Managing Customer Loyalty - Micro and Macro Approach

Copyright © 2011 Business Over Broadway · Bob E. Hayes, PhD · bob@businessoverbroadway.com · www.businessoverbroadway.com
Overview
 Customer Loyalty and Business Growth
 Micro Approach to Improving Loyalty
 Macro Approach to Improving Loyalty
 Summary

Customer Loyalty
 The degree to which customers
experience positive feelings for,
possess allegiance to, and
exhibit positive behaviors
toward a company

Customer Loyalty and Business Growth
 Research shows companies with higher customer
loyalty experience accelerated business growth
Low High
BusinessGrowth
Revenue,Profit,Marketshare
Customer Loyalty
Attitudinal and Objective Measures of Loyalty1
Slow
Fast
1 Retention, Advocacy, Purchasing, Renewal rate, Churn rate

Micro Level Approach
 Understand the customer relationship for a
specific survey respondent
 Individual survey respondents
 Identify customers who indicate they are disloyal
 Threatened customer relationship
 Use individual loyalty questions
 Target improvements on disloyal customers to
address specific needs immediately
 Action plan directed at impacting individual customers

Proactive Follow-up – Notification
 Distribute completed
survey response to
the Account team
 Highlight issues
around loyalty
questions or specific
business attribute
questions
 Distribute survey
responses to all
business units with an identified satisfaction or loyalty
problem

Proactive Follow-up
 Account team coordinates follow up with the
customer to address all identified issues
 All business units with issues participate in follow-up
 Sales
 Product
 Services
 Use CRM system,
if available, to
manage and
monitor the
follow up process
and track follow-
up activities

Integrate with Account Planning
 Provide the Account team with tools and access
to customer satisfaction data for their accounts
 Include customer
satisfaction objectives
in the account plan
 Minimize surprises
before visiting an
account

Business Unit Review
 Each business unit takes ownership for their area
 Link specific questions to each business unit
 Identify Customer Satisfaction Officers in each
business unit
 Manage the process
 Leverage reporting tools
 Engage the rest of the business unit
 Develop and execute action plans to address issues
 Example: Vertical Industry Product Marketing
 Customer Satisfaction Officer for each industry
 Receives trigger emails for product target gaps of 2 or higher
 Contacts customers to understand product issues
 Identifies Product Marketing follow up items
 Reports quarterly to management on PM specific metrics and
actions

Macro Level Approach
 Understand the customer relationship across all
customers
 Analyze entire customer base
 Identify systemic reasons causing loyalty/disloyalty
 Software quality, technical support, staff knowledge
 Target company-wide improvement programs
directed at all customers
 Help improve the service delivery system
 Impacts how the work gets done

Business Areas
Business Areas
Performance
(Average Rating)
Impact on
Customer Loyalty
Perceived Customer Value 6.60 0.81
Perceived Customer Centricity 6.47 0.78
Product Effectiveness 7.21 0.65
Lifecycle Services 6.81 0.65
Account Management 6.61 0.69
Global Customer Support 6.42 0.64
Advanced Customer Services 7.32 0.54
SaaS 7.22 0.54
Saas CRM 7.04 0.78
University Program 6.54 0.50
Customer Services Management 6.84 0.55
Consulting Services 6.73 0.61
Partner Satisfaction 7.20 0.43
Performance and Impact on Customer Loyalty

Performance in Business Areas
Performance (average satisfaction with business areas)

0.00 0.20 0.40 0.60 0.80 1.00
Partner Satisfaction
University Program
Advanced Customer Services
SaaS
Customer Services Management
Consulting Services
Global Customer Support
Lifecycle Services
Product Effectiveness
Account Management
Saas CRM
Perceived Customer Centricity
Perceived Customer Value
Impact on Customer Loyalty
(correlation between business areas and Advocacy Loyalty Index)
Impact on Customer Loyalty
If you can perform
well in these areas,
customers will likely
have high loyalty.
Impact is correlation between business areas and customer
loyalty

