Page 83 - DMGT524_TOTAL_QUALITY_MANAGEMENT
P. 83
Total Quality Management
Notes To help clients more intelligently, Rockbridge manage their customer retention, and has
developed scales to measure two constructs that together more fully explain loyalty –
satisfaction and mobility. Existing customer satisfaction surveys often contain enough
information to develop both of these measures. The satisfaction and mobility scales have
a great deal of independence, meaning that a person who is “highly satisfied” can be
either “highly mobile” (i.e., willing to switch to a competitor) or “static” (i.e., unlikely to
change brands).
Customers can be classified by where they fall on each of the two characteristics:
“Safe” customers are considered such because they are not only satisfied, but tend
not to change services even when their satisfaction drops.
“High risk” customers are both unhappy and more likely than other customers to
move on; management might consider writing off this segment, since even if they
could be satisfied, they would still be prone to leaving.
Attention needs to be focused on the “unhappy but static” customers. Every company
has customers like these. Whether it is due to laziness or fear of inertia, they are
likely to remain customers despite their lower satisfaction. Companies should still
seek to correct these customers’ problems. Even though their odds of leaving are
less, they may still change brands, and a satisfied relationship will move them into
the “safe zone.”
“Happy but mobile” customers are satisfied, but are in danger of switching brands,
perhaps because they like to shop for new deals or are receptive to marketing
pressure. The strategy for retaining these types of customers is akin to “watching
the chickens in the henhouse.” They need to be monitored more closely for switching
cues. Companies should also structure pricing and programs to make sticking around
economically rewarding.
Customer retention depends on much more than a process of continually improving
satisfaction. It also requires dealing with attrition as an environmental circumstance that
occurs even when the best service is in place.
Source: http://www.rockresearch.com/a-new-paradigm-for-understanding-customer-retention
Self Assessment
Fill in the blanks:
1. Customer …………………… is the key to any organization’s effectiveness.
2. …………………… marketing is emerging as the core marketing activity for businesses
operating in fiercely competitive environments.
3. Customer Retention is the activity that a selling organization undertakes in order to
reduce customer …………………….
4. …………………… customer retention strategies impose high switching costs on customers,
discouraging defection.
6.3 Trends in Customer Retention
Retaining and developing customers has long been a critical success factor for businesses. In that
sense, Customer Relationship Management is not new, previously falling under the guise of
customer satisfaction. Worldwide, service organizations have been pioneers in developing
cause retention strategies.
78 LOVELY PROFESSIONAL UNIVERSITY