CH 9 - Customer Relationship Management A Databased...

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Customer Relationship Management A Databased Approach V. Kumar Werner J. Reinartz Instructor’s Presentation Slides
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Chapter Nine Effectiveness of Loyalty Programs
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Topics Discussed Drivers of Loyalty Program Effectiveness LP Design Characteristics Achieving Competitive Advantage The 7-Point Check List for Successful Loyalty Program Design and Implementation Minicases: Starwood Hotels CRM at Work: Tesco
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Drivers of LP Effectiveness LP Benefits to Organization Supply side: Cost of Loyalty Program 2. Efficiency Profits: Greater SCR* or retention Demand side: Attitudinal Loyalty Demand side: Behavioral Loyalty 3. Effectiveness Profits: Better value proposition through learning 4. Value Alignment Customer Characteristics Market Characteristics Firm Characteristics LP Design Characteristics 1.Commitment, positive WOM ! , Community, True Loyalty !Word-of-Mouth *Share of Category Requirement
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Loyalty Program Design Characteristics Classified according to: Reward structure Sponsorship (existence of partner network, network externalities) To know if an LP is effective: From the consumer’s perspective, are rewards attainable? From the consumer’s perspective, are rewards relevant? From the firm’s perspective, is the LP design aligned with the desired goal(s)?
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LP Customer Characteristics Skewness of customer value distribution varies across industries (value heterogeneity) Similar usage and customer profitability of individual customers or accounts (e.g.: gasoline industry) Different usage and customer profitability of individual customers or accounts (e.g.: financial services or the telecom industry) Value alignment feasible in industries such as airlines, hotels, rental cars, pharmacies, telecom and financial services
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This note was uploaded on 11/09/2011 for the course MAR 08 taught by Professor Staff during the Spring '08 term at Youngstown State University.

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CH 9 - Customer Relationship Management A Databased...

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