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Relationships and Building Loyalty. Andrew Sikula Bus 550. Customer Loyalty and Profitability. Profit from increased purchases Profit from reduced operating costs Profit from referrals to other customers Profit from price premium. Customer Loyalty and Profitability.

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Relationships and building loyalty

Relationships and Building Loyalty

Andrew Sikula

Bus 550


Customer loyalty and profitability
Customer Loyalty and Profitability

  • Profit from increased purchases

  • Profit from reduced operating costs

  • Profit from referrals to other customers

  • Profit from price premium



Why are customers loyal
Why are Customers Loyal?

  • Relationships

    • Greater Confidence

    • Social Benefits

    • Special Treatment


Foundation for loyalty
Foundation for Loyalty

  • Target the Right Customer

  • Value over Volume

  • Manage Customer Base

    • Platinum, Gold, Iron, and Lead

  • Customer Satisfaction and Service Quality


Reducing customer defections
Reducing Customer Defections

  • Analyze Customer Defections

  • Address Key Churn Factors

  • Complaint Handling and Service Recovery

  • Increase Switching Costs


Customer relationship management
Customer Relationship Management

  • Customization and Personalization

  • Development and Management of Relationships

  • Common CRM Failures

  • Getting CRM Right


Discussion
Discussion

  • How can PSI address its “lead” customers without jeopardizing its reputation?


Question
Question

Customer loyalty is an important driver of a service firm’s profitability. The profits derived from loyal customers come from which of the following:

  • Increased purchases

  • Reduced operation costs

  • Referral to other customers

  • Price premiums

  • All of the above