Understanding customer satisfaction, loyalty, and Retention

to improve the efficiency of challenging churn.

(Provided by Ahmad Heshmat)

Loyalty And Retention Operations Agouza The Egyptian Company for Mobile Services (Mobinil) August 16, 2008

Tables of Contents

1- Quotations
2- Definitions 4- Types of Customer Churn

5- Dimensions of Loyalty
6- Reasons of Churn 7- Elements of Churn Reduction 8- How to handle ?

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The Egyptian Company for Mobile Services (Mobinil) Corporate Presentation March 1, 2008 Nile City UNRESTRICTED page 3

QUOTATIONS
A customer is the most important person in any business

A customer is not dependent upon us. We are dependent upon him.

A customer is not an interruption of our work. He is the sole purpose of it. A customer does us a favor when he comes in. We aren't doing him a favor by waiting on him. A customer is an essential part of our business--not an outsider. A customer is not just money in the cash register. He is a human being with feelings and deserves to be treated with respect.

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QUOTATIONS
A customer is a person who comes to us with his needs and his wants. It is our job to fill them. A customer deserves the most courteous attention we can give him. He is the lifeblood of this and every business. He pays your salary. Without him we would have to close our doors. Don't ever forget it.
Attributed to Sam Walton founder of Wal-Mart.

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DEFINITIONS
Customer Satisfaction: is customers perception of the degree to
which the customers expectations have been fulfilled.

Customer Loyalty: Feelings or attitudes that incline a customer

either to return to a company, shop or outlet to purchase there again, or else to re-purchase a particular product, service or brand.

Customer Churn: loss of customers. Also known Customer attrition. Customer Retention: a strategy whose objective is to keep a
companys customers and to retain their revenue contribution. Primarily it aims to prevent customers from going to the competitor.

Complaint: is an expression of dissatisfaction made to an

organization, related to its products, where a response or resolution is explicitly or implicitly expected

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Definition of customer satisfaction

Customer satisfaction is how well our PRODUCTS, SERVICE, SUPPORT and ENGAGEMENT are able to meet the customer EXPECTATIONS.

Break-down of the Definition

Customer satisfaction is a measure of how well our PRODUCTS - Products including physical products and services. SERVICE - Customer service after sale. This includes responding to customer queries and issues. SUPPORT - Repair, maintenance and upkeep of your products post sales. ENGAGEMENET - Engaging with customer, apart from the above mentioned contexts (product, service and support). This includes offering new products, schemes, up-sell, cross-sell, process reengineering and enhancement.

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Definition of customer satisfaction

are able to meet the customer

EXPECTATIONS - Customer satisfaction is your delivery compared with the expectations. The way a customer interprets your delivery also defines customer satisfaction. Customer satisfaction is driven by how well you manage your delivery and how well you manage customer expectations.

Satisfied customer, could be open to the next better opportunity Loyal customer. Returns despite offers by the competition

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Definition of Customer Retention

Customer retention: is how well the customer STAYS and STAYS ENGAGED with the organization OR with specific products and services
Break-down of the definition STAYS - Customer being active and user of your product and service- This is mainly relevant to the products and services, having an existing contract. This includes banking, telecommunication and maintenance contracts. STAYS ENGAGED - Customer who maintain OR increase the level of relationship. A customer could still be retained, while he reduces his average, OR cancels two out of the three lines he has got.

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Customer Satisfaction and Customer Retention is not absolutely the same

You may have situations where a customer is satisfied, but is still not retained. You may have situations where a customer will not be satisfied, but still retained.

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Customer Satisfaction and Customer Retention is not absolutely the same

Satisfied Customer, but still churning:
Your products are doing the right things, but they are not the right products. Your products and services could be meeting customer expectations, but customer could be attracted to more creative and functionally better products. Customer wants to try something new. Customer may get bored of your product, and they just want to try something new. Customer going for more competitive products, Competition is giving better price vs. value equation.

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Customer Satisfaction and Customer Retention is not absolutely the same

Dissatisfied customer, but retained
Existing account yet to expire. Supplier market, More demand than supply (e.g. scratch cards). Customer expectations are not well managed, but customer is staying due to the value proposition of your product. High Exit cost to the customer. example- Exit load for early termination.

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Points to consider for Customer Satisfaction and Customer Retention

Customer Satisfaction leads to Customer Value

Customer Satisfaction has a great co-relation with customer lifetime value.

A satisfied customer:
adds to his current value, but more importantly its the lifetime value which the organization will gain. will go for repeat purchase more often.

will give you valuable references.

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Customer Life Cycle Model

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Dimensions of Loyalty
Emotive loyalist Rarely reassess purchase decision Strongly feel that chosen brand is the best infrequently reassess purchase decision Uninvolved; dont consider change or, feel it doesnt worth effort.
Frequently reassess purchase decision Reaffirm chosen brand through rational criteria

Loyalist

Passive loyalist

Deliberative loyalist Customer basic behavior

Lifestyle Churner

Reassess purchase decisions because of change in needs Frequently reassess purchase decisions Choose new brand through rational criteria Actively dissatisfied May be prompted to reevaluate because of specific experience

Churner

Deliberative Churner

Dissatisfied Churner

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Emotive loyalist
Emotive customers are the most loyal. Feeling strongly that their current purchases are right for them and that their chosen product is the best, they rarely reassess purchasing decisions. These feelings can reflect a products long record of good History, but they are often fostered by intangible factors. Research suggests that emotive customers generally spend more than those who deliberate over purchases, and churn at a much lower rate

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Passive Loyalist
Inertial customers, like emotive ones, rarely reassess their purchases, but their inaction results from high switching costs or a lack of involvement with products. Although these customers arent intending to spend more or less than they currently do, influencing them, benefits as much opportunity as influencing emotive customers, largely by making them less likely to churn in response to shocks such as price hikes, isolated cases of bad service, and lifestyle changes.

