards the brandOther influence

An attitude thatsometimes leads to a

relationship with brand


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Behavioral-loyalty to the

brands,mainly dividedto few brands

Habitualrevealed

behavior

Satisfactoryexperience &

weak

commitment tobrands

Expressed in terms ofrevealed behavior


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Buying moderated byindividuals characteristics,

purchase situation

Co-

determinantsof buyingbrands

Purchasesituation,varietyseeking

Individualscharacteristics


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Attitude Approach

Behavioral Focus Approach

Contingency Approach

Complementary theories of customer loyalty


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Attitude Approach

Aim to increase sales by enhancing beliefsabout the brand

Strengthening the emotional commitmentof customers to their brand

This is through persuasive advertising and

personal service programs

Finally marketers bond customer to theirbrands


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Contingency Approach

Marketers work on unusual factors such asextending working hours, having 24 hourscustomer support

they also offers price promotions, deals andspecial offers

Marketers create the above contingencyfactors to attract customer loyalty ratherthan developing loyalty programs


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Summary of approachesCBC : Customer Brand CommitmentCBA : Customer Brand AcceptanceCBB : Customer Brand Buying


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LOYALTY PROGRAMS


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Examples of loyalty programs

Loyalty program from anindividuals prospective

Loyalty program from amarket prospective

Loyalty program andprofitability pitfalls


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Loyalty program froman individuals

prospective

Loyaltyprogram

forindividualcustomer

is the

Vehicle to

Increase single brand loyalty

Decreases price sensitivity

Induce customer resistance to counter

offers or counter arguments Dampen the desire to consider alternative

brands

Encourage word of mouth support and

endorsement

Attract larger pool of customers

Increase the amount of product bought


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Loyalty program from amarket prospective

There arefour

differentstrategies

To try to grow the size of the brand

To create a niche brand

Big brands to become a super-loyalty

brands DJ effect is to exploit the desire of

customers for change-of-pace


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Factorsaffectingloyalty

programs

Provide vast amount of data

Few of this programs collect data about thecomplete customer experience

Data come from two sources Evaluation on sales effectiveness of loyalty

program are often based on a poor quasi-experimental design

The choice of benchmark

Loyalty program andprofitability pitfalls


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Assessing customer loyalty

Assessing loyalty programs

Assessing major traps

The choice of benchmark

Whither loyalty programs


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Level of Loyalty programs


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Building Loyalty Stratgy


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Action Outline

4. Measure effects of program and redesign

Maintain constant communication with your loyal customers

Monitor costs and results of your program

3. Implement a loyalty treatment

Design specific communication strategy and message

Train staff to understand the importance and the process

Create opportunities to invest and receive investments

Generate a sense of community among your customers

2. Design a relationship-building service culture

Identify what type of treatment promotes customer loyalty

Identify what loyal customers want to give to you

Identify potential for the development of a brand community

1. Select your market segment Identify most valuable customers (what criteria?)

Identify customerswho might become valuable


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Building Strategy- GraphicDepiction

Product

Performance

Service

Performance

Employee

Performance

Customer

Satisfaction

Retention /

Loyalty

Revenue /

Profit


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Difficulty in Building true loyalty

According to a report from Mintel Research: Only 15% of all grocery shoppers are completely loyal to

the store where they do their main grocery shopping

29% use one other store

22% use two others

Men are more likely than women to be loyal to a singlestore

46% of men shop in just one or two main stores

This study helps us to understand that merelyspending millions does not creates Loyalty. Acontinous approach is essential.

C


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Customer Recognition

Customer Recognition is an important aspect of anybusiness or for any Organization.

With each loyalty programs Recognition aspect comesinto pivotal role.

Each customer wants an attention or recognition whomhe/she enters into relation with.

The recognition can be TangibleorIntangible. Dont underestimate Customer recognition.


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Economic Value of a Loyal Customer

Understanding loyalty program economics is essential.

A loyalty program incurs a cost to an organizationwhich is of prime importance as running these

programs is isnt cheap.

According to a study by Mckinsey & Companyestimated for any Fortune 500 organization aprograms 1st year cost makes up for a large amountsimultaneously costing in marketing and maintenance.

Understanding the economic value of your customers,not just your loyal customers can save tremendous

amounts of revenue and effort.


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Future of Loyalty Programs

Companies should look for ways to differentiate their loyaltyprograms while balancing the revenue and the costs.

Focus should be made more specific or segmented liketargeting life-style, or interests.

Concentrating resources on high potential and high valuecustomers.

