BSBOPS505 Readings

The following tips for improving the employee-customer service encounters are based on several decades of research and logical extensions of this knowledge:

• Attempting to micromanage employee service encounter behavior through measuring and rewarding or punishing employees based on compliance with behavioral specifications such as canned greeting, sales, and thanking scripts is counterproductive and actually creates an organizational climate that is less likely to lead to customer satisfaction. This type of strategy reduces employee feelings of autonomy, intrinsic motivation, and genuine emotion. Therefore, Tip 1: Don't ignore the basics. Create an organisational environment in which employees feel valued, treated fairly, and supported by management. This type of climate, coupled with standards and expectations for quality service, creates the kind of environment where employees genuinely want to give good service and represent the organization in a positive light.
• Both positive and negative emotions on the part of employees are readily "caught" by customers, and vice versa. Therefore, Tip 2: Remember that human resource and management practices need to be aligned with the goal of creating an atmosphere when employees feel positive emotions at work. Management policies and practices that support the goal of quality service, considerate and fair treatment by management and internal service providers, employee involvement in decision making and problem solving, and other strategies that show management concern for both employee and customer welfare are all part of creating a climate where employees feel positively about the organization and their contribution to it. This is particularly true for service jobs that are low in task attributes associated with intrinsic motivation due to low autonomy, little task variety, and low skill challenge, such as call center operator. Because the job is so inflexible and structured, supervisors of these jobs need to exhibit high consideration toward employees.
• Quality data on customer views of service quality are vital for decision making. Organizations need multiple strategies for collecting this data. So, Tip 3: Get help from your employees. Involve employees in systematically recording customer complaints for a given time period and forwarding this information up the chain of command. No punishment of employees or managers based on these complaints can follow, or these complaints will not be recorded. This can work only in an organization where there is a high level of trust in management's word that there are no consequences for accurate recording of employee complaints. A modest incentive could also be offered. This approach is a way to collect quality data and also communicates to employees that they are partners with management in working on service quality management.
• Tip 4: Involve employees in diagnosing service quality palms and subsequently developing solutions to service quality problems. This approach has several benefits. It generates good information about service quality concerns and weaknesses. Employees, who are close to the customer and bear the brunt of customer dissatisfaction, often have valuable ideas about how to improve service quality. In addition, this process communicates to employees that their input, knowledge, and ideas are valued, creating a sense of ownership and empowerment in resolving service quality issues. These feelings and attitudes will be noticed by customers during the service encounter and can translate into improved customer views of service quality.
• Organisations need a multipronged approach to reducing the gap between customer expectations and perceived service quality.

Tips 5, 6, and 7 are three approaches to reducing this gap.

Tip 5: Revise policies and practices that customers dislike when possible. These policies and procedures may cost more in terms of customer good-will than the benefits gained through administrative efficiency.

Tip 6: Communicate with customers through a variety of means, including advertising signage, and interpersonal communications, to provide customers information about policies and procedures in order to create realistic expectations about the service delivery system and the rationale for any policies and procedures disliked by customers. When a policy or procedure is not amenable to change, clear communication about the policy and its rationale can reduce or prevent customer dissatisfaction.

Tip 7: Train employees to communicate effectively in difficult service encounter scenarios, such as handling a customer complaint Behavior modelling training, which involves observation of a model using the behavior, practice, and feedback, is the appropriate method for teaching this type of communication skills. Employees can be involved in developing the key learning points to be used in this training.

Tip 8: Create an organizational climate where employees feel attached to the organization and are internally motivated to be helpful to customers. When employees are satisfied with their jobs, feel well treated by management, and believe that organizational policies and practices support the goals of customer service as well as concern for employee needs, they are more likely to be helpful to customers during service encounters on a voluntary basis, without need for close supervision and monitoring, formal reward and punishment, or service scripts.

Conclusion

The bottom line in trying to improve the service encounter is that it is resistant to overt attempts on the part of management to use the typical management control mechanisms of behavioral specifications, close supervision and monitoring, performance appraisal, and contingent reward. It is more amenable to influence through indirect strategies that focus on creating a climate for service, employee feelings of fair and supportive treatment, and a work environment that causes employees to care about customers.

Customers can sense the difference between "positive vibes" and "fake greetings," and only one of these will have a positive influence on customer views of service quality. While many of the principles discussed in this chapter sound a lot like the golden rule, we propose a slightly revised version: "Do unto employees as you would have your employees do unto customers." Consider it organizational karma, but how management treats people counts.

Purpose

This procedure sets out responsibilities and a process for the consistent management of unreasonable complainant conduct arising during the management of a customer complaint.

Overview

A complaint is a customer complaint if it involves an expression of dissatisfaction about the service or action of the department, or its staff, and the complainant is directly affected by the service or action. The Department of Education (the department) appreciates and acknowledges a customer’s right to make a complaint. The department expects, however, that complainant conduct will be appropriate and reasonable and must not compromise staff safety and wellbeing.

Conduct is unreasonable if it involves actions or behaviours, which because of the nature or frequency, raises substantial health, safety, wellbeing, resource or equity issues for the department, its staff, other service users or the complainant themselves. Unreasonable conduct can arise at any time in the customer complaints management process. Where unreasonable conduct is identified, this procedure is to be used to enable the customer complaint or internal review to be productively resolved, or otherwise to terminate contact with the complainant. Unless the complaint is frivolous or vexatious, the complaint will still be addressed even if contact with the complainant is terminated.

This procedure is to be read in conjunction with the:

• Customer complaints management framework and policy (if the conduct arises during the management of the original customer complaint)
• Internal review procedure (if the conduct arises during an internal review).

Responsibilities

Complainant

• Cooperate in a respectful way and understand that unreasonable conduct will not be tolerated
• Comply with any management strategies imposed by the department
• Understand that the department may terminate contact if conduct is unreasonable, but the complaint will still be dealt with, unless it is frivolous or vexatious.

All staff involved in managing customer complaints or internal reviews (complaints officer or internal review officer)

• Manage the customer complaint or internal review in accordance with the Customer complaints management framework (PDF, 1.4MB), policy and procedure or Internal review procedure
• Act fairly, reasonably and ethically in all interactions with a complainant, including considering the complainant’s circumstances
• Manage complainant expectations at all stages of the process and ensure complainants understand their responsibilities
• Help complainants understand reasonable and unreasonable conduct
• Set boundaries and clearly explain the consequences of unacceptable conduct
• Monitor complainant conduct and use suitable strategies to manage unreasonable conduct
• Escalate unreasonable complainant conduct to a principal, deputy principal, supervisor or manager if support is require
• Use clear but respectful language to communicate with complainants
• Focus on personal health, safety and wellbeing, and seek support or debrief where required
• Keep up-to-date customer complaints register
• Maintain appropriate records to support each step in the management of unreasonable complainant conduct.

Additional responsibilities for principals or deputy principals

• Seek advice or escalate unreasonable complainant conduct matters to the regional office if support is require
• Support staff to manage unreasonable complainant conduct
• Ensure that even if contact with the complainant is terminated, the complaint is still addressed, unless the complaint is frivolous or vexatious
• Support staff to participate in training about how to manage unreasonable complainant conduct
• Give staff opportunities to debrief after managing unreasonable complainant conduct.