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Deliberators
Deliberators; both those who maintain their spending and those who spend lessare on average the largest group. The rewards from influencing deliberators can be twice as high as the rewards from influencing emotive and inertial customers. Deliberators frequently reassess their purchases by criteria such as a products price and performance and the ease of doing business with a company.

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Types of Churn

Voluntary Churn where customers choose to switch carriers or terminate their use of wireless services

Involuntary Churn where service is deactivated Involuntarily, due to missed payments, bad debts, etc.

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statistics about customers

It can cost five times more to buy new customers than retain existing Ones

Reducing customer defections can boost profits by 25-85%

Institute of Customer Service:

68% of customers are prepared to pay 20% more for good service (2006 National Complaints Culture Survey)

BSI Survey (1,715 respondents): Only 2% of those surveyed have not had an adverse experience from customer service 76% have moved to a competitor because of poor customer service
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Churn or interest in churn due to dissatisfaction with operator (%)

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Churners top reasons for dissatisfaction (%)

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Customer retention drivers impact in %

www.nokiasiemensnetworks.com
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Complaints leading to churn

Incomplete information shared during Sales Call and wrong commitment by sales person Billing - Wrong Plan, Bill Not explained / Not able to be explained, Wrong bill, wrong plan, Bill not delivered Network coverage issues Call barring due to non payment

Calls from Credit for payment, company concerned with Collection and not service Long pending request, issues unresolved
Wrong SLA stated

Systems not working

SERVICE Executives incapable to understand and explain

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Complaints leads to churn

No assurance to Service continuity Difference in communication from back office and front line. No permanent solution only temporary solution provided

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Are these previously mentioned only reasons for Churn?

These are physical unsatisfied needs prompting Churn playing 51% of the actual reason to Churn. The remaining 49% is due to:

Service fast and best when Customer shouts attitude

The way the customer is heard, understood and Is his complain being taken seriously Actions of SERVICE EXECUTIVES

Inappropriate answers, Rude behavior and inadequate system knowledge

No viewing of Customer Category and History prior to handling customer query to decide on the intensity of the problem and the required intensity to service Actual problem not captured / understood by SERVICE EXECUTIVES and temporary solution provided. Can I be assured that my problem will be resolved Unknown System response and System error Communication in times of System failure
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8 Elements to reduce Churn

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How to handle?
Know your loyalty stages and ensure your customers are moving through them.

Customers become loyal to a company and its products and service one step at a time. By
understanding the customers current loyalty stage, you can better etermine whats necessary to move that customer to the next level of loyalty. Our Profit Generator Loyalty System comprises six stages: Suspect Prospect First time customer Repeat customer Client Advocate.
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How to handle?

Serve first. Sell second. Todays customers are smarter, better informed and more intolerant of being sold than ever before. They expect doing business with you to be as hassle-free and gratifying for them as possible. When they experience good service elsewhere, they bring an if-they-can-do-itwhy-cantyou? Attitude.

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How to handle?
Aggressively seek out customer complaints. For most companies,only 10% of complaints get articulated by customers. The other 90% are unarticulated and manifest themselves in many negative ways: o unpaid invoices o lack of courtesy to your front line service reps o negative word of mouth. Make it easy for customers to complain, and treat complaints seriously.

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How to handle?

Get and stay responsive. Research shows that responsiveness is closely tied to a customers perception of good service.

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How to handle?
Know your customers definition of value.

The loyalty password is value.

Knowing how your customers experience value & then delivering on those terms is critical to building strong customer loyalty. But knowing our customers true definition of value is not easy because your customers value definitions are constantly changing.

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How to handle?

Win back lost customers. Research shows that a business is twice as likely to successfully sell to a lost customer as to a brand new prospect. Yet, winning back lost customers is frequently the most overlooked source for incremental revenue in many firms.

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How to handle?

Use multiple channels to serve the same customers well. Research suggests customers who engage with a firm through multiple channels exhibit deeper loyalty than single channel customers.

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6 Customer Interface Standards

Check Mobinils 6 standards for interfacing the customer, on the Intranet, 1) Customer feels valued from the outset and is able to feel confident that the agent will help him/her. 2) Agent must demonstrate interest and a desire to find the best solution for the customer. 3) Customer was involved in the decision making process and offered a solution that was tailored to the customers' needs and explains the reason behind it. 4) Customer feels confident that the right solution has been found for him/her and makes a commitment. 5) The customer is clear on what will happen next and by whom. 6) Customer feels engaged and valued by the agent throughout the transaction.
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SOURCES, NOTES, FOOTNOTES

Standards for Customer interfacing:

1- Customer feels valued from the outset and is able to feel confident that the agent will help him/her. 2- Agent must demonstrate interest and a desire to find the best solution for the customer. 3- Customer was involved in the decision making process and offered a solution that was tailored to the customers needs and explains the reason behind it. 4- Customer feels confident that the right solution has been found for him/her and makes a commitment. 5- The customer is clear on what will happen next and by whom. 6- Customer feels engaged and valued by the agent throughout the transaction.

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Thank you