CRM &

Customer
Experience

Course developed by:

Helen Cocco
Nathalie Demoulin
Annelies Costers
Marketing and Sales Department
1
Feedback Case study: CRM at Walt Disney
World
1. Why was it crucial for the company to implement a CRM strategy
(internal and external factors)?
2. What is the CRM strategy adopted by the company? (summarise)
1. What are the expected benefits for the company?
2. How does the company create an omnichannel strategy?
3. How does the company collect and use the information in an appropriate
manner to improve the customer experience?
4. Which KPI could be used by the company to measure the effectiveness
of the strategy?
3. What are the results?

2
Session Plan
S1: Introduction to CRM and Customer Experience

S2: CRM Strategy & creating customer value

S3: Creating and developing customer relationships & CX

measurement

S4: Group presentations

3
S3 Recap: Question 1
How can managers enhance value for customers?
A. By increasing the sacrifices and decreasing the benefits
B. By increasing the benefits and decreasing the sacrifices
C. By increasing the benefits and decreasing the targets
D. By dividing the sacrifices by the benefits

4
S3 Recap: Question 2
What is the link between satisfaction and loyalty?
A. Satisfaction equals loyalty
B. Increased satisfaction is expected to lead to lower loyalty
C. Loyalty and satisfaction are not linked
D. Satisfaction has a positive relationship with loyalty

5
S3 Recap: Question 3
The Customer Lifetime value is…
A. the present value of future profits generated from a customer
over his or her life of business with the firm
B. total value derived from its entire customer base
C. the value a customer generates from the referral of new
customers
D. All of the above

6
 By the end of this session you will be able to…

1
Understand what is a customer relationship

2 Identify stages of the development process in the customer

relationship

Understand when companies should develop retention strategies

3
Develop customer retention strategies

4 7
What is customer
experience?

Core principles

Understanding
Customers relationship
8
1. What is a relationship?
• A relationship is a social construct
• A relationship exists if people believe that a relationship exists and they act
accordingly
• Relationships can be unilateral or reciprocal
• Either one or both parties may believe they are in a relationship

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2. How do companies build customer
relationship?
Satisfaction

Loyalty

Commitment
Trust

10
2.1. Customer satisfaction

• Why is it necessary to enhance the customer satisfaction?

• What is the customer satisfaction?
• When can we state that a customer is satisfied?

11
Exercise: Customer satisfaction

1. Remember two examples of your own experience in a store

A. One after which you have been highly satisfied;
B. Another one for which you have been totally unsatisfied;
2. Explain your store experience and the reasons that explain your
satisfaction level
3. Which emotions have you felt during or after your purchase
experience (joy, sadness, anger, surprise….)?
4. Have you communicated your satisfaction to anyone? How?

12
 2.1. Customer satisfaction
The origin of the term satisfaction comes from Latin: satis (enough) et
facere (make) ; which means « provided someone with what he/she expects
until it is enough ».

• Satisfaction is the consumer’s fulfilment response; a judgment that a

product or service provided a pleasurable level of consumption-related
fulfilment, including levels of under- or over-fulfilment

• It includes two processes: cognitive and affective

• The cognitive process: the disconfirmation of expectations
• The affective process: emotions (+/-) or affective responses

Source: Vanhamme, 2002 13

Satisfaction: The cognitive model

Perceived Performance

Disconfirmation Satisfaction

Expectations

Source: Oliver, 1981

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Satisfaction: The cognitive model
A comparison with expectations…
Previous purchases

Performance
Friends/others’ advice
Competitors

Dissatisfied Satisfied ‘Delighted’

The expectation-disconfirmation theory (Oliver 1980)

Expected performance
Actual performance
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Customer expectations are beliefs about
the interaction that serve as standards or
reference points against which
performance is judged

16
Ideal expectations or desires High ”Everyone says this restaurant is as good as one
expectations in France and I want to go somewhere very
special for my anniversary”

Normative expectations (“must-haves”) “As expensive as this restaurant is, it ought to

have excellent food service”

Experience-based expectations “Most times this restaurant is very good, but

when it gets busy the service is slow”

