Change Implementation Techniques for Forming Transitional Team, Creating Alignment, Maximizing Connectedness and Creativity

Importance of Customer Retention

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There is a remarkable impact of customer retention on profitability. This is multi-faceted as it has a positive impact on price, cost and sales dimensions of profitability, eg

- cost impacts of custom loyalty

- customer acquisition is a significant marketing cost (advertising, promotion, discounting, etc).

On the other hand, loyal customers result in lower direct and operating costs, eg

- fewer over-head and variable costs associated with a more efficient customer service function

- with less claims on warranties, product returns, replacements, etc, associated with lost sales

- offset to advertising costs through positive word-of-mouth advertising

·  Some ways to increase customer retention are customer loyalty programs, cross-selling and up-selling. On the other hand, these are not substitutes for satisfactory product/service quality and service levels. Loyalty programs are more than a reward for making repeated purchases. They are a powerful tool for gathering information on spending patterns and customer profiles. As the costs of operating these programs can be high, is essential that any loyalty programs are cost-effective.

 

Based on the concept that retention is better value than acquisition, luxury brands are going to great lengths to keep customers loyal. They are offering their loyal customers unique upmarket, free experiences. These experiences include private concerts, meeting with the designers, dinners in extravagant localities, front row seats at runaway parades, trips around the world to launches, gifts for milestones, etc. Some specific examples include 

-  Audi's Lifestyle Experience (if you buy a car worth over $150,000, offers a sailing masterclass with London gold-medal-winning Olympian Michael Page, a catered extravaganza at Sydney Theatre Company in the presence of actor Richard Roxburgh, etc)
- Qantas's Platinum One includes a yoga session with Miranda Kerr, opening night tickets to cultural events and private performances, a joy ride over Sydney Harbour piloted by John Travolta, breakfast with Max Webber at Melbourne's Grand Pix, VIP tickets to Qantas-sponsored sports events, all expenses paid trip to London to the 2012 Olympic Games, etc.
- Net-A-Porter (online retailer) looks after its big spenders, ie EIP = extremely important persons, at a personal level. It is an invitation-only program

"...For women who are our top spenders and we see huge return on investment and value in managing this relationship with top spenders..."

Lisa Bridget as quoted by Katarina Kroslakova, 2014 The aim of the exercise is to encourage customer loyalty and ensure future purchasing decisions are swayed in the brand's favour

"...As someone with money, you enter a club which can be achieved through purchasing your luxury cars, timepieces, fine jewellery, fashion or staying at a luxury hotel. You are then invited to more events, provided with many delightful experiences, provided with 'thank you' products and then you meet other people at these events, you share things in common. And this extension of money, experience, relationship continues..."

Melinda O'Rourke as quoted by Katarina Kroslakova, 2014
Even companies like Samsung are working on the "taste makers and powerful communicators" by giving them the latest devices and personal help in their use; this encourages them to become brand ambassadors

"...the core elements to build and sustain loyalty are appropriate communication that matches the client's expectations, delivering their needs and therefore building trust......it can take months usually, sometimes years..."

Melinda O'Rourke as quoted by Katarina Kroslakova, 2014

 

 

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