Module 1

Customer Focus
and Managing
Customer
Loyalty
 Customer Focus and Managing Customer
Loyalty
MODULE 1
• Market orientation and customer focus
• The importance of customer satisfaction,
retention, and loyalty
• Building a measure of customer loyalty
• Customer relationship management
• Marketing knowledge
• Role of market orientation in building
marketing strategies in delivering customer
satisfaction and profitability
• Effective measure improving customer focus
and managing customer loyalty
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MARKET ORIENTATION AND
CUSTOMER FOCUS

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 What is market orientation?

Market orientation is an approach to

business that prioritizes identifying
the needs and desires of
consumers and creating products
and services that satisfy them.

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 Putting It All Together

Superior
Superior
Customer
Customer Value
Value

Total
Total Company
Company Effort
Effort Customer
Customer
to
to Satisfy
Satisfy Customers
Customers Acquisition
Acquisition

Profitable
Profitable Customer
Customer
Relationships
Relationships with
with
Customers
Customers
Satisfaction
Satisfaction

Customer
Customer
Copyright © 1999 by Thomas Retention
Retention
6
Southwestern. All rights reserved.
What is market orientation?

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 MARKETING RESEARCH:
Only way to Know
CUSTOMER VALUE

Copyright © 1999 by Thomas 8

Southwestern. All rights reserved.
 Customers
• Historically, customers were considered
who used a company’s products and
suppliers were outsiders who provided the
materials needed to produce the products.
• A more contemporary view is that every
organization has both internal and external
customers.

An organization’s survival depends upon

customers
 Customers

• An external customer is the one referred

to in the traditional definition.
• An internal customer is any employee
whose work depends on that of employees
whose work precedes his or hers.
  Identifying Customer Needs
• Scholtes’ six-step strategy for identifying
customer needs is as follows:
– speculate about results,
– develop an information-gathering plan,
– gather information,
– analyze the results,
– check the validity of conclusions,
– and take action.
 Customer Defined Quality
• Only Customers can tell you what they
want and how they want it.
• Must work with customers to determine
their needs and collaborate with suppliers
& operations to deliver them.
• Components of Customer defined quality
Identifying Customer needs
Customer focus
Customer Satisfaction
 Customer focus

• Customer Focus’ refers to and what being

customer focused means.

• Customer Focus can be understood as

forming the strategy for customer orientation
for the salesperson or organization.

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Weak Customer Focus

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Strong Customer Focus

Insert figure 1.2 here

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 Importance of customer
satisfaction, retention and
loyalty

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What Is Customer Satisfaction?
• Customer Satisfaction (CSAT) is a broad
term to describe a way of measuring how
happy customers are with your service. This is
typically done through a few different types of
customer surveys, often sent shortly after an
interaction with the customer. For example,
you might send a CSAT survey shortly after a
customer contacts your support team in an
attempt to gauge their satisfaction with the
support they received.

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 Keys to Customer Satisfaction
• Establishing a customer focus.
 put employees in touch with customers so that
customer needs are known and understood.
• Continual improvement
Process improvement throughout the supply chain;
from raw materials to delivery
Making things better, even when they are not
broken
 What is Customer retention?
• Customer retention refers to the ability
of a company or product to retain its
customers over some specified period.
High customer retention means
customers of the product or business
tend to return to, continue to buy or in
some other way not defect to another
product or business, or to non-use
entirely.
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 What is customer loyalty?
• Customer loyalty is a measure of a
customer’s likeliness to do repeat
business with a company or brand. It is
the result of customer satisfaction,
positive customer experiences, and the
overall value of the goods or services a
customer receives from a business.

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Building and Measure Customer
Loyalty

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Building Customers Loyalty:
• Know Your Customer and Let Them
Know You
• Reward Loyalty with a Customer
Loyalty Program
• Be the Best at What You Do
• Encourage Customer Feedback

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Measure customer loyalty:
• Net Promoter Score (NPS)
This metric indicates the likeliness of your customer
referring you to her friends. She answers this simple
question with a value between 1 – 10.
-Detractors. Customers answering with a score of 6
or lower are segmented as “Detractors”
-Passives. Those with a 7 or 8 are segmented as
“Passives”. They are quite satisfied, but not ecstatic
enough to recommend you.
-Promoters. Those with a 9 or 10 fall into the
“Promoters” segment.

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Measure customer loyalty:
• Repurchase Ratio
This measures the ratio of repeat
purchasers over one-time purchasers.
A purchase is at the core of a
commercial relationship, which makes
this metric a valid representation of
customer loyalty.

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Measure customer loyalty:
• Upselling Ratio
This tracks the ratio of customers
who’ve bought more than one type of
product divided by the customers
who’ve bought only one. This sounds
similar to the Repurchase Ratio, but it’s
different because it concerns another
product .
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Measure customer loyalty:
• Customer Loyalty Index (CLI)
This is a standardized tool to track customer
loyalty over time, and it incorporates the
values of NPS, repurchasing, and upselling.
• How likely are you to recommend us to your
friends or contacts?
• How likely are you to buy from us again in the
future?
• How likely are you to try out other of our
products/services?
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Measure customer loyalty:
• Customer Engagement Numbers
According to Curtis N. Bingham ,
customer engagement is the most
effective predictor of customer loyalty.
He argues that compared to NPS and
CLI, customer engagement metrics are
easier to measure, to influence, and
that they’re more strongly correlated
with revenue and profits.
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Measure customer loyalty:
• How much would you miss us?
This is an alternative to the NPS score. You
ask your customers how much they’d miss
you if your company would cease to exist
tomorrow.
Like the NPS, customers choose a value
between 1 (would not miss at all) and 10 (I
couldn’t do without you). This measures the
strength of your customer connections and
the perceived value of your offering.
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CRM: Customer Relationship
Management
 What is customer relationship?