Additional responsibilities for supervisors or managers in regional offices and central office divisions

• Support staff to manage unreasonable complainant conduct
• Ensure that matters requiring action are still addressed, even if contact with the complainant is terminated
• Support staff to participate in training about how to manage unreasonable complainant conduct
• Give staff opportunities to debrief after managing unreasonable complainant conduct
• Report to regional or divisional management on matters involving unreasonable complainant conduct.

Regional Director or Deputy Director-General (or nominated Assistant Director-General)

• Terminate contact with a complainant displaying unreasonable conduct if appropriate in the circumstances.

Customer complaints coordinators, Strategy and Performance

• Provide advice and guidance to staff involved in customer complaints management
• Organise training to ensure staff understand the department’s customer complaints management approach and their responsibilities, including for managing unreasonable complainant conduct.

Process

The process does not apply to complaints outlined in the Excluded complaints factsheet, as these are not customer complaints. The process also does not apply if a complainant’s conduct creates an immediate unacceptable risk of harm to a person or departmental property. If these circumstances arise in a school, the Hostile people on school premises, wilful disturbance and trespass procedure should be followed. For regions and divisions, the following approach should be adopted:

• Immediately bring the matter to the attention of a senior officer/supervisor
• Suspend contact with the complainant
• Tell the complainant not to present on departmental property
• If necessary, refer the matter to the Queensland Police Service.

The following process can be applied to unreasonable conduct that arises during the original customer complaint that is managed at the frontline or during an internal review requested by the complainant if they are dissatisfied with the original complaint outcome or process.

1. Unreasonable complainant conduct identified
   • The complaints officer or internal review officer will actively monitor the complainant’s conduct throughout the complaints management process to identify if it is reasonable or unreasonable.
     • The complaints officer or internal review officer must assess all conduct on a case-by-case basis to decide whether it is unreasonable in the circumstances – i.e., the nature or frequency of the conduct raises substantial health, safety, wellbeing, resource or equity issues for the department, its staff, other service users or the complainant themselves.
     • The complainant information sheet will assist complainants to understand different types of unreasonable conduct.
     • The Unreasonable complainant conduct matrix External link (the matrix) (DoE employees only) contains examples of unreasonable conduct and guidance on possible management strategies.
   • If the complaints officer or internal review officer considers the complainant’s conduct to be unreasonable, this should be recorded in the register.
2. Set standards of conduct and apply management strategies
   • Once unreasonable conduct is identified, the complaints officer or internal review officer must set expected standards of conduct with the complainant by:
     • Explaining why conduct is unreasonable in the circumstances
     • Reminding the complainant to cooperate respectfully and not act unreasonably
     • The complainant information sheet may assist complaints officers or internal review officers.
   • The complaints officer or internal review officer must consider the type of unreasonable conduct and use strategies to mitigate or manage the conduct.
     • Strategies must only be implemented to the extent necessary to enable productive management of the customer complaint or internal review.
     • Staff safety and wellbeing is paramount. If a complainant’s immediate conduct is inappropriate or unacceptable, it may be necessary to temporarily stop contact with the complainant while management strategies are developed and put in place. For example, if a complainant is shouting or swearing during a phone call, the call should be ended.
   • The complaints officer or internal review officer must explain the management strategies to the complainant, ask them to comply, and warn that ongoing unreasonable conduct may result in further strategies being imposed or termination of contact with the complainant.
     • This explanation can be provided verbally, but should also be provided in writing and saved in the register and/or records management system.
     • The warning letter template External link (DoE employees only) can be used for written advice
3. Monitor complainant conduct
   • Once management strategies are in place, the complaints officer or internal review officer will monitor the complainant’s conduct and determine if it remains unreasonable.
     • Factors to be considered include:
       • how long the strategies have been in place and if the complainant has had reasonable opportunity to comply
       • the degree of compliance or non-compliance with the management strategies
       • any other factors relevant in the circumstances.
     • The frequency of monitoring will depend on the type of conduct, for example:
       • persistent contact multiple times a day may need active, daily monitoring
       • aggressive behaviour may only need monitoring when contact with the complainant occurs.
     • The complaints officer or internal review officer will take action, based on their assessment of the complainant’s conduct. Possible outcomes include:
       • if the conduct is no longer unreasonable, manage and resolve the customer complaint or internal review in the usual way.
       • if conduct remains unreasonable, but has improved, reinforce existing management strategies or escalate to different strategies, and again warn the complainant of the consequences of ongoing unreasonable conduct. This can be repeated as many times as it is productive to do so.
       • if the conduct is so unreasonable that the customer complaint or internal review cannot be productively resolved, contact with the complainant may be terminated (step 4). The complaint will still be addressed unless it is frivolous or vexatious.
4. Termination
   • Termination is a last-resort, which should only be considered if the complainant’s conduct is so unreasonable that continued engagement is unproductive and/or inappropriately burdens health, safety, wellbeing or resources.
     • Staff safety and wellbeing is paramount. If a complainant’s immediate conduct is inappropriate or unacceptable, it may be necessary to temporarily stop contact with the complainant while the termination process is undertaken. For example, if a complainant is shouting or swearing during a phone call, the call should be ended.
   • To commence the termination process, the complaints officer or internal review officer must prepare advice for the regional director or deputy director-general (or nominated assistant director-general) recommending the termination and explaining why termination is appropriate. This should include evidence that demonstrates:
     • the complainant has been treated fairly, reasonably and ethically
     • there has been compliance with the customer complaints management framework, policy and procedure and/or Internal review procedure
     • there are no reasonable prospects of engaging productively with the complainant and continued engagement would create unreasonable risks to staff or others, and/or unreasonably burden departmental resources.
   • The regional director or deputy director-general (or nominated assistant director-general) must not terminate contact with the complainant unless satisfied termination is appropriate. The evidence provided by the complaints officer or internal review officer (as outlined in the previous point) should inform the decision to terminate contact.
   • The regional director or deputy director-general (or nominated assistant director-general) must provide written advice to the complainant (see termination letter template External link (DoE employees only)) about the termination, including:
     • clearly stating that contact with the complainant about the complaint or internal review has been terminated and no further communication will be entered into about the matter
     • the grounds for the termination; and
     • any alternative options available to the complainant (e.g., external review by the Queensland Ombudsman or other review agency).
   • The complaints officer or internal review officer must update the register to reflect the termination of contact with the complainant and save any records in the department’s records management system.
     • The complaints officer or internal review officer must still address the complaint or review issue unless it is frivolous or vexatious.
5. Debrief and support options
   • Principals, deputy principals, supervisors or managers must ensure support and debriefing options External link (DoE employees only) are available to complaints officers and internal review officers managing or exposed to unreasonable complainant conduct.

