McBDC Business Development & Consultancy Services Co.Ltd 1

Transcription

1 2013 McBDC Business Development & Consultancy Services Co.Ltd Customer Experience Management (CEM) Customer Loyalty Programs, Mar, 2013 McBDC Business Development & Consultancy Services Co.Ltd 1

2 CONTENT What is CEM Why is CEM Valuable Key Benefits The Challange The Opportunity Loyalty Programs Turning Customer Information into Customer Intimacy Where is a good place to begin? Bibliography Acknowledgements McBDC is a business development company and strategic managerial consulting outsourcing provider that specializes in assembling and managing teams of highly skilled advisors who will augment your in-house adding value resources by their business models, strategies and plans worldwide. McBDC Business Development & Consultancy Services Co.Ltd 2

3 What is CEM? Survival in today's economic climate and competitive retail environment requires more than just low prices and innovative products. To compete effectively, businesses must focus on the customer's shopping experience. To manage a customer's experience, retailers should understand what customer experience actually means. Customer experience includes every point of contact at which the customer interacts with the business, product, or service. Customer experience management represents a business strategy designed to manage the customer experience, evaluating product, enriching service and powering business. It represents a strategy that results in a win win value exchange between the retailer and its customers. The customer experience doesn t start at purchase. It begins when the customer has a need. Most of the buying experiences are based on how the customer feels and how they are being treated. Active, two-way positive interaction that begins soon after purchase has the greatest potential long-term value. Picture 1: CEM cycle Customer Experience describes the quality and nature of the interaction that is between a company and its current and prospective customers. These interactions enlarge the customer lifecycle - from activities that initiate the customer relationship to activities that extend the relationship. Companies must be able to deliver excellent customer experience in the relevant customer channels including stores, internet, call center and others; while providing the good service with right messages in order to be able to succeed in today s competitive environment. McBDC Business Development & Consultancy Services Co.Ltd 3

4 Customer experience is the sum of all experiences a customer has with a supplier of goods or services, over the duration of their relationship with that supplier. It is believed that successful businesses influence people through engaging, authentic experiences that render personal value (HBR Pine and Gilmore 1998). A 2009 study of over 860 corporate executives revealed that companies that have increased their investment in customer experience management over the past three years reported higher market share, retention, profitability, and customer satisfaction (Chordiant, 2008, Strativity Group, 2009). Why is CEM valuable? Acquiring new customers can cost five times more than satisfying and retaining current customers. A 2% increase in customer retention has the same effect on profits as cutting costs by 10%. The average company loses 10% of its customers each year. A 5% reduction in customer defection rate can increase profits by %, depending on the industry. The customer profitability rate tends to increase over the life of a retained customer. Never before customers have so much control over how and where they research, compare, and purchase products and services. Customer expectations continue to increase despite the tightening marketing budgets. The high cost of acquiring new customers has become a major challenge for profitability. The service quality has been an increasingly important factor in determining customer loyalty, new customer acquision, and the frequency and amount of customer purchases as well as major metrics such as Net Promoter Score (NPS). 46% of the organizations organizations do not think that they are sucessful in providing the desired in-store customer experience. Happy customers tell 4 to 5 others of their positive experience. Dissatisfied customers tell 9 to 12 how bad it was. McBDC Business Development & Consultancy Services Co.Ltd 4

5 Two-thirds of customers do not feel valued by those serving them. Only one out of 25 dissatisfied customers will express dissatisfaction directly to the retailer. CEM solutions are the technology solutions that allow businesses to manage and optimize the customer experience. Through content management, customer targeting, and analytics, personalization, and optimization capabilities across customer touch points online, through mobile devices, through internet-connected interfaces, and through digitally supported customer interactions such as contact centers and in-store or branch interfaces. Key Benefits 1 Increased customer retention Increased customer understanding and need identification Improved operational efficiency and overhead cost reduction Increased customer relationship and communication platform establishment Growth in revenue stream Increased market certainty and more accuracy in business decision making process The Challenge The rate of internal change must be greater than the rate of external change or the company will fall behind. Jack Welch New technologies are empowering customers; therefore companies often find themselves having to play catch up. Customers now have access to information and resources that provide new options and opportunities. Companies cannot always rely on past business practices to keep and grow their customer base. The opportunity Companies that are willing to embrace the new trends have opportunities to engage and grow customer relationships like never before. The tools and technologies that empower customers can do the same for companies willing to adapt to the changing landscape. 1 Rasses Advanced Solutions Architects McBDC Business Development & Consultancy Services Co.Ltd 5

