Market and Customer Management Customer Loyalty Change Drivers

Market and Customer Management - Customer Loyalty Change Drivers for Loyalty Programmes (1/2) n Several change drivers have a direct impact on the customer loyalty. . . Several change drivers … market liberalisation and entry of new competitors (e. g. European Telco) affect the rising customer defection and the need … new technologies conclude in fast change of competitive forces, market erosions and higher win-back costs for loyalty programmes … more sophisticated customers … information overflow due to ineffective marketing campaigns and lack of knowledge about customer behavior … globalization of markets and products and the need for a better transparency about the market offerings (e. g. internet) … new technologies enabling a company to target their offerings towards the individual customers (mass customization) Not caring about customer loyalty has a negative impact on shareholder value © MCM Switzerland Source: Dr. A. Black, P. Wright, J. E. Bachman: “In search of shareholder value” Companies will not only loose market share when staying „as is“, but also the customer contact. Research studies show that revenue growth has a large impact on shareholder value. A loss in this value driver will strongly effect the shareholder value. 02 Change Drivers. ppt 11

Market and Customer Management - Customer Loyalty Change Drivers for Loyalty Programmes (2/2) The core idea of customer loyalty: Retaining customers is cheaper than winning them back! n The main driver for the rising awareness for customer retention in general and for customer loyalty programmes in particular lies in the following idea: To retain a current customer is cheaper, than to win or win-back a new one. n The main emphasis for marketing and sales activities is therefore shifting towards retention strategies and loyalty programmes. The chart below shows the advantages of keeping loyal customers. Profit Impact of Loyal Customers Profit ers l pr iona it Add No (Re-) entry offerings y th lo wi ofit stom u c al Referrals Cost Reductions Cross Selling 0 Basic Turnover Customers Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Costs for acquisition Source: The Loyalty Effect, Frederick Reichheld © MCM Switzerland 02 Change Drivers. ppt 22