Definitions

The Internet has definitely changed since it first became commercially available in the early 1990s. From company websites that were little more than online brochures, the web has become a juggernaut platform to establishing relationships with customers. Over time, the Internet has proven to be customers’ first touchpoint with a brand. And customers judge a brand on the Internet within 50 ms.1 That’s less time than it takes to blink. Your website is important for building your brand and credibility. That goes without saying. But it is also important for customers to get the information they need to do business with you. In fact, it has been found that customers expect an excellent digital experience, and no excuses are tolerated.2 Several books have been published on the best practices in web/mobile app design. Jakob Nielsen, Jared Spool, Jesse James Garret, Peter Morville, Luke Wroblewski and many others have written a number of books and articles on the subject.

In sum, here are seven attributes of a well-designed website/ mobile app:

1. It’s simple. As John Pawson, a renowned architect and designer, said: “Simplicity is the perfection that an artefact achieves when it is no longer possible to improve it by subtraction. This is the quality that an object has when every component, every detail, and every junction has been reduced or condensed to the essentials. It is the result of the omission of the inessentials.” In other words, this means that your website/mobile app should not be a barrier for customers – but a means to make their lives easier. It is better to design a website/ mobile app that is simple and well-built than something that drowns visitors in meaningless content and complicates the entire purchasing process.
2. It’s customised. Your content must be relevant to customers. You must provide the right information, for the right person (based on his/her profile, past purchases and interactions), at the right time and at the right place. Again, content relevance avoids inundating customers with useless information. So, instead of trying to figure out what might be of interest to your customers and creating unnecessary content, find the questions that come up most often and answer them on your site. Do not forget to present your products and services – in a way that is understandable for customers.
3. It’s built with humans in mind. A well-built website/ mobile app speaks the language of customers. A properly designed website/mobile app reassures customers, in particular by confirming that a requested action has indeed been carried out (for example, by sending a confirmation message of an order). A customer-friendly website/ mobile app also prevents errors by using non-technical vocabulary and posting warning messages as needed.
4. It’s visually appealing. According to a study published by Stanford University, a website’s graphical design is the first criteria customers use to judge a company’s credibility. The website’s graphical design includes:
   • Layout of colours
   • Composition grid of the page
   • White space
   • Fonts’ choice This is where professional web designers come in handy. Do not hesitate to consult them.
5. It’s accessible via multiple platforms with screens of various sizes. Smartphones and tablets of all sizes and technologies (iOS, Android, and others) have superseded the computer as a way to access the web. Therefore, design and think about your website with mobile-first approach. Your very survival depends on having a mobile-first strategy; Google will rank your website further down in the search results if your website is not suitable for mobile devices.
6. It’s up-to-date. The content of your website must always be up-to-date. Nothing is worse to taint credibility than to see the announcement of an event planned…for last year! The same applies for a promotion on great Christmas gift ideas that is still featured on your website in the middle of summer. In short, opening hours, promotions, products and news must always be up-to-date. Always. It’s frustrating for customers to bump into a locked door on a Sunday afternoon in July – when the company’s website says it’s open.
7. It’s not all about you. You are not designing the website/ mobile app for yourself or for your CEO or VP to brag about. You are designing for your customers.

With roughly $4.8 trillion in retail e-commerce sales projected globally by 2021, it would appear that there is ample opportunity for e-commerce businesses to excel. However, nearly 8 out of 10 online stores fail within the first 24 months, often due to problems concerning subpar branding and an excessive emphasis on the product itself rather than marketing the product. While your product is critical to sustainable business success, poor branding in a digital era of social credibility and brand recognition can make your product irrelevant. “It's not the best product that wins but the best-known one that wins ,” says Jaiden Vu, Founder and CEO of Vantura Cosmetics, an e-commerce business that specializes in organic and vegan cosmetics.

The company was able to capture a sizable audience of Facebook and Instagram followers before even launching a product. With a budget of $5,000, the cosmetics company gathered a following of more than 27,000 people on Instagram, 6000 on Facebook and over 10,000 emails in just two months – without a product launch. The company utilized social media tools such as UNUM, an app for planning and publishing digital content that provides data-driven insights, partnered with other companies for promotional giveaways, and were very consistent with their publishing schedule in order to grow their following.

Vu cites a unique strategy for launching a successful e-commerce business in an increasingly competitive market for 2019.

“If you run an e-commerce business, your first initial action is to develop or find a great product, make sure it works, and then build a website and social channel,” he says. “The first step is correct, but everything after is why most e-commerce fails – the reason Vantura Cosmetics is trending is not because we focus on crafting the perfect product, but we focus on the vision of our branding.”

As e-commerce continues on its path towards social commerce and product content syndication, branding will remain a powerful tool and competitive edge for emerging from a crowded field of competition.

Building Your Vision

Content is king, and selling a vision is as important as selling the product itself. Consumers want to be part of a community that is recognized on social media and within popular culture. One of the best ways to incorporate a vision into your branding is with personalized and relatable content. Consumers spend approximately 48% more when their online shopping experience is personalized – echoing the compelling sentiment among marketers that personalized branding is the future of marketing. Part of catering to the preferences among consumers is cultivating a brand story that they can identify with. “As a business, your job is to sell a vision, not just a product,” says Vu. “You sell that vision right, and the product will sell itself. Ask yourself: what is your story?”

Vantura Cosmetics was founded on the vision of everyone feeling confident with their natural features and radiant skin. “The mission is to develop a culture around physical authenticity as opposed to keeping up with the superficial media standards,” says Vu. A narrative that many people identify with, at a time of persistent social pressures among younger generations.

The generational impact of social media on Gen Z and Millennials can often have several adverse consequences, with social pressures among the most prominent.

Creating a relatable brand story can be just as powerful as advertising strategies that analyse conversion rates and individual shopping habits – since the storyline is fundamentally personal already. The method of marketing and branding distribution is critical, especially considering the proliferation of new mediums for content production and consumption.

Distribution And Social Credibility

Many e-commerce brands operate on a shoestring budget in their early stages. The brand story you want to portray to your audience is the foundation for how to distribute your narrative on social media and content platforms. Managing your marketing campaign can come with significant pressure to get it right the first time as a result, which means coming up with an effective distribution strategy before you even launch a product.

“It's your job to get your company and product on your audience's radar,” says Vu. “If you miss your initial chance to advertise properly, don't expect to get any major returns.”

The primary challenge in producing an effective advertising strategy from the jump is hitting the right content channels and generating optimal engagement.

Social media and e-commerce are quickly becoming intertwined, rapidly blurring the lines between mobile applications, web stores, and social media channels. Additionally, according to a recent report by Global Web Index, nearly 3 in 10 consumers cited finding or researching products as the primary reason for using social media, and 24% of consumers detailed finding brands for the first time on social media.

People do business with brands that they trust, and fostering a social media community with a distinct message and story is vital to creating that trust.

“Social credibility is everything in business and is even more important as an e-commerce business,” says Vu.

An established and successful method for building initial trust in your brand is through influencer partnerships. There has been a recent boom in celebrity influencer posts on social media, and it is no secret that the growth of influencer marketing is going to continue. According to the same Global Web Index report, 14% of digital consumers already find out about new brands from celebrity endorsements on social media.

Social media celebrities encompass vast audiences of followers who already have a favourable view of them and, by extension, a certain level of trust.

Small e-commerce operations may not have the budget to hire leading social media influencers, but even the lesser-known celebrities can prove a valuable injection of credibility to your brand. Their reputation combined with a brand vision that resonates with your intended audience, can make your e-commerce brand stand out in a saturated market and quickly position your product amongst leaders in the industry.

