MGT 3761 Assignment 4

MGT 3761 Assignment 4 - Assignment 4: Customer Relationship...

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Assignment 4: Customer Relationship Management MGT 3761 Group: Deb Dolasinski Cory Stevens Tim May
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Business Dilemma Since Broadway Café will be offering similar products at the same competitively matched prices as Starbucks, a differentiation strategy focused on providing superior service and awarding loyal customers will decrease the threat of customers and buyer power forces. Our superior service will become synonymous to a homey, “part -of- the-family” feeling and a greeted-by-name smile. Also, our loyalty cardholders will receive discounted/ free refills every fifth visit. We value our customers and believe them to be the most influential people in our cafe. A crucial element impacting a business’s health is its reputation on customer service. In support of this, the Customer Institute website lists some rules of thumb based upon findings from research reports. A 1981 study conducted for Coca-Cola had a 2 to 1 ratio of customer experiences—a median of 10 persons heard about a bad experience and 5 persons heard about a good experience. In a later study for Coca-Cola, resolving a problem on the first contact improved loyalty 10% higher than resolution via multiple contacts. The ratio of cost to acquire a new customer versus the cost to retain a customer was 5 to 1. These figures were derived from a study of new automobile customer and 50% base of loyal customers. Cost to sell a car to a new customer was $750; goodwill cost to retain a customer was $150. (Source: http://thecustomerinstitute.bogspot.com/2008/11/real-impact-of-customer-complaints.html) “How Bad Customer Service Affects Business” is an online article that presents four negative impacts of poor customer service: decreased profits, poor public profile, boosts to competition, and lowered employee morale. Simply put, profits will decrease due to lost business because “customers treated poorly in your business will not return”. As the saying goes, bad news travels
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faster than good news. An example of the crippling effect of a poor public profile is a negative endorsement from an unhappy customer to a would-be customer. If a customer is treated poorly, he will take his business elsewhere—to your competition! This boost will give your competitor
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MGT 3761 Assignment 4 - Assignment 4: Customer Relationship...

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