Best Practice, Measures and Methods of Customer Retention Management

Transcription

1 Best Practice, Measures and Methods of Customer Retention Management Prof. Dr. rer. oec. h.c. Dr. phil. h.c. Adalbert H. Lhota, Wisconsin International University (USA) Ukraine, 2014

2 1. Basics and objectives 2. Examples of possible measures 3. Customer retention management in practice 4. The future of customer relations Wisconsin International University (USA) Ukraine,

3 General definition Measures of customer retention are all activities undertaken by a company aiming to positively shape a customer s behavior towards a provider or a provider s services with the goal to stabilize or extend future customer relations. The main objective of customer retention measures is the buildup of long-term, profitable relations to customers. see: Christian Brock: Beschwerdeverhalten und Kundenbindung, Wiesbaden: Gabler Verlag 2009 Wisconsin International University (USA) Ukraine,

4 Reasons for a commitment to customer retention Advantages in binding existing customers Cost savings Efforts focused on evidentially beneficial customer relations Recommendations A content customer relays his opinion to three others, on average More efforts Higher costs? Lower price sensitivity A customer convinced from a provider will accept upward changes in the pricing structure more easily Promotion of impulse buying Being present in a customer s mind promotes impulse decisions in favor of a brand Second chance for mistakes Bonded customers complain constructively and allow providers a second chance New paths Existing customers are more likely to try new products and distribution channels Wisconsin International University (USA) Ukraine,

5 Impact factors Dedicated programs alone do not achieve a high level of customer satisfaction. Eventually, many factors convene to turn a customer into a content customer. Product lines Pricing Brand image Availability Behavior of staff Customer service Customer Retention Adalbert H. Lhota: Best Practice, Maßnahmen und Methoden zur Kundenbindung Wisconsin International University (USA) Ukraine,

6 Example: Impact factors for provider evaluation Factors perceived positively Politeness of staff Manifold assortment Shop design Brand image Price Packaging Availability Factors perceived negatively Adalbert H. Lhota: Best Practice, Maßnahmen und Methoden zur Kundenbindung Wisconsin International University (USA) Ukraine,

7 It is five to ten times more expensive to attract a new customer than to retain a regular customer, because investments placed in the course of attracting customers (advertising, discounts) are often higher than the value of the newly won customer for the company. Prof. Dr. Thomas Hutzschenreuter, Professor of Economics at Otto Beisheim School of Management, Düsseldorf / Germany Wisconsin International University (USA) Ukraine,

8 Objectives Dedicated programs alone do not achieve a high level of customer satisfaction. Eventually, many factors convene to turn a customer into a content customer. Increasing frequency of visits Customer retention Increasing revenues Mining usage data Setup of switching barriers Buyer-readiness for new products Enforcing price premiums Wisconsin International University (USA) Ukraine,

9 1. Basics and objectives 2. Examples of possible measures 3. Customer retention management in practice 4. The future of customer relations Wisconsin International University (USA) Ukraine,

10 Examples of customer retention programs: Corporate Publishing Characteristics - Periodically issued publications - Usually consist of an advertising and an editorial part - Are intended to garner customers interest without being obvious advertising - Made available free, thus production costs often must be kept especially low Wisconsin International University (USA) Ukraine,

11 Examples of customer retention programs: Customers club Characteristics - Intends an increased level of identification with provider - Membership linked to special advantages, i.e. exclusive events, pre-purchase options, rebates - Basis for very reliable, insightful data stock - Members become communication medium for company Wisconsin International University (USA) Ukraine,

12 Example for customer retention programs: Bonus programs Characteristics - Rewards actual revenues - Various membership levels depending on revenue - Possibility to tie into existing third-party programs, enabling to offer wider choice of benefits for own customers - Generates useful customer data and enables placement of targeted offers Wisconsin International University (USA) Ukraine,

13 Example for customer retention programs: Social networks Characteristics - Best possible, continuous interaction with customers - Comparatively little effort needed - Enables only a small degree of actual customer retention - Serves many other purposes apart from customer retention: information, communication, marketing,... Wisconsin International University (USA) Ukraine,

14 Comparison of various methods Short overview of advantages and weaknesses of customer retention measures Measure Evaluation reach Advantages Weaknesses Corporate Publishing good Enables targeted, comprehensive showcasing of products, may also raise interest of non-customers Comparatively low retention effects, high wastage Customers club medium High retention effects, generates useful customer data Rather high expenditures necessary, comparatively low usefulness for customers Bonus programs medium Highest retention effects, generates very valuable data Very cost- and effort-intensive Social networks very good Best possible reach, in trend, targeted marketing and brand image building possible Provides little insight into customer behavior, high wastage, low actual retention effects Wisconsin International University (USA) Ukraine,

15 1. Basics and objectives 2. Examples of possible measures 3. Customer retention management in practice 4. The future of customer relations Wisconsin International University (USA) Ukraine,

16 Customer loyalty Elements to achieve customer retention Matrix to determine effectiveness of measures in use Components related to the past Satisfaction with product and provider Satisfaction with complaint management Component related to social environment Components related to the future Recommendation rate Re-purchase rate Rate of purchase of additional products Meeting future demands Customer retention Wisconsin International University (USA) Ukraine,

17 Need for continuous evaluation Consistent monitoring of the tools in use is indispensable Operating time of customer retention tools Continuous evaluations at pre-defined points in time: Reach Intensity of use Frequency of use Feedback received Usability of data generated Impact on revenues and sales Relation cost-to-benefits Relation expenditure-to-benefit Starting points for improvements and extensions Wisconsin International University (USA) Ukraine,

18 Optimization possibilities: Corporate Publishing Weaknesses Comparatively low retention effects, high wastage Possible: Switch to online publication Saves production and distribution costs More precise reach of target group Enables more precise user data Wisconsin International University (USA) Ukraine,

19 Optimization possibilities: Social networks Weaknesses Provides little insight into customer behavior, high wastage, low actual retention effects Possible: Strengthen interactive elements Generates more usable customer and usage data Increases actual retention Also has effects on attraction of new customers Wisconsin International University (USA) Ukraine,

20 1. Basics and objectives 2. Examples of possible measures 3. Customer retention management in practice 4. The future of customer relations Wisconsin International University (USA) Ukraine,

21 The future of customer relations online global adaptive interactive multi-channel social Wisconsin International University (USA) Ukraine,

22 Thank you. Wisconsin International University (USA) Ukraine,