Many e-commerce brands fail because they approach branding with a convoluted plan that has no explicit focus, relying on the quality of their product without taking into consideration the evolution of e-commerce in a digital age. Simplifying the process can be the key to success for many e-commerce brands.

“Everything looks simple if you strategically home in on what works,” says Vu. “You don't have to be an innovator; you just need to model and execute on what works.”

The total framework for a strategic marketing plan consists of a three- to five strategic plan and year a one-year marketing plan. As highlighted in Figure 7.1 , we now turn to formulating a specific tactical plan for products and markets. An auto parts manufacturing company and an electric utility company were used to illustrate how two diverse organizations write objectives and strategies. The sample marketing plan that follows uses only the electric utility company as an example. It is an actual case of a midwestern company facing extensive competition for the first time. Deregulation hit the industry and set in motion predicament a whole series of events that created a monumental competitive and initiated strategic marketing planning. Consider the following events that impacted the utility company in a flat growth economy:

1. Deregulation brought in more aggressive pricing competition from natural gas companies
2. Lower-priced energy entered from neighbouring states
3. Major industrial customers began generating their own energy and bypassing the utility company
4. The company completed a nuclear plant with the capability of doubling its electric energy output, placing oversupply it in an situation.

Thus, there was an urgent need to develop a workable plan with fresh strategies to penetrate existing markets. And with the oversupply situation, it needed to increase usage of electric energy by identifying industrial, commercial, and residential users that could consume more energy through additional applications.

Sample marketing plan

The product produced by the electric utility is energy expressed in kilowatt-hours (kWh). It is used in a variety of end-use applications such as major appliances, water heating, space conditioning, lighting, commercial cooking, electric transportation, motor drives, and process heating. The markets for this product are residential, markets manufacturing, nonmanufacturing, and municipalities. But these are generally grouped as residential, industrial, and commercial.

The sample plan given below focuses on only one segment of the total market, lighting. The plan includes detailed planning guidelines to help you master the principles and issues, followed by an application detailing how to fill out each section of the plan. This format will help you apply the strategic marketing plan to your own situation, regardless of your product or service. Although the term “product” is used in the guidelines, a service organization can use the same planning format, whether that service is in the financial, medical, or some other professional field.

For authenticity in using the electric utility company as an example, only the numbers from its actual plan have been disguised for confidential purposes. Also, the information provided does not constitute the utility’s entire plan, but only enough of a sampling to show you how to write an actual plan.

Planning guidelines

In this section, describe in factual and objective terms where your operation stands in relation to the total marketing mix (product, price, distribution, and promotion). Compile data for a period of at least three years. Then, using a variety of industry and other reference sources, indicate what the future trends are for your industry, market segments, and product line.

A. Product

Objectively describe the product by

1. Sales history.
2. Position in the industry, including market share as well as less tangible aspects of relative position in the life cycle curve (introduction, growth, maturity, decline, and phase-out).
3. Future trends in the industry relative to government regulation, technology, financial, buyer behavior, that may affect product position.
4. Intended purpose of the product(s), in terms of market use, uniqueness, or positioning.
5. Features and benefits of the product(s), in terms of cost, safety, or convenience, that make for a winning proposition. 5. Other pertinent product information, such as expected product improvements and additional product characteristics (quality, size, model, price).

You may also wish to include recent features that enhance the product position; competitive trends in features and benefits; and required changes for improved competitiveness.

B. Pricing

• In this section, evaluate the company’s and competitors’ pricing policies for each market segment and/or distribution channel and their impact on market position.
• Evaluate what the pricing trends will be on the basis of raw material sourcing, product specification changes, financial constraints, and expected market situation, e.g., customers’ attitudes and possible competitive response.

C. Distribution channels and method

• Conduct a channel of distribution analysis that includes quantities sold directly and through dealers and prepare an analysis of physical distribution.
• Identify effectiveness of coverage through current channels and functions they perform. Comment on efficiency of distribution systems (direct/dealers). Include an evaluation of key activities that are being performed at each point and isolate areas that require special attention.
• List special functions or unique sales activities performed by the company sales force on the basis of types of distribution channels targeted to a specific market segment. Specify what key jobs and/or activities should be performed by the sales force (primarily company sales force, but also dealer outside sales reps, if applicable). Mention pros and cons about “push” (going through distribution channels) and “pull” (going end-user)to sales strategies. Discuss how effectively the sales force covers the market area and show target accounts by district.
• Identify future trends in distribution methods and channels. What growth is expected in each major market segment? How will this growth affect the needs for different (or existing) distribution channels or methods (physical distribution)? What is the impact of using the Internet as a channel of distribution?

D. Advertising and sales promotion

• Analyse the advertising and sales promotion directed at each segment of the market by copy theme, expenditure, and media.
• What are the past and current advertising and sales promotion strategies by product and market segment?
• What publicity, educational, and other non-advertising influences have been used, and with what effect?

Market background

This section is an extension of the basic marketing situation. However, focus is on the behavioral aspects of customers and prospects in a changing and competitive environment. The information in this section is important because it serves as foundation material for developing the objectives and strategies that follow. It also highlights any gaps in knowledge about your markets and suggests the types of marketing research needed to make effective decisions. Compile the following information:

A. Customer profile

What is the profile of potential customers? Classify by:

• The markets served by distributors, dealers, and other intermediaries, as well as from direct to end-user sales.
• Overall sales by market segment and channel of sale.
• Other classifications: describe profile of customers by type of product they use, level of sophistication, point of purchase, and sensitivity.

B. Frequency and magnitude of product usage

• How often do they purchase?
• In what volumes?
• Is there a seasonal effect?

C. Geographic aspects of product usage

• Are most of the buyers in a region of the country? National? International?

D. Customer characteristics

• Age? Level of education?
• Degree of sophistication? Management practices? Time in the business?
• Attitude toward the company, the products, the services, our quality image?
• Economic factors?

E. Decision making

• Who makes the buying decisions? When and where are they made, and by whom?

F. Customer motivations

• Why do customers buy? (Quality? Performance? Convenience? Image? Service? Location? Friendliness?)
• What motivates them to buy the product, to select one supplier/provider in preference to another?

G. Customer awareness

What is the level of customers’ awareness of the company’s product? To what extent do they

• Recognize a need?
• Identify the brand/product/company?
• Associate the brand/product/company with desirable features?

H. Segment trends

What are the trends in the size and character of the various submarkets? A submarket or measurable, segment should be considered if it is accessible, or potentially profitable. Also identify segments that are emerging, neglected, or poorly served.

Competitor analysis

A. Market share

List all major competitors, in descending-size order, showing relative position. List enough additional competitors to show a total minimum list of five.

B. Competitive strengths and weaknesses

List all major competitors, in descending-size order, showing relative position. List enough additional competitors to show a total minimum list of five.

