Customer Relationship and Loyalty

Question 1

Why is customer loyalty important?

Answer 1

• Easier (and cheaper) to keep existing clients than find new ones
• Loyal customers contribute to overall business outcomes (i.e, stability, promotion, quality control)
• A loyal customer base can discourage competition

Question 2

What are Confidence Benefits? (Firm Benefits)

Answer 2

Feelings by the customers that in an established relationship, there was less risk of something going wrong, greater confidence in correct performance, and ability to truth the provider.

Question 3

What are Social Benefits? (Firm Benefits)

Answer 3

Embraced mutual recognition between customers and employees, being known by name, having friendship with the service provider, and enjoyment of certain social aspects of the relationship.

Question 4

What are the three components of Wheel of Loyalty?

Answer 4

1. Build a Foundation for Loyalty
2. Create Loyalty Bonds
3. Reduce Churn Drivers

Question 4

What are Special Treatment Benefits?

Answer 4

included better prices, discounts on special deals that were unavailable to most customers, extra services, higher priority when there was a wait, and faster service than most customers.

Question 5

Build a Foundation for Loyalty (strategy)

Answer 5

1. Segment the market to match customer’s needs and firm capabilities
2. Be selective: Acquire customers who fit the core value proposition
3. Manage the customer base via effective tiering of service
4. Deliver quality service

Question 5

Create Loyalty Bonds (strategy)

Answer 5

1. Build higher-level bonds (social, structural, customization)
2. Give loyalty rewards (financial, non financial, higher tier service levels, recognition and appreciation)
3. Deepen the relationship via cross-selling and bundling

Question 6

What is Customer Relationship Management (CRM) ?

Answer 6

Systems are tools to track customer behaviors across different service products

Question 7

What are the most common CRM systems?

Answer 7

allow the company to better understand, segment, and tier its customer base, better target promotions and cross-selling, and even implement churn alert systems that signal if a customer is in danger of defecting.

Question 8

Social Bond?

Answer 8

Think Hairdresser, creating a close relationship

Question 9

Customization Bonds?

Answer 9

Think Starbucks, services that allow you to customize to your preferences.

Question 10

Structural Bonds?

Answer 10

think Apple, or Car rental companies