CUSTOMER ACQUISITION & RETENTION

Relational Facet Organizational implications

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Financial Incentives
Frequent flyer/reader/buyer..rewards

Social bonding

Friendly companionship, trust

Structural interactions

Systematic mass personalization

CUSTOMER ACQUISITION & RETENTION

THE MAIN AIM OF AN EFFECTIVE CRM IS TO RETAIN CUSTOMERS AT EVERY STAGE OF THEIR LIFE CYCLE

CUSTOMER LIFE CYCLE (1) Acquisition Stage

A Suspect converted into a Prospect then into a Customer who goes into 1st Transaction

(2)Retention Stage& (3) Win back stage The customer may(i) become a Repeat Customer& a Loyal Advocate (ii) Inactive Customer who needs to be won back (iii) A Lost Customer who again needs to be won back

CUSTOMER ACQUISITION & RETENTION

Acquisition
Suspect Prospect Customer:1st Transaction

Retention
Loyal Advocate Repeat Customer

Win back

Inactive customer

Lost Customer

CUSTOMER ACQUISITION & RETENTION

CUSTOMER RETENTION STRATEGY
A plan identifying what basic retention objectives will be pursued and how will they be achieved in the available time.

It is therefore important to understand reasons why customers terminate relationships Novelty seeking, Dissatisfaction, Relative advantage Conflict, Loss of trust & Cease of Need

CUSTOMER ACQUISITION & RETENTION

Effective Retention Strategies
The Welcome Reliability Responsiveness Recognition Personalization Access Strategy & Customer- initiated Communication Reward Strategy Problem Identification & Management

CUSTOMER ACQUISITION & RETENTION

CONFLICTS & COMPLAINTS A dissatisfied customer may (A) Purchase of little monetary/psychological value do nothing (B) Purchase of high monetary/psychological value may avoid repeat purchase, May produce bad WOM, May complain & return the product or May seek redressal
MOST IMPORTANTLY THEY WANT THE SOLUTION TO BE HASSEL FREE

CUSTOMER ACQUISITION & RETENTION

ATTRIBUTION THEORY People look for explanations for events/occurrences Cost/ Benefit perception of complaints Personal characteristics
WHAT TO DO WHEN CUSTOMERS COMPLAIN

Be Customer-centric- listen carefully empathize-express regretresolve and follow up

CUSTOMER ACQUISITION & RETENTION

IN CASE OF CONFLICT Accommodate Compromise Terminate FOLOW UP Prevent reoccurrence Keep in touch Always listen to customers

CUSTOMER ACQUISITION & RETENTION

WINBACK STRATEGIES
IDENTIFY WHO IS ABOUT TO TERMINATE Act rather than React A process that requires advance notification System that automatically initiates action to retain (2) CONSIDER LIFETIME CUSTOMER VALUE Focus on high value customers (3) ESTABLISH WHY CUSTOMERS TERMINATE Exit interviews Focus group Listening Posts (4) RE-CONTACT LAPSED CUSTOMERS Winback Team Situational Script (5) PROVIDE A REACTIVATION OFFER (1)

CUSTOMER ACQUISITION & RETENTION

ACQUISITION Objectives
Enumerate all costs, divide by no. of new customers gained, determine period to keep a customer to provide a payback on investments, set customer acquisition objectives

Strategy
Select customer segment/(s), design MM accordingly

Referrals
Natural referrals, Affinity marketing- group purchasing programs, Affiliation Networks- commissions for referrals

Switching Costs Point of entry