C. Product comparison

How do the company’s products compare with those of the competition with regard to:

• Pricing, price lines, and discounts.
• Product features and quality. What are the specific features and benefits of the competitive products? Is quality consistent according to intended design? How about product performance and value?
• Advertising volume and effectiveness.
• Effectiveness of distribution and sales methods. Address both distribution mix (sales through dealers or direct to end-user) as well as physical distribution of finished products.
• Packaging. Review comparisons with competitive brands on the basis of tests for performance and preference; also review quality, size, models, and innovations.
• Attitudes of various classes of customers by quality, service, performance, and image.
• Trends in competitors’ share of market. Specify trends of share gains in individual product and/or product distribution lines. If possible, also relate to channel.
• Sales force effectiveness and market coverage. Review effectiveness as it relates to sales and service for each of the market segments that are critical — for example, effectiveness of sales and service with industrial accounts as well as dealers.

Marketing opportunities

In light of the facts presented in the previous two sections, now examine your strengths, weaknesses, and options. Your opportunities will begin to emerge from this examination as you consider the variety of alternatives available. Do not attempt to restrict your thinking at this time. Consider all possibilities that can expand your coverage of existing markets and lay the groundwork for entering new markets. A screening process will identify the major opportunities when you establish objectives and determine resources required.

A. Present markets

What are the best opportunities for expanding present markets cultivation through of new business, new users, or competitive displacement; increasing usage by present customers; redefining market segments; reconfiguring the product; finding new uses for the present product; repositioning the product; and identifying new market segments?

B. Buyers

What are the best opportunities for improving or expanding channels of distribution, product pricing, product promotion, customer service, and trade buying practices?

C. Growth Markets

Identify the major product growth markets in key areas (state geographic location, if applicable). Which markets represent the greatest long-term potential?

D. Product and Service Development and Innovation

What are the immediate and long-range opportunities for product development and innovation in the following areas: addition of new products to the line; diversification into new or related products, product lines, and/or new items or features; product modification (alterations); and packaging improvements? What new services should be offered (or current services improved)?

E. Targets of Opportunity

List any areas outside or your current market segment or product line (and not included in your marketing plan) that you would like to explore.

Marketing objectives

Having reported relevant factual data in the Situation Analysis section and interpreted their meaning and consequences to your product line in the Opportunities section, you now set the goals you want to achieve during the current planning period. One part of this section focuses on your primary or quantitative objectives as they relate to sales, market share, profits, and return on investment. Another part is a statement of your functional objectives, which concern both product and non-product-related goals. For those goals assumptions to be realistic and achievable , you must first generate assumptions and projections about future conditions and trends about the following.

A. Assumptions and projections

List your major assumptions for the current planning period in relation to:

• Economic assumptions: gross national product, industrial production, plant and equipment expenditures, activities of competitors, costs and prices, local economics, consumer expenditures, tendencies, and changes in customer needs.
• Technological assumptions: intensity of research and development effort, likelihood of technical breakthroughs, availability of raw materials, and plant capacity.
• Socio-political assumptions: prospective legislation, probability of political tensions, tax picture, population patterns, education, consumer habits, and changes in customer needs.

B. Primary objectives

• Financial objectives: State current and projected sales, units, profit margins, market-share objectives, as well as any other financial measurements required by the organization.
• Entrepreneurial objectives: Relate to non-measurable objectives for which you will not be accountable, but that are key success factors — for example, innovations in product/price/promotion and distribution. (These are optional, unless required by senior management.)

C. Functional objectives

Functional objectives normally refer to an expanded list based on the marketing mix: product, pricing, distribution, and promotion.

1. Product Objectives
   • Development
   • Modification
   • Differentiation
   • Diversification
   • Deletion
   • Segmentation
   • Pricing
   • Promotion
   • Distribution mix
   • Physical distribution
   • Packaging
   • Service
   • Other
2. Non-Product Objectives
   • Manufacturing
   • Marketing research
   • Credit
   • Sales activities (educational/informational)
   • R&D
   • Training
   • Human resource development

Strategies and Action Plans

Strategy is the art of coordinating the means (money, human resources, materials) to achieve the end (profits, customer satisfaction, growth) as defined by company policy and objectives. In this section, strategies have to be identified and put into action. Responsibilities have to be assigned, schedules set, budgets established, and checkpoints determined. Make sure that the operations groups (sales, service, manufacturing, etc.) actively participate in this planning exercise, since they are the ones that have to implement it.

A. Marketing strategies and tactics

• Product strategy: What changes are needed in product and packaging?
• Pricing strategy: What changes are needed in prices, discounts, and long-term contracts?
• Advertising strategy: What are the most effective benefits to feature, and how should basic copy ideas and copy themes be presented to special groups?
• Media strategy: What suggestions should be made to the advertising agency?
• Promotion strategies: What suggestions should be made to private label, dealers and/or distribution, and sales force (direct and dealer/distribution)?
• Other tactics.

Summary statement of final strategy

Include the highlights of your basic strategies aimed at achieving your primary objectives. Show the market segments, characteristics, barriers, and the strategies. You may also include alternative and contingency plans if situations occur whereby objectives cannot be reached. Make sure they relate to the overall marketing plan (not just product or product-line plans), as well as the corporate objectives.

Guidelines for planning

You have just reviewed an abbreviated version of an actual marketing plan for a midwestern utility company. While the terminology may differ from yours, the conditions are the same as for any other business, product, or service. There are sales to be achieved, a product to be delivered, a service to be provided, market segment opportunities to be reached, competitor activities to be monitored, and environmental factors with which to deal. The plan has a logical progression: where you have been, where you want to go, how you want to get there, and how you know when you have arrived.

More specifically, Figure 7.2 outlines an eight-step process for achieving the ultimate reason for writing any marketing plan: the development of competitive marketing strategies.

The Development of Competitive Marketing Strategies

Step 1 - Consumers

• Examine your firm's total market and operation environment
• Define your ultimate buyers
• Determine who makes the buying decisions
• Analyze the economic conditions of your target markets
• Identify factors influencing buying behavior

Step 2 -Customers

• Evaluate your customers. i.e. intermediate buyers (wholesalers and/or retailers)
• Determine how much support they give your product
• Indicate how you can motivate them to work harder
• Evaluate the need to expand into multiple channels of distributions

Step 3 - Competition

• Assess strengths and weaknesses of your competitors
• Analyze competitor's product mix in comparison with yours
• Determine if their participation in the market is growing or declining
• Indicate if new competitors are on the horizon

Step 4 - Market and Environment

• Indicate where government regulations may be restricting your operations
• Evaluate how efficiently your firm is keeping up with technology
• Indicate what broad cultural or industrial shifts could affect your business

Step 5 - Market/Product Strategy

• Develop your strategy (action) plan
• Position your product in terms of consumers; perceptions
• Examine possibilities of product modification, line extension, diversification, repackaging
• Extend sales life of product by finding new users, more uses of product, more frequent usage of product, and new markets

Step 6 - Pricing Strategy

•   Select a strategy of skimming market with high prices or penetrating with low prices
• Avoid price wars and search out untapped market segments; focus on product improvement; find new distribution channels

Step 7 - promotion strategies

• Combine advertising, sales force and sales promotion into an integrated force
• Focus media and copy themes to match market and sales obstacles
• Determine sales force size, design territories and select compensation methods based on overall objectives
• Use sales promotion to encourage more product usage, induce dealer involvement and stimulate greater sales force efforts

Step 8 - distribution strategies

• Select strategy of direct-to-consumer or indirect through intermediaries based on:
  • Total market size
  • Type of customer services provided or replacement rate of product
  • Amount of control you want over channel
  • Extent of market coverage

Schedule for Marketing Planning

The purpose of a planning schedule is to demonstrate that effective planning is a participative process requiring input from all levels of management. While Figure 7.3, a calendar-type schedule, displays an optimum situation, the activities and units of responsibility may vary within each organization. In practice, many organizations with formalized planning systems will take a six-month period to develop an operating plan. If a company is working on a calendar year, the process begins in July and is usually submitted to top management as early as October, with a final version in early December when expected sales become apparent.