“I expect this restaurant to serve me in an

Acceptable expectations adequate manner”

“I expect terrible service from this restaurant,

Low but come because the price is low”
Minimum tolerable expectations expectations

17
 Desired “The Zone of Tolerance”:
Quality I wished for service If the organization’s
performance falls within
these thresholds,
customers will be
satisfied

Customers realize that

quality will not always be
Minimum quality I find
Adequate as desired, and accept
acceptable to engage/keep service
(some) variability
engaging with the organization

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Satisfaction: An affective component
• Affective responses: excitement, joy, pride,
contentment, optimism, relief, peacefulness,
love, loneliness, envy, guilt fear, shame, worry,
discontent, anger, surprise, eagerness (Richins,
1997)

• Affective responses can have a strong influence

on the customer and his/her satisfaction

• Customers experiencing affective responses

such as “joy, surprise are more satisfied and
inversely for customers experiencing “anger,
sadness, disgust”.
(Vanhamme, 2002) 19
Cognitive and affective model of
satisfaction

Perceived Performance

Disconfirmation Satisfaction

Expectation

Affective responses

(Vanhamme, 2002)
20
2.2. Trust
Trust exists when one party has confidence in the reliability and integrity of exchange
partners
It is a willingness to rely on an exchange partner in whom one has confidence

• Reliability is the consistency of the performance of the product or

service
• Integrity is being honest and having strong moral principles
• Trust is associated with qualities such as consistent, honest,
competent, fair, responsible, helpful, and benevolent
• Trust is an important driver of relationships and reduces
customers’ perceived risk
• Trust is even more important for e-commerce
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2.3. Commitment
It is a desire to maintain a relationship resulting in an ongoing investment into activities
which are expected to maintain that relationship
It is the importance of the relationship for both partners and their desire to continue it

• It is one of the most often used relationship marketing outcome variable

• It only occurs for mature relationships
• Two types of commitment
• Calculative commitment: a balance sheet of costs and benefits
• Affective commitment based on liking, emotional attachment and sense of
bonding
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2.4. Loyalty
Why do companies make their customers loyal ?
Retention costs are 5 time less than
customer acquisition

To make profitable the cost of a new

customer acquisition

To generate « up-selling » and « cross-

selling »

To minimize the attrition rate

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How do Loyal customers behave?
Be less price sensitive

Spend more time with the company and spend more

More positive attitude towards the brand or the retailer

Positive recommendations about their favorite brand or suppliers (WOM)

Less sensitivity to attractive promotion of competitors

Higher willingness to adopt new products or services from the brand

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What is Loyalty?

“A deeply held commitment to rebuy or repatronize a preferred

product or service in the future despite situational influences
and marketing efforts having the potential to cause switching
behavior.” (Oliver, 1997)

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Loyalty: 2 dimensions
• What is the true loyalty?

26
 The 2 dimensions of loyalty

2 dimensions
• Behavioral loyalty or a repeat patronage behavior:
• Purchase sequence (AAAAAA - ABBAAB -AAABBB)
• Share of Wallet (SOW %): the amount of the customer's total
spending that a business captures in the products and services
that it offers
• Share of Visit (SOV %): the number of visits to the focal retailer/
total number of visits to the same category of retailers
• Recency Frequency Monetary (RFM)

• Attitudinal loyalty
• A favorable attitude towards the brand or the retailer
27
2.5. the customer relationship Process
Relational
Trust Commitment Barriers to
Process
change

Attitudinal loyalty

Behavioral loyalty
Satisfaction

Moderating
variables:
individual,
situational
Previous
purchase
behavior
Transactional Process 28
Quiz
29
S3: Question 1
Relationships in marketing can be
A. Unilateral and Reciprocal
B. Unilateral only
C. Reciprocal only
D. Neither unilateral or reciprocal

30
S3: Question 2
The building blocks of customer relationships are
A. Trust and satisfaction
B. Satisfaction and loyalty
C. Commitment and trust
D. Trust, Commitment, Loyalty and Satisfaction

