Customer Loyalty Programs Increasing Customer Loyalty throughout the

Customer Loyalty Programs – Increasing Customer Loyalty throughout the customer base! Paul Knott– Customer Services Director EMEA Response Center

Why Customer Loyalty? Ø Why should we care? Ø What’s at stake? Ø Customer Loyalty Vs. Customer Satisfaction Ø Promoters and Detractors

The Big Picture Ø Companies With Satisfied, Loyal Customers Enjoy Higher Margins, Greater Profits – And Consequently, Higher Stock Price-earnings Multiples.

Customer Loyalty: Return to Investors Average P/E Ratio 40 35 35. 40 30 25 23. 42 20 15 23. 62 19. 52 10 5 0 6. 12 7. 14 7. 65 8. 01 Customer Loyalty CLI Score 9. 03

Current Market Trends Ø What Customers are doing differently w Experience matters § Positive experience means repeat action w Vendor selection criteria Ø Commitment, not loyalty? w The “Trust Factor” w “A 5% increase in customer retention yields a 75% increase in customer net present value. ” -Fred Reichheld Ø Incentive driven model w Loyalty rewards

Main Customer Loyalty Business Objectives 1. Measure, monitor and improve overall customer satisfaction within major product, service, and geographical areas 2. Increase software revenue through retention and growth of profitable customers 3. Measure against the Customer Loyalty Index (CLI) 4. Use key drivers of customer loyalty to develop company -wide cross-functional prioritized action plans

Customer Loyalty Focus Ø Working with and complementing the efforts and initiatives of each organization at File. Net Ø Teaming internally to enable us to partner externally with our customers Ø Re-focusing on the requirements of our customers Ø Managing our customers' expectations Ø Building relationships and communicating with our customers at various levels Ø Placing highest emphasis on our performance - at all levels Ø Creating cross-organizational partnerships

Keys to successful Customer Loyalty Program Ø Create Customer Loyalty Program goals Ø Contract third party organization to conduct Customer Relationship surveys w Agree upon measurement model (CLI) Ø Create Tactical and Strategic plans to address immediate and future goals Ø Tie compensation of all employees to Customer Loyalty improvement

Company Culture and Focus Ø Drive to total “satisfaction” to build Loyalty Ø Customer Loyalty must be a core value Ø Gain Top Executive sponsorship w CEO includes program as top initiative Ø Weave through the corporate/management fabric Ø Tie compensation to Loyalty goals

Measuring Customer Loyalty Ø What is the Customer Loyalty Index? w Measurements? w Why its important? Ø Components of the Customer Loyalty Index? w Overall Satisfaction w Continue to Buy w Recommend w Choose Again

Customer Loyalty Program Ø Strategic: w Form Executive Customer Loyalty Council Stakeholders § Senior representation from all organizations to collaborate and breakdown internal and external barriers preventing our company from achieving total customer satisfaction Ø Tactical: w Form a cross-functional team to resolve major tactical issues identified from surveys § Address “Trigger” Issues identified through surveys

Key Customer Loyalty Program Activities Ø Quarterly Customer Relationship Surveys Ø Survey Data connected to CRM Application w Allow Sales and Field personnel to have access to Customer Survey data for their particular accounts Ø Global Partner Relationship Survey w North America, EMEA and Asia Pacific

Sample Customer / Partner Loyalty Plan Customer/Partner Loyalty Plan CLOs for File. Net Organizations 2005 Customer/Partner Loyalty Council Define Roles for Members Charter for Council Company wide Engagement Strategy CL Customer/Field Outreach Plan CL Road show – Visits to US District and International offices Customer Visits CL Collateral Generation CL Quarterly Workshops for Management CL information on File. Net. com Performance Metrics for CL related projects Unique/connected CLOs across company Customer Loyalty Quarterly Surveys Quarterly surveys Contacts pre-defined Reporting methodology predefined Communication Initiative for 2005 Monthly Company wide CL communiqué Monthly CL Employee Roundtables Customer Loyalty Projects Knowledgebase Project Reference Project

Key Customer Loyalty Drivers Ø Understand Key drivers § Overall Business Value § Product Overall § Sales Relationship – Responsiveness – Follow-through Ø Calculate Gap scores w (Stated importance) - (satisfaction) = gap score

Common Key Customer Loyalty Drivers Ø Relationship Ø Product Knowledge Ø Expectation Management Ø Understanding Needs

Change In Satisfaction Ø How has our customers’ satisfaction level changed? w Good gauge to monitor performance of changes you implemented

Loyalty Scoreboard Ø What is the Loyalty Scoreboard? Ø Significance of the Loyalty Scoreboard?

Incentives/Rewards Ø Why should our customers participate? Ø Incentive programs Ø What Works w Do Incentive models have to be financially driven?

Keeping the Customer Interested Ø Measure Response Rates w Offer Incentives to survey respondents § § § Special seminars Thought leader forums Executive involvement SLA discounts Points

Other Focus Areas Ø Creating a reference program w Leveraging customer feedback Ø Turning satisfied customers into references Ø Creating a knowledgebase w Best practices w Case studies

Thank You