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BUILDING CUSTOMER LOYALTY

Watch the video and take notes of the


tips given
http://www.youtube.com/watch?v=i
nhsMlIBGXk

Creating Customer Value,
Satisfaction and Loyalty

What is Value?


What is Value?

Value = Benefits Costs
Additional benefits are added while costs remain the
same, or costs of the current benefits provided are
reduced.

Whose Definition of Value is
Important?
The Buyer?
The Seller/ Provider?


Whose Definition of Value is
Important?
The Buyer?
The Seller/ Provider?



The Buyer might find value in the acquisition
process itself: the ease, convenience, timeliness,
etc. The buyer might also find value in the
relationship with a particular provider.



The provider may see value in the exchange: the
money received for the service provided. Providers
are hoping the first exchange will lead to repeated
business and long term commitment.

Value as a Competitive Advantage
Competitive companies have traditionally compete based on value
as perceived by the customer.

Example : Company A vs. Company B and Company C

Competitive Advantage is achieved in two basic customer
perceptions of value: Differentiation and Lowest Price.

Competitive Advantage
In the 80`s - TQM
In the 90`s - Reengineering

Value as a Competitive Advantage
Is quality is value-added benefit?
Value as a Competitive Advantage
Today most products and services are of high quality and
offered at very efficient pricing. Thus, a seller is mistaken
when he/she believes that quality is a value-added benefit.
Today quality is expected.
Value as a Competitive Advantage

What are motivational
factors?

Why do we need new
motivational factors
constantly?
Value as a Competitive Advantage

Motivation requires exceeding
expectations
Companies must continually
search for new motivational
factors since factors than once
gave a competitive advantage
were rapidly copied and
customers expectations
continually arise
Value as a Competitive Advantage
It is time to link value obtained in the
exchange process with customer
satisfaction.
Relationships
Repeats
Referrals

Customer Satisfaction


Product Service Customer = Customer
Performance Expectations Satisfaction
Watch the video
What kind of customer service do you
observe?
What is Loyalty?

Loyalty



A commitment to rebuy
or re-patronize a
preferred product or
service.

Dimensions of Customer Loyalty
Whats the difference
between Behavioral Loyalty
And Attitudinal Loyalty?


Dimensions of Customer Loyalty
Behavioral Loyalty
(Repeated purchases)
Attitudinal Loyalty
( Commitment)
Both dimensions could be use to
identify truly loyal customers and to
customized loyalty strategies
according to the level of loyalty.
Attitude
Low High
B
e
h
a
v
i
o
r

H
i
g
h

Spurious Loyalty True Loyalty
L
o
w

Low Loyalty Latent Loyalty
Dimensions of Customer Loyalty
Focusing in behavior alone
cannot capture the reasons
behind the purchase.
The two dimensional loyalty
approach can help us to identify
loyalty segments and suggest
marketing strategies to reach
those segments.
Customers Motivation for
Maintaining Relationships

According to Bendapudi and Berry customers motivation
to maintain relationships with service providers are
divided in:

Constraint Based (they have to stay, high switching cost)
Dedication Based ( they want to stay, trust and affective
commitment)

Switching cost: Time, effort and expense associated with switching
from one company to another.
Example: Movistar - Claro
Creating Value Towards Loyalty
Building high switching barriers can
increase both Behavioral and
Attitudinal Loyalty.
Outperfom the competition.
Use value added strategies to
augment the service delivery system
and outperform the competition.
Example: Supermarket employees
taking your purchases to the car.
Creating Value Towards Loyalty
The value added strategies could involved personalized
service and building relationships at employees levels.
Reward Attitudinal Loyalty.
Emotional attachment, trust and value added strategies
will help build brand loyalty.
Activity
Upload your answers in the assignment Building Customer
Loyalty till Monday. This activity can be done in groups of 4 or 5

1. Choose between the following services:
a. Disco
b. Supermarket
c. Movie Thatre

2. Describe your behavior and attitude towards the service
chosen
3. Describe your relationship with this kind of service.
(Constrained Based, Dedication Based)
4. What would you suggest to improve the relationship with the
service provider.
5. Explain an example of a loyalty program.(Example: Frequent
Flying program)
6. Explain how that loyalty program help to build true customer
loyalty.

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