Organization's focus should be on broadening customerrelationship rather than rewarding.

Coalition programs a new trend will be seen as new conceptin the loyalty programs.


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Contd ...

Thus we have seen that loyalty programs are ofimmense value to any organization irrespective ofgeographical distribution.

Providing a better product an impeccable serviceshould be the major objective for any organization.

Recognizing the customer and his spending behaviorcan enable to make more specific rewarding structure.

Loyalty programs should not be limited to Rewardingbut to broaden relationship with the customer andoffering them more liberty.


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Loyalty & Profit


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Managerial Strategy

Retain Existing MarketGenerate New Customers

Increase customerloyalty andsatisfaction

Erect switchingbarriers

Capture share fromcompetitors

Expand marketsize


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Loyalty and Profit

Quality

Satisfaction

Loyalty

Profit

LoyaltySatisfactionQuality

Guaranteedcustomer base

Greater retentionHigher premiums

More accurate

budgeting

Increased

purchasing

Higher margins

More strategicplanning

Higher pricetolerance

Higher reputation

Decreasedmarketing costs

Higher firm specificadvertising vigilance

Higher awareness

Higher competitiveinsulation

More positive wordof mouth

Lower newcustomers costs

Higher market

expectations


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The Value of Loyalty

150 top satisfaction dealers were compared tobottom 150

Higher salesperson retention

30 % lower in advertising costs

Higher profit

Higher ROI


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The Value of a Lost Customer

According to a study conducted by

Visits 4 times more

Spending 1000$ per visit

Profit margin is 60%

Potential profit is 2400$

2400$ loss if not satisfied

C t l P ti f L t


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Conceptual Perspective of a LostCustomer

Profitimpact

Word ofmouth

Newcustomer

status

OutcomeBehaviorLostcustomer

status

Out productcategory

Essentiallysatisfied

Betteralternative

NegativeNegativeLost forgood

NoneNo contact

NegativeNone

Positive

AgitatedUnknown

Enthused

FailedReinstated

Transformed

Recovery

ComplainedDissatisfied

Identified


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Case Study


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43

Jetstar Airways is a low-cost airline headquartered in Melbourne.

It operates an extensive domestic network as well as regional andinternational services.

Its main base is Melbourne Airport.

Parent company Qantas also has stakes in sister companies JetstarAsia and Valuair in Singapore

INTRODUCTION


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Key Points

No CRM

Lack of Technological related Infrastructure

No Segmentation of IA customers No govt. support

Innovators but overtaken by Competitors


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Customer Service Standards

No Service Manuals

Avg. of 4 complaints daily

5% of Dissatisfied Customers voice their

dissatisfaction. Poor Complaint Handling Procedures

Complaint handling through Excel


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CUSTOMER SATISFACTION

SURVEY


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Customer Satisfaction Survey Results

Correlation between frequency of Travel with IAand Overall Customer Satisfaction.

Correlation between the years of travel with IAand Overall Customer Satisfaction.

No Correlation between the sex and age of thecustomer and Overall Customer Satisfaction.

Correlation b/w Overall Customer Satisfaction

and Business Class Travelers


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7

27

18

26

3

0

5

10

15

20

25

30

Overall Customer Satisfaction

VeryDissatisfied

Dissatisfied

Neutral

Satisfied

Very Satisfied

Customer satisfaction and the


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Customer satisfaction and the

effect on customer loyalty

Poor Fair Good ExcellentSatisfaction Score

100

80

60

40

20

10Zone of defection

Zone of indifference

Zone of loyalty

Loyalty(Retention)

Source: JL Heskett, The Service Profit Chain; The Free Press; New York 1997


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0

5101520

253035

Customer

Relations

TravelAgents

Punctualityof

Flights

Responseto

Queries

Complaint

resolution

Responsiveness

toenquiries

ValueforMoney

Customer Satisfaction of Individual

Factors

VeryDissatisfied

Dissatisfied

Neutral

Satisfied

Very Satisfied


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Discriminant Analysis Output

1. Bookings

2. Relations

3. Service Quality

4. Value Added

M t I t ti


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FREQUENT FLYER PROGRAM

Management Intervention


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Frequent Flyer Program

Pioneers

Members of FFP: 2,00,000

Quarterly Reports

No additional fares on-flight services Add a car and hotel

Book car and accommodation in selected destinations at thesame time as you book your flights!

Free tickets for frequent travelers Additional free luggage coupons


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Documents

Loyalty Consolidated Final