6 Companies can benefit from internal and external feedback, resolving issues and leveraging strengths. Studies have consistently demonstrated that customers are willing to continue doing business with a company that listens and responds to their needs. Loyalty Programs As an important component of firms customer relationship management (CEM) strategy, loyalty programs aim to increase customer loyalty by rewarding customer for doing business with the firm. Through these programs, firms can potentially gain more repeat business and, at the same time, obtain rich customer data that aid future CRM efforts. Loyalty cards are quite an important component in a whole program of efforts designed to increase customer commitment to a store. They represent the opportunity to build long term customer loyalty. In order to fully gauge the impact of loyalty programs on customer behavior, it is imperative to understand both frequency reward and customer tier components. This requires incorporation of the following phenomena: Forward-Looking Customers: Both forms of loyalty programs encourage customers to consider the future ramifications of their current choices, because these choices bring them closer to receiving a reward, be it the short-term free product or the chance to be a Platinum customer. Value of the Reward: Obviously, the degree to which customers value the reward influences their behavior. Obtaining the Reward: For the frequency reward program, this requires a deliberate decision to cashin. The reward is automatically delivered for customer tier programs. Points Pressure: This is a direct outcome of forward-looking behavior; customers are expected to increase purchase frequency as they get closer to the reward. McBDC Business Development & Consultancy Services Co.Ltd 6

7 Rewarded Behavior: This is particularly relevant for frequency reward programs. The reward indeed is short-term, but customer affect created by the reward can translate into an increase in loyalty (Taylor and Neslin 2005). Customer Heterogeneity: Customers are clearly heterogeneous with respect to the above phenomena. Some customers may feel a free flight is worth any amount of effort, while others may not stand the hassle. Some may not care about the perks provided to Platinum customers, while others crave the royal treatment. Loyalty programs are used in most places such as; fashion stores, super-markets, restaurants, cafes, gas stations, hotels and so on. A business executive may apply a loyalty program to its business and/or join to multi-merchant loyalty programs. Multi-merchant loyalty coalitions are quite common in most countries including Turkey. Customers enjoy the assortment of benefits these different retailers provide. That is why these multi-merchant membership programs are getting bigger and more popular. Turning Customer Information into Customer Intimacy Value Value is a fundamental requirement for an information exchange and a necessity for any loyalty program. The age-old practice of giving new customers 10 percent off their purchase is a good step in creating that value, but maintaining it means consistently delivering benefits that customers feel are commensurate with their spending. Visibility The core purpose of a loyalty program is to form a deep understanding of the customer. This means attracting enough customers to collectively account for a significant portion of sales. If done on a sustained basis, the transactional history and the customer s journey can be mapped, creating a viable business asset. Voice Loyalty plans need a platform for communication; a sounding board that enables the company to address customer issues on a personal level. In an age of social media, making that voice heard is particularly important to creating customer engagement. McBDC Business Development & Consultancy Services Co.Ltd 7

8 Where is a good place to begin? Customers, partners, and suppliers evaluate the business relationships with you every time they touch your organization. As McBDC, we understand the need to identify the importance of each touch-point or channel in driving a specific organizational objective. Some touch-points and channels are important in driving satisfaction, reflecting brand differentiation, driving customer retention or referrals. This prioritization will guide you to allocate resources seperately and effectively in optimizing customer satisfaction, brand differentiation and loyalty. We believe that through outsourcing, clients gain the flexibility to expand as rapidly as they need to, enabling effective time-to-market. Our team s expertise extends lifecycle and performance management to ensure return on investment for your CEM initiatives. Our strength resides in innovative methodologies and infrastructures that enhance customerservice performance across multiple dimensions including effectiveness, outgrowth, cost control and revenue burst. Our qualified management team will guide and support you in managing your CEM approach through every step of the process, including service development, contact-center setup, and ongoing service management. McBDC approach is aimed at enhancing communications, improving operational efficiency, and driving better decision-making. Also, we believe, customer loyalty is not just about points, discounts or rewards; it is about the way processes, technologies and interactions engage individuals with a brand. McBDC will support you on your way to: Figure out ways to collect the information from your customers without disturbing them. Involve cross functional teams in identifying and solving challenges, especially those that are systematic. Map each customer touch point, make sure there are no gaps, places where customers are ignored or left on their own. Effective customer experience management requires a great deal of time and energy, but it is well worth the effort, especially with us. McBDC Business Development & Consultancy Services Co.Ltd 8

9 For more information about McBDC Partners, please contact; McBDC Business Development&Consultancy Services Co.Ltd. (Member of TUBISAD - Turkish Informatics Industry Association) Gazi Muhtar Paşa Çk Prof.Dr.Nevzat Gürelli Köşkü Feneryolu Istanbul /Turkey Tel : Fax : Web: partner@mcbdc.com McBDC Business Development & Consultancy Services Co.Ltd 9

10 BIBLIOGRAPHY 1. Journal of Retailing, Volume 85, Issue 1, March McBDC Business Development & Consultancy Services Co.Ltd 10