31
S3: Question 3
Satisfaction is
A. When expectations and perceived performance are aligned
B. When expectations and perceived performance are no longer
important
C. When delight leads to consumer retention
D. When dissatisfied customers want to leave

32
S3: Question 4
Trust is
A. When one party perceives risks in an exchange
B. When either party makes a profit
C. One party has confidence in the reliability and integrity of an
exchange
D. One party is open to an exchange

33
S3: Question 5
Having loyal customers is important because
A. Retention costs are higher than acquisition costs
B. Retention costs are lower than acquisition costs
C. Attrition rates are increasing globally
D. Attrition rates usually remain stable

34
S3: Question 6
The two dimensions of loyalty are
A. Affective and behavioural
B. Exceptional and delightful
C. Satisfaction and growth
D. Attitudinal and behavioural

35
What is customer
experience?

Core principles

Identifying stages of the

development process of
the customer relationship
36
3. Relationship stages

Re-invention
Awareness Exploration Expansion Commitment
or dissolution

37
3. Relationship stages
Awareness
• Parties recognition that the
other party exists and is a
feasible exchange party
• First interactions between
parties take place
• Each party makes him/herself
attractive
Exploration
• Evaluation of the other party
with minimal investment
Sub-processes
• Attractiveness of the relationship
• Communication & Bargaining
• Development and exercise of
power
• Expectation development
38
3. Relationship stages

Expansion Commitment
• Increase in investment and in • Real desire to continue the
benefits obtained by the relationship
exchange • Benefits linked to
• Increased interdependence • Certainty
which leads to increased risk- • Efficiency
taking

39
 3. Relationship stages
Customer service failure and problem
recovery Dissolution
• Customers reactions may differ • Dissolution: two parties agree
depending on
• Their propensity to switch on separation
• The industry
• How previous problems were handled
• Customer exit: the customer decides
to cease patronage of a supplier after an
• The length of the relationship unsatisfactory transaction
• Satisfactory responses may lead to
• Renewed levels of satisfaction • Supplier withdrawal
• Greater satisfaction than before = • Dumping the customer
Recovery paradox
• Exclude customers from the
• Unsatisfactory responses may lead to database
• Customer complain (2%)
• Customer exit (90%) 40
 Customer
satisfaction after
the recovery
Customer satisfaction

The recovery paradox

Customer satisfaction if the

customer did not experience a
Recovery
critical incident
Critical
incident
Time

Source: de Matos et al. (2007)

41
“Given the recovery paradox, should
a firm screw up then?”

42
“Given the recovery paradox, should
a firm screw up then?”
NO!!
1. Not everybody complains
2. Paradox does not always hold
3. Do It Right First Time =
Preferred option

43
What is customer
experience?

Core principles
Understanding when
companies should
develop customers
acquisition or retention
strategies 44
The leaky bucket theory

Source: Dwyer et al. (1987, p.

14) in Egan (2011). 45
What is the customer retention rate?

Raw retention rate

• Number of customers doing business with a firm at the end of a
period/active customers at the beginning of the period
The period over which
retention is measured
depends on the
Sales-adjusted retention rate purchasing cycle
• The value of sales from the retained customers/ sales achieved
from all active customers at the beginning of the period

CRM
Profit-adjusted retention rate Retention of customers
• Profit earned from the retained customers/ profit earned from all who deliver the most value
customers active at the beginning of the period
46
Zero defections?
Total customer retention?
• Total customer retention is not always an achievable objective
• Particularly in highly competitive market, customers may switch to
another product or service providers for reasons not under the
control of the company (e.g. competitors promotion)
• It might also be unprofitable to achieve total retention as the cost
of retention can be excessively high
• Companies should monitor and compare their acquisition and
retention costs to know when to ‘cut and run’

47
Offensive marketing - Customer acquisition
• Why should companies acquire new customers?
• Every organization loses customers
• Any loss of customers has to be replaced for the company to stand still to
keep a good profitability
• Decrease in profitability can be particularly important in service industries
where fixed costs are higher

ÖCustomer acquisition will become more difficult in the future due

to negative population growth in many mature market

48
Defensive marketing - Customer retention
• A customer retention strategy is aimed at raising the retention level of current corporate
customers

• Why should company retain their customers?