Getting Started: Form a Strategy Team

One of the best approaches for gaining participation in the marketing plan, and in the total strategic marketing plan, is to form a strategy team made up of individuals from different functions of the organization. As already discussed in previous chapters, include individuals from finance, product development, sales, promotion, manufacturing, distribution, and research and development (or the equivalent). The members of the team are not meant to take passive roles. Rather, they should participate totally in the development of the plan, from analysing the opportunities to creating objectives and strategies. For it is through this participation that new markets and new product opportunities are developed, which, in turn, help secure the future of the organisation.

Evaluating a marketing plan

You can use the following qualitative guidelines as a dependable checklist to evaluate the marketing plan — and the total strategic marketing plan, as well. This checklist is particularly useful in determining whether the plan is providing you with the action-oriented strategies that will serve you, your products or services, and you organization as a whole.

• Are there strategies for enlarging current markets?
• Are there strategies for developing new markets?
• Are there strategies for defining the position for the product?
• Are there strategies for protecting existing sales volume?
• Are there strategies for launching new products?

For quantitative measures of overall planning performance, use the following:

• Total sales and profits: compare with preceding years.
• Market share: measure performance relative to that of competitors.
• Sales analysis: compare sales variations from plans by breakdowns such as geography, salespeople, customers, and products.
• Distribution cost analysis: determine the relative profitability of present ways of doing business through various channels.
• Measures of customer satisfaction: use surveys, customer panels, and other market feedback

With the reality that many plans consist of a lot of verbiage but little substance, there is still another approach to evaluating the quality of a marketing plan, as well as the total strategic marketing plan. A number of progressive organizations are creating additional planning teams to develop strategic marketing plans and act as if they are competitors. The intention is to view your company and its strategies from a different perspective; that is, from a competitor’s perspective. By doing so, you often uncover weaknesses that you could not identify from the narrower perspective of developing your own plan. Armed with such information, you can identify areas of product and market vulnerability and define points of entry by competitors. The process also highlights internal and external weaknesses that would need your attention. This evaluation technique often proves invaluable in developing a number of contingency strategies that would counter a competitor’s efforts to defeat your plans.

The importance of good performance management

Performance management does not always have a good reputation. A survey of nearly 200 companies found that while almost all, 90%, carried out appraisals nearly four out of 10 managers considered these to be merely tick-box exercises1 . Your challenge as a team coach is to reverse these statistics and integrate performance management successfully into the very heart of the team.

The team leaders who achieve this offer clear frameworks and set team objectives that are realistic as well as challenging. They are also comfortable dealing with mavericks, star performers and slow learners. No easy task! They sometimes have a touch of magic when it comes to helping their colleagues achieve their objectives. They provide great coaching support and are genuinely interested in developing others and seeing them grow. These types of managers are also great at talent spotting younger staff, or those who have been rather neglected, and enjoy helping them gain the confidence and skills they need. It’s not unusual to hear that they have ‘transformed’ someone who previously had a hopeless reputation.

Managed well, good performance management can deliver some substantial bottom-line results and in addition it can also be a very satisfying process, helping the team and the individuals in it to grow and develop.

To assess your approach to performance management, complete the following performance management audit. Also ask team members to complete it to provide feedback on how well the performance management process is working for them.

If you scored:

• 25 or above
  You are managing the performance in your team well. Your team is clear about their expectations and understands what they need to do. By having regular reviews, you can adapt to any changes, provide regular feedback, spot any performance issues and provide the support to keep everyone on track for success.
• 11–24
  You are attempting to manage the performance in your team and whilst you are having some degree of success, there are improvements you could make. Look at the areas where you and the team have a low score and identify a plan to improve them over the next few months. Talk these through with team members so that you can get some idea of what they need to help them work more effectively.
• 0–10
  In terms of performance management, it is important that you start to set up some processes to help your team. Even if your organisation doesn’t have an official system you can organise meetings to discuss objectives and progress and provide performance feedback. If people don’t know what is expected of them, they won’t know what to deliver.

Building alignment

One of the important aspects of performance management is that it aligns the objectives of the business with that of the team and the individual team members. The objectives you and your team members set together should fit in with the organisation’s goals, the overall team goals, and also reflect the individual’s role and aspirations. The building alignment model (see below) will help you and the team focus on the overall process and will also help to identify any individual or team development needs required to meet these objectives.

• Organisation's goals - What are the goals of your organisation?
• Team Goals - What are the goals of your team?
• Individual goals - How does this fit into the goals and objectives of the individual team members?

The four Rs of successful performance management

Relevant

Goals and objectives should fit firmly in the centre of the alignment diagram (Figure 8.1) and be relevant to the organisation and team success, and to the individual

Realistic

It’s important to make sure that any objectives are realistic, ambitious and achievable. If objectives are too easy, team members won’t put in much effort; equally if they are impossible to achieve, people will give up. The challenge is to hit the sweet spot where the team will be stretched. Your role is to help identify the capabilities in the team and encourage members to work together to achieve success. If you set these objectives together rather than imposing them, you will have the buy-in and commitment of the team.

Rigorous

Performance management also requires rigour. Objectives need to be defined in terms of outcomes which can be measured. They also need to have clearly defined milestones and time scales. It is important to regularly review progress, celebrate progress and motivate the team to continue on the path you have set together. As a team coach you can provide encouragement and if performance slips, you can provide the feedback, coaching and development to keep everything on track.

Rewarding

People need to feel some sort of reward for their hard work. This does not always need to be financial, but it is important that they feel some sort of motivation and satisfaction in what they do. Research shows that the top motivators for managers were:

1. Challenging and interesting work
2. The opportunity to learn and develop skills and knowledge
3. A high basic salary
4. Autonomy
5. Career advancement
6. Knowing what I do has an impact.

You might like to reflect on this list with regard to your team. Try to link in with what motivates your team members so that they have the energy and enthusiasm to achieve their goals and objectives.

Implementing a performance management process for your team.

Traditional performance management processes are based around a yearly cycle of objective setting, with quarterly or half-yearly reviews. We will see later in this chapter that many organisations are moving away from this process as it has become unwieldly and doesn’t always reflect the fast-paced environment in which we work. However, whatever processes your organisation uses, the success of any performance management rests on the quality of the conversations you have with your team. It is very important to take time to plan the performance review conversations you want to have with your team members.