• Customer relationship management

(CRM) is the combination of practices,
strategies and technologies that
companies use to manage and analyze
customer interactions and data
throughout the customer lifecycle.

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 Integrated Framework for CRM
Strategy

Strategy Value Creation Multi-Channel Performance

Development Integration Assessment
Process Process Process Process

Information Management Process

Source: Adapted from: Adrian Payne and Pennie Frow, “A Strategic Framework for Customer
Relationship Management,” Journal of Marketing 69 (October 2005): pp.167–176.
Integrated Framework for CRM Strategy
Development

• Strategy Development
– Assessment of business strategy
– Business strategy guides development of
customer strategy
Integrated Framework for CRM Strategy: Value Creation

• Value Creation
– Translates business and customer strategies into specific value
propositions for both customers and firm

• Customers benefit from priority, tiered services,

loyalty rewards, and customization
• Company benefits from reduced customer acquisition
and retention costs, and increased share-of-wallet
– Dual creation of value: Customers need to participate in CRM to reap
value from firm’s CRM initiatives
 Integrated Framework for CRM
Strategy: Multi-Channel Integration

• Multi-Channel Integration
– Serve customers well across many
potential interfaces
– Offer a unified interface that delivers
customization and personalization
Integrated Framework for CRM
Strategy: Performance Assessment

• Performance Assessment
– Is CRM system creating value for key
stakeholders?
– Are marketing and service standard
objectives being achieved?
– Is CRM system meeting performance
standards?
Integrated Framework for CRM Strategy:
Information Management

• Information Management
– Collect customer information from all
channels
– Integrate it with other relevant information
– Make useful information available to the
frontline
– Create and manage data repository, IT
systems, analytical tools, specific
application packages
Common Objectives Of CRM Systems:
• Data collection
– Customer data such as contact details, demographics,
purchasing history, service preferences, and the like
• Data analysis
– Data captured is analyzed and categorized
– Used to tier customer base and tailor service delivery
accordingly.
• Sales force automation
– Sales leads, cross-sell, and up-sell opportunities can be
effectively identified and processed
– Entire sales cycle from lead generation to close of sales
and after- sales service can be tracked and facilitated
through CRM system
Common Objectives Of CRM Systems:
• Marketing automation
– Mining of customer data enables the firm to target its market
– Goal to achieve one-to-one marketing and cost savings, often in the context
of loyalty and retention programs
– Results in increasing the ROI on its marketing expenditure
– CRM systems also enable the assessment of the effectiveness of
marketing campaigns through the analysis of responses
• Call center automation
– Call center staff have customer information at their fingertips and can
improve their service levels to all customers
– Caller ID and account numbers allow call centers to identify the customer
tier the caller belongs to, and to tailor the service accordingly
• For example, platinum callers get priority in waiting loops
 Common Failures in CRM Implementation
• Service firms equate installing CRM systems
with having a customer relationship strategy
• Challenge of getting it right with wide-ranging
scope of CRM
• Common reasons for failures
– Viewing CRM as a technology initiative
– Lack of customer focus
– Insufficient appreciation of customer lifetime value (CLV)
– Inadequate support from top management
– Failure to reengineer business processes
– Underestimating the challenges in date integration
Key Issues in Defining a Customer Relationship Strategy
• How should our value proposition change to increase customer loyalty?
• How much customization or one-to-one marketing and service delivery
is appropriate and profitable?
• What is incremental profit potential of increasing share-of-wallet with
current customers? How much does this vary by customer tier and/or
segment?
• How much time and resources can we allocate to CRM right now?
• If we believe in customer relationship management, why haven’t we
taken more steps in that direction in past?
• What can we do today to develop customer relationships without
spending on technology?
Effective measures improving customer focus
and managing customer

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Effective measures improving customer
focus:

• Use Clear Language

• Do the Time Zone Math
• Anticipate Hidden Needs
• Use the Pre-Emptive Acknowledgement
• Take the Thank You Letter Challenge
• Take Action!

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Effective measures in managing
customer loyalty:
• Understanding the importance of
customer loyalty
• Managing customer loyalty
• Giving a customer loyalty programs a go
• Measuring customer loyalty
• Final thoughts

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Effective measures in managing customer
loyalty:
• Understanding the importance of customer loyalty
-Customer loyalty versus customer retention
Customer retention rates identify whether an existing customer
continues buying from you or doing business with you. There is
a variety of activities and actions a company decides to take in
order to encourage repeat purchases.
Customer loyalty, on the other hand, measures a customer’s
preference for your brand over competitors. Loyal customers
are likely to consistently respond favorably toward the brand
because of shared values and positive emotional experience
with a brand.

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Effective measures in managing customer
loyalty:

• Managing customer loyalty

-Share valuable content
-Be present
-Personalize communication
-Offer outstanding customer service

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Effective measures in managing customer
loyalty:
• Giving a customer loyalty programs a go
-Points program
-Spend program
-Paid program

-Tiered program

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Effective measures in managing customer
loyalty:
• Measuring customer loyalty
-Net promoter score

-Repeat purchase rate

-Customer Lifetime Value
-Customer participation rate
-Redemption rate

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Thank you.

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