• Existing customers are 5 to 10 time less expensive to retain than to
recruit
• Securing a customer’s loyalty over time produces superior benefits
particularly in saturated market

49
Defensive marketing - Customer retention
• When should we pursue such a strategy?

If the company
• Has a generally high churn rate
• Immediately loses numerous customers
• Achieves cross-selling only to a low degree
• Has many customers that also used products or services from
competitors
• Has higher acquisition costs than retention costs
CRM encourages retention marketing first and acquisition second
50
 When should companies use retention
strategies?
• When the front-end costs of customer acquisition
exceed the cost of retention
• High front-end acquisition costs are found in
industries where:
• Costs due to detailed information gathering and writing of
contracts (e.g insurance)
• Supply of equipment (e.g. digital TV receivers)
• Markets with high advertising and other communication
expenditures
• High costs of personal selling
• Commission payments based on sales
51
 When should companies use retention
strategies?
• High costs of personal selling if
• High degree of product and service
complexity
• High-value product
• Limited number of customers met in
a given period
• Low client conversion rate
• If commissions are payable
on sales:
• the fixed cost of personal
selling will decrease
• But the cost of acquisition
relative to retention costs will
be high
52
When should companies use
acquisition strategies?
• When acquisition cost are = or < than retention costs
FMCG: High advertising and sales promotion

Retention costs >

Acquisition costs = retention costs acquisition costs 53
What is customer
experience?

Core principles

Developing customers
retention strategies
54
Two types of customer retention
strategies
Solidarity strategy Dependence strategy

Positive barriers Negative barriers

Using psychological drivers Build barriers to switching or

such as relationship quality any aspect that makes
and customer satisfaction switching difficult or
expensive

55
Two types of customer retention strategies

Solidarity strategy Dependence strategy

• Superiority of the offer compared to

competitors to satisfy or delight • Search costs
customers • Learning costs
• Emotional costs
• Customers engagement
• Inertial costs
• Interpersonal relationships
• Risk
• Loyalty programs to reward • Social costs
customers • Financial costs
• Customization of the offer • Legal barriers
• Cross-selling
56
Switching costs
The negative (or positive) costs that a consumer incurs as a result of
changing suppliers, brands or products

• Search costs: those based on time and energy spent searching for
alternative sources of supply
• Learning costs: based on time and energy spent learning how to deal
effectively and efficiently with a new suppliers (e.g. learning the layout of a
supermarket)
• Emotional costs (+): relationships over an extended period can create
emotional ties with an organization or its personnel. Personal relationship
or iconic brands can engender such loyalty. Brand community on the
internet demonstrates that members have devotion

57
Switching costs
• Inertial costs: the effort involved in breaking habitual behavior. It is often
underestimated. It is associated with the concept of Zone of Tolerance. It is
the range of service performance where small increases or decreases in
performance quality do not lead to any action.
No action
Delighted
Dissatisfaction

58
Quiz
59
S3: Question 1
The first stage of a relationship is
A. Awareness: Recognising that each party exists
B. Exploration: Evaluating the other party
C. Commitment: A real desire to continue a relationship
D. Dissolution: Two parties agree on separation

60
S3: Question 2
The leaky bucket theory shows us that
A. Customers can be defensive
B. Customers can be offensive
C. Companies must have a flow of new customers
D. Marketers must concentrate on following bucket usage trends

61
S3: Question 3
The leaky bucket theory shows us that
A. Companies should have both defensive and offensive strategies
B. Companies should focus on retaining customers
C. Companies should focus on acquiring customers
D. All of the above

62
S3: Question 4
An example of implementing a solidarity strategy is when
A. The company focuses on delivering relationship quality and
satisfaction
B. Making customers feel bad for leaving
C. Encouraging customers to sign a contract in order to keep them
D. Telling customers that they won’t get the same service elsewhere

63
S3: Question 5
An example of implementing a dependence strategy is when
A. Delighting customers with a free gift
B. Influencing brand love
C. Setting up campaigns to build company awareness
D. Charging customers fees to exit a company