One-to-one meetings

Whilst your organisation may provide guidelines for when meetings should take place, you may need to take that initiative yourself and you should at least be aiming at quarterly reviews with team members. There are three stages to the success of any performance management conversation (see Figure 8.3). Whilst your organisation may provide guidelines for when meetings should take place, you may need to take that initiative yourself and you should at least be aiming at quarterly reviews with team members. There are three stages to the success of any performance management conversation (see Figure 8.3).

Here are some suggestions which can help the process work smoothly:

Before the review

During the review

After the review

New approaches to performance management

Many organisations are finding that the traditional approach to performance management isn’t working for them. In a VUCA* world they need a process which is more agile and flexible and able to adapt to change. In addition, there is a recognition that employees want a more individualised approach and one which helps them to work to their strengths. When Deloitte4 reviewed their traditional approach to managing performance they found that 58% of executives believed that the current approach ‘drives neither employee engagement nor high performance’ (and it was consuming 2 million hours a year!). As they researched further, they discovered that in their highest-performing teams, team leaders conducted regular check-ins with each team member on a weekly basis. As they put it: ‘very frequent check-ins are a team leader’s ‘killer App’.’ Rather than a long, drawn-out, review process they now capture a ‘performance snapshot’ which can easily be collated and reviewed to identify development needs and succession plans.

_{*VUCA = volatile, uncertain, complex and ambiguous}

They also found that another defining characteristic of their best teams was that team members felt that they were working to their strengths and doing what they do best every day. These findings are backed up by the experience in other organisations. At Atlassian, the Australian software company, managers replaced their traditional performance management approach with a more lightweight continuous model, using their weekly one-to-one meetings as an opportunity for feedback and coaching. These meetings focused on how individuals could enhance their performance and play to their strengths. As well as greater emphasis on ongoing feedback and building on strengths, the organisations that are updating their approach to performance management are asking more person-centred questions. They are also involving other colleagues in the review process to create greater transparency.

Google operates a peer review process where the individual and their manager nominates a group of peers (including some who are more junior to them) and asks them the following question:

These newer approaches to performance management are certainly providing a more agile, flexible and immediate way of directly working with employees to help them manage their performance and development. However, they require managers to have the skills to observe and recognise performance, to provide regular coaching and feedback, and help their people constantly develop and improve their performance: the skills of a great team coach. This may sound like more work for you, as team leader, but in the long run, shorter and more focused conversations will enhance team performance.

Team performance reviews

Often, performance management is dealt with on an individual basis, even though people rarely work in isolation. An individual’s success is usually the result of the support and input from other colleagues and team members.

As a result, it is equally important that you meet together to review the overall team performance, on a regular basis. These meetings should not be just a review of the targets, revenue and budget projections. You need to reflect on the way the team is working together to achieve these goals. This means going back to the team goals you set, and reviewing your team charter to look at:

• What is working well for us?
• What success have we had?
• Is there anything we need to change?
• How can we support each other?
• What can we do to build on and improve performance in the team?
• What support do you need from me?

Use these meetings as a chance to celebrate success and give each team member the opportunity to share what they are doing, and provide an update of where they are with their contribution to the overall team goals.

Summary

Building the performance of the team not only helps to achieve the overall goals and targets, but it has the potential to supercharge your team and help them to work more effectively together. In this chapter we have provided an overview to help you think about how to structure your approach and create the processes and frameworks which can help the team to grow. Identify some ideas and action you and your team can put into practice to build performance.

Introduction: What is customer loyalty?

In order to sustain long-term operations, most service enterprises rely on a set of loyal customers. While a single purchase contributes to a firm’s revenue stream, the lack of a consistent stream of revenues in the future can be problematic for any business. Consequently, managers and researchers have gained interest in the topic of customer loyalty. Formally defined customer loyalty is “A deeply held commitment to re-buy or patronize a preferred product or service consistently in the future, thereby causing repetitive same-brand-set purchasing, despite situational influences and marketing efforts having the potential to cause switching behavior” (Oliver, 1997). For most services, customers have options: they can choose one restaurant, airline, hotel, retailer, or bank, instead of their competitors. Furthermore, those competitors will make every effort to attract your existing set of customers. However, truly loyal customers have both a belief and a repeat purchasing behavior which favours their preferred brand.

Given the existence of customers who are more loyal and companies that are better at retaining customers, a question emerges: what makes customers loyal? Customers tend to be more loyal when the product or service is highly differentiated, a sense of community is created, limited competition exist, in situations of price insensitivity, and when customers are delighted by the services they receive. Some services are highly differentiated. Major theme parks are an example of this: the Magic Kingdom at Walt Disney World is different from Sea World in terms of its attractions, shows, theme, service, and service scape. Whenever a community of users exists to support product utilization, people will likely be more loyal. A customer that belongs to a Harley Davidson motorcycle club is likely more committed to the brand than someone that occasionally rides alone. Limited competition tends to restrict the possibility of switching behavior. For example, customers typically have one choice for their electric and water utilities. Therefore, they’re extremely likely to continue their service. Customers that have low price sensitivity are less likely to engage in search behaviors, which might ultimately stray them away from their competitors. A loyal customer at a luxury hotel such as Four Seasons is less likely to make a decision based on price than a customer at an economy hotel on a tight budget. Finally, delighted customers are more likely to be loyal as opposed to those who have been simply satisfied (Ahrholdt et al., 2017; Arnold et al., 2005; Barnes et al., 2010; Crotts & M agnini, 2011; Dey et al., 2017). Some demographic characteristics have also been shown to influence loyalty. Research has demonstrated that middle-aged individuals, homeowners, and those living in rural areas tend to be more loyal (Reichheld, 1993). Higher degrees of customization also positively influence customer loyalty (Shoemaker & Lewis, 1999).

Customer retention (loyalty) might become a challenge when multiple competitors exist, the product or service is not differentiated, sales promotion and discounting are common practices, customers are dissatisfied or outraged, and whenever customers are price sensitive. In situations where customers have many options, it becomes easier to find an alternate service which might suit their needs. Restaurants and retailers are known to be in hypercompetitive industry characterized by low entry barriers and therefore a greater number of competitors. For example, the restaurant review site Yelp lists 24,453 restaurants in New York City. Compare this to the airline industry where four carriers (Southwest, Delta, United, and American) comprise the majority of the market for air travel in the United States (Rodriguez, 2019). Loyalty is a harder goal to attain for products with little or no differentiation. This applies to most commodities such as apples and gasoline. Sales promotion and discounting are practices which might erode customer loyalty. In the hotel industry, it is common for revenue managers to discount the price of a hotel room during a nonpeak period. In the retail industry, discounts and promotions are designed to entice customers to buy at one store, thus potentially poaching them from their competitors. Similarly, dissatisfied or outraged customers are less likely to be loyal. When a customer believes that he or she is not receiving good service, search behavior might be triggered, which ultimately results in the decision to switch service providers. Price sensitive consumers are likely to exhibit less loyalty. Since price savings are prioritized, other features become less prominent in their purchase decision process.

