REC101 Lecture Notes - Lecture 8: Customer Satisfaction, Employee Retention

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Published on 16 Oct 2011
Course
Professor
Profit and Building Customer Loyalty
REC 101
October 4, 2010
Main point: frontline workers and customer need to be the center of management concern
(do reading , also look at diagram )
Service Profit Chain
1. Customer loyalty drives profitability and growth
Customer loyalty is an important determinant of profit
A 5% increase in your customer loyalty can produce profit increases from 25% to 85%
Loyal customers provide all profits and cover losses incurred in dealing with less loyal
customer
Three R’s:
Retention
Repeat sales
Referrals
Find out WHY customers defect (why leaving, why not repeating) ! Not just where
2. Customer satisfaction drives customer loyalty
Create “Apostles”
o Customers so satisfied they convert others
Avoid “Saboteurs”
o Customers so unhappy they speak out against your service
Symbolic atonement
o Every service might fail or do mistakes, they right thing is to fix it to get
customer loyalty. Try to atone for the mistake by giving something of value back
to the customer
( its good if companies see it as an opportunity to get customer loyalty )
Use “Listening Posts”
o Tools for collecting data to improve services
E.g complaints, reports from employees
Encourage customers and employees to report concerns
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Document Summary

Main point: frontline workers and customer need to be the center of management concern (do reading , also look at diagram ) Service profit chain: customer loyalty drives profitability and growth. Customer loyalty is an important determinant of profit. A 5% increase in your customer loyalty can produce profit increases from 25% to 85% Loyal customers provide all profits and cover losses incurred in dealing with less loyal customer. Find out why customers defect (why leaving, why not repeating) ! Not just where: customer satisfaction drives customer loyalty. Create apostles : customers so satisfied they convert others. Avoid saboteurs : customers so unhappy they speak out against your service. Symbolic atonement: every service might fail or do mistakes, they right thing is to fix it to get customer loyalty. E. g complaints, reports from employees: encourage customers and employees to report concerns, service value drives customer satisfaction. The results customers receive in relation to total cost.

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