64
S3: Question 6
Inertia is
A. When customers are delighted
B. When customers tolerate a business that they may not be that
happy with
C. When customers are dissatisfied
D. When customers want to switch to another supplier

65
S3: Question 7
Why do companies want loyal customers?
A. To sell the maximum possible products and services
B. To give discounts to them
C. Retaining customers is more profitable
D. All of the above

66
S3: Question 8
Relationships evolve over time. During this period customers move
through different stages of development. These phases involve:
A. Awareness: Recognizing that each party exists
B. Expansion: Increase in investment and benefits from the
exchange
C. Commitment: Desire to continue the relationship
D. All of the above

67
S3: Question 9
Why is satisfaction so important for companies?
A. Because it involves perceived performance expectations and
affective responses.
B. Because its really easy to react quickly to evaluations
C. Because it involved trust and commitment
D. All of the above

68
Session Plan
S1: Introduction to CRM and Customer Experience

S2: CRM Strategy & creating customer value

S3: Creating and developing customer relationships & CX

measurement

S4: Group presentations

69
 By the end of this session you will be able to…

1
Understand a VOC strategy

2 Design a VOC strategy

70
What is customer
experience?

Core principles

Designing a Voice of
the Customer strategy
71
A. What is VOC?
• The VOC is the process used to capture the needs, requirements
and feedbacks from customers.
• It is the process of capturing all of what a customer is saying about
your business, product, or service with the final objective of
providing them with the best customer experience
• It is a proactive and constantly innovative process to capture the
changing customers expectation with time

72
B. How and why should companies listen to
their customers?

Customers The company

Understand Establish an feel identifies its
their interpersonal understood weaknesses
expectations relationship and and adapt its
recognized offer

73
C. Who should listen to the company’s
customers?
• Most of employees…
• CEO and top managers
• Back office employees should spent sometimes with customers to better
understand them
• Employees in contact with customers;
• Any new employee should participate to an integration process that
enables him/her to observe and listen to customers

74
 D. How to stimulate the collection of
customer information?
• Raise the awareness of employees on the
importance of information
• Make the transmission of information easy by
creating a unique customer database
• Demonstrate the utility of information to improve
the company process and offer
• Encourage customers to contact the company by
various channels

75
 Methods used to better understand the
customer & to listen to the VOC

Satisfaction ba- Online methods:

Customers
rometers, Survey, Emails, Social Observation of
meeting, clients Mystery shoppers
Face to face Networks, Website customers
club, community
interviews Chatbots

76
 77
Source: adapted from Wirtz and Tomlin (2000) The kalepa Group All rights reserved
 Case: CRM at Four Seasons Hotels and Resorts: the creation of a
personalized guest experience through customer service and e-CRM

1. What is the retention strategy of Four Seasons Hotels and Resorts?

Explain the steps involved in this strategy?
2. How do Four Seasons Hotels and Resorts prevent dissatisfaction?
3. What is the strategic purpose of the Four Seasons Hotels and
Resorts mobile app?
4. How do Four Seasons Hotels and Resorts use social network to
create the customer’s engagement?
5. What would you do to improve the CRM strategy of Four
Seasons Hotels and Resorts?
Guestware: Software for guest experience management
78
(Reminder) The Group Project
CE & CRM Master Course Group Task
You are consultants working at my company Kalepa, in a team whose mission is to create more effective CE
and CRM strategy for companies. Choose a company where you would like to implement a new CE and CRM
strategy. Design a ‘pitch’ (influential presentation) that you would give to this company. You have 15
minutes. You can include the following:
• Analysis of the current situation
• How does the company create and manage its customer experience today? Describe and analyse the channels/touchpoints in
which customer experience is visible. Do they have a customer retention strategy?

• Recommendation of the future strategy to implement

• How to improve the customer experience and CRM strategies regarding possible marketing activities (be creative and innovative,
yet relevant and feasible)
• What to recommend in order to help the company better listen to their customers (VOC) and measure customer experience?
• What do you recommend to improve the company’s retention strategy?

79