Driver Matrix Prioritizes Investments
Impact
LowHigh
Key Drivers
INVEST in these areas.
Improvement in these areas
are predicted to attract new
customers (advocacy),
increase purchasing behavior
(purchasing) or retain
customers (retention)
Hidden Drivers
LEVERAGE as strengths in
order to keep current customers
loyal.
ADVERTISE as strengths in
marketing collateral and sales
presentations in order to attract
new customers (advocacy),
increase purchasing behavior
(purchasing) or retain customers
(retention).
Weak Drivers
MONITOR as lowest priority
for investment. These areas
have relatively low impact on
improving customer loyalty.
Visible Drivers
CONSIDER as strengths in
marketing collateral and sales
presentations in order to attract
new customers.
EVALUATE as areas of potential
over-investment.
Low High
Performance
For each business
area, examine its
performance and
impact on loyalty
simultaneously.
1. Key Drivers – Invest in
areas to increase
Customer Loyalty.
2. Hidden Drivers – Use
features in marketing to
grow customer base.
3. Visible Drivers –
Consider features in
marketing to grow
customer base.
4. Weak Drivers – Monitor
as lowest priority for
investment.

Where to begin improvements
To improve customer
loyalty, you may
consider focusing on
following areas:
1. Perceived Customer
Value
2. Perceived Customer
Centricity
3. Account
Management
4. Global Customer
Support
0.30
0.40
0.50
0.60
0.70
0.80
0.90
6.00 6.25 6.50 6.75 7.00 7.25 7.50
ImpactonCustomerLoyalty
(correlationbetweenbusinessattributes
andAdvocacyLoyaltyIndex)
Performance of Business Attribute
(Customer Rating)

Marketing Messages
To focus marketing
message, you may
consider leveraging
following areas:
1. Saas CRM
2. Product
Effectiveness
3. Advanced
Customer Services
4. SaaS
5. Partner Satisfaction
0.30
0.40
0.50
0.60
0.70
0.80
0.90
6.00 6.25 6.50 6.75 7.00 7.25 7.50
ImpactonCustomerLoyalty
(correlationbetweenbusinessattributes
andAdvocacyLoyaltyIndex)
Performance of Business Attribute
(Customer Rating)

Business Areas Performance
(Average Rating)
Impact on
Customer Loyalty
Perceived Customer Value 6.60 0.81
Perceived Customer Centricity 6.47 0.78
Product Effectiveness 7.21 0.65
Lifecycle Services 6.81 0.65
Account Management 6.61 0.69
Global Customer Support 6.42 0.64
Advanced Customer Services 7.32 0.54
SaaS 7.22 0.54
Saas CRM 7.04 0.78
University Program 6.54 0.50
Customer Services Management 6.84 0.55
Consulting Services 6.73 0.61
Partner Satisfaction 7.20 0.43
Marketing/Improving Your
Company/Brand
ImproveLeverage Consider
1 Business area ratings range from 0 (Extremely
Dissatisfied) to 10 (Extremely Satisfied; 2 Impact is the
correlation between Business Area sand Customer Loyalty.

Outcomes of Two Approaches
 Micro level approach
 Addresses special causes of disloyalty
 Focuses on changing individual issues
 Customer-specific improvements
 Short-term
 Macro level approach
 Addresses common causes of disloyalty
 Focuses on improving systemic issues
 Organization-wide improvements
 Long-term
 Both approaches impact customer loyalty
 Addresses specific customer’s concerns
 Improves the service delivery system

Managing Customer Disloyalty
Characteristics of Different
Approaches to Managing Disloyalty
Focus of
Management
Causes of
Disloyalty
Improvements
GeneralApproachesto
ManagingDisloyalty
One customer at
a time
(micro approach)
Address a
specific
customer
Special reasons for
disloyalty that are
unique to specific
customer
Short-term and
customer-specific
Customer
base/segment
(macro approach)
Address
customer
group/ segment
Business
processes cause
disloyalty for many
customers
Improve business
processes; Long-
term and
organization-
wide
Both approaches
(micro and macro)
needed to manage
customer loyalty

For More Information
Bob E. Hayes, Ph.D.
Email: bob@businessoverbroadway.com
Web: www.businessoverbroadway.com
Blog: www.businessoverbroadway.com/blog
Twitter: www.twitter.com/bobehayes
Business Over Broadway
Business growth through customer insight

Managing Customer Loyalty - Micro and Macro Approach

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