Types of customer loyalty

From a psychological viewpoint, customer loyalty is likely to have a series of precursors. Dick and Basu (1994) classify these as cognitive, affective, and conative. The cognitive aspects to customer loyalty involve customer thoughts about the brand being better, superior, or significantly different than that of its competitors. In other words, these are deeply held beliefs that customers have about a product, service, or brand. The affective antecedents to loyalty involve the emotional attachments which customers might have to a specific brand. Finally, conative aspects of loyalty relate to factors which might influence behaviors such as switching costs. Switching costs comprise both tangible and psychological costs which the customer might lose when switching to another brand. For example, a customer might have to spend time researching the new service. The same customer might lose points or benefits received for being a frequent customer of their preferred brand. Customer loyalty can be classified by the intensity of both the affective and behavioral components. Whenever a customer continues to select their preferred service provider on a consistent basis, they’re said to be high on repurchase behavior. However, having a strong repurchase behavior does not necessarily mean that the same customer will have strong feelings of attachment toward a brand. It is possible that the customer repeats the behavior out of habit, lack of alternative, or to benefit from the incentives given as part of a loyalty program. Similarly, a customer might have a strong feeling or belief about a brand, but this might not always be reflected in a repeated pattern of purchases. For example, a customer might really like to stay at the Ritz Carlton, but they might neither have the budget to stay there often nor the time to travel on a frequent basis. Whenever a customer has a strong belief about a product or service, but not a significant amount of repurchasing behavior, this is called attitudinal loyalty. In contrast, when customers have a strong set of repurchase behaviors, but is not particularly strong in their beliefs about a brand, this is called behavioral loyalty. When a customer has both strong beliefs about a brand coupled with a strong set of repeat purchases, this is called true loyalty (Baloglu, 2002). This holy grail of loyalty is what managers and marketers strive for. It is believed that loyal customers cost less to serve on a regular basis, are less price sensitive, spend more time with the company, and spread positive word of mouth (Reichheld, 1996).

and frequency of purchase (Reinartz & Kumar, 2002). Using this framework, four groups of customers are created. “Butterflies” are those customers that are highly profitable, yet not very frequent. They present a high fit between a company’s offerings and their needs and have a high profit potential. “Strangers” are infrequent customers with low profitability. Little fit exist between their needs and the company’s offerings. Using the same characteristics, customers with a long history of purchases and low profit potential are called “Barnacles”. Finally, “true friends” are those customers with high levels of profitability and high frequency of purchases (Reinartz & Kumar, 2002). Understanding the multiple customer groups with different patterns of behaviors helps marketers and managers alike devise targeted strategies to attract and retain each of them.

In yet another way to classify customers, Rowley (2005) devised the “four C’s” of customer loyalty. Accordingly, customers may be categorized as captive, convenience seekers, contented, and committed. A captive customer remains in relationship with the firm because they either have no choice or perceive they have no other alternative. These attitudinally neutral customers may require a major change in personal circumstance or environmental factors in order to make a change. From a practical standpoint, someone might be captive, in that they’re bound by a long-term contract with the firm or in situations were no competition exists (i.e., monopoly). Certain services often benefit from a captive customer. For example, passengers inside a cruise ship are captive to the company’s offerings. Restricted to the options aboard, ships often capitalize on this circumstance to boost beverage sales and offer premium experiences (e.g., specialty dining at an extra cost).

Movie theatres also have a captive audience once inside their facilities. This facilitates the purchase of highly priced popcorn, candies, and beverages which are much more profitable than the sale of tickets. Some customers are convenience-seekers. These low-involvement consumers repeat purchases out of routine (Rowley, 2005). A customer might stop at a gas station because it is closer to home. Yet, another customer might eat lunch at a restaurant because it is walking distance from work. Some services such as quick service restaurants (i.e., fast food) appeal to a customer’s desire for convenience by having multiple locations throughout a city, offering a drive-thru, deliveries, and many other features aimed at making a customer’s life easier. A third group of customers can be classified as contented.

Contented consumers have a generally positive attitude about the brand, though they’re not strongly committed (Rowley, 2005). From a practical standpoint, it might be difficult to get contented customers to buy additional products or services. For instance, the customer might have an Apple iPhone and a Windows-based computer. Ideally, the organization would like to improve the amount of business they do with them. Finally, some customers are committed to a company and its services. These are the individuals who are prone to co-create with a brand, spread positive word of mouth, and buy additional products and services from the same brand (Rowley, 2005). Although it is possible for a committed customer to consider other products and services, their level of devotion to the brand is such that there is a low probability of switching behavior. The relationship between companies and their customers need to go beyond a single transaction. Indeed, the concept of Customer Lifetime Value (CLV) proposes that customers are more valuable than a single transaction. Therefore, losing a customer means losing the stream of revenues, they would generate over the course of their lifetime. In order to calculate lifetime value, a company must determine the size of each customer transaction, the frequency in which customer make said purchases, and the number of years that the customer can be reasonably expected to come back. Similarly, companies need to be cognizant of their customer acquisition costs. These can be calculated by the total marketing expenses divided by the number of customers. The goal is for the CLV to far exceed the cost of customer acquisition. In practice, customers might have split loyalty portfolios of habitually bought brands (Uncles et al., 2003). This means that a customer might do business with two or three of their favourite retailers, thus alternating between them as time goes by. Whereas a traditional marketing strategy might advocate for acquiring more new customers, sometimes the market is saturated and unlikely to grow. Therefore, some marketers have attempted to increase the frequency of purchases in one business (as compared to others) which is frequently referred to as the share of customer or the share of wallet. For example, let’s take our retail customers who buy from three distinct stores. Let’s assume that their purchases are split evenly between the three. One of these retailers might attempt to get the customer to spend 50% of their budget (instead of 33%) in their store. This strategy will result on the same number of customers contributing a greater amount of revenue.

Many business sectors are characterized by a relatively small number of consumers which accounts for a large amount of the revenues generated by the organization. These customers often termed “heavy users” by marketers have been studied in various contexts, including wine consumption (Goldsmith & d’Hauteville, 1998) and travel (Litvin, 2000). Heavy users can be more involved and interested in a product category (Goldsmith & d’Hauteville, 1998). A study on vacation marketing categorized 22% of customers as “heavy users” of vacations. Despite their relatively small size, they accounted for 41% of all vacations taken (Litvin, 2000). Heavy users of vacations travel twice as often as light travelers, are more likely to be married, and have a higher level of education and income. Furthermore, they’re more likely to be opinion leaders and early adopters in the travel space (Litvin, 2000). Increasing customer loyalty can have ethical implications for managers and marketers alike. A person who goes to the casino too often can develop a gambling addiction. Similarly, a bar patron who visits frequently can develop alcoholism. In recent years, many have grown concerned about the potential addictive effects of various technologies. Research has demonstrated that addiction to video games results in loyalty (Lu & Wang, 2008). However, this desired marketing outcome can have detrimental effects on the social lives of consumers. Similarly, addiction to smartphones has been demonstrated to improve customer loyalty (Kim & Shin, 2016). Consequently, developers of technologies have added incentives to study the consumers and develop features which might increase their screen time. Socially responsible firms pay attention to customer behavior which might result in negative effects on the customers and the community. Making customers aware of their own behavior, intervening when necessary, and creating programs to help those who develop addiction are all actions which companies can do to help customers.