Thursday, March 4, 2010

Customer Retention as a part of CRM

Customer relationship management is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. It deals with all aspects of acquiring, keeping and growing customers (see Kotler page 14).

Customer retention is the loyalty of the consumers to the company. Consumers make loyalty decisions based on customer satisfaction. Outstanding marketing companies go out of their way to keep important customers satisfied. Most studies show that higher levels of customer satisfaction lead to greater consumer loyalty, which in turns result in better company performance. Smart companies aim to delight customers by promising only what they can deliver, then delivering more than they promise. (see Kotler page 14)

Since satisfaction depends on the product's perceived performance relative to buyer's expectation, companies have to perform what they promise to the consumers.

About two weeks ago, I went to Chipotle restaurant in the U-District Ave. It was a Mexican restaurant. I purchased a steak burrito after lining up, and there was a problem during the payment process. I gave him my debit card and showed him my UW student id card (to get a free drink). After all the payment was done, and I was about to put the receipt in my pocket, the cashier told me that he charged the wrong price to my debit card. I was confused, I thought he charged too low so I just gave him my debit card. Apparently, he charged my card about couple cents higher than it should have been charged. I was still confused because it did not say the payment was voided, and he gave me two different receipts instead (with different amount of purchases). I just stood there for a moment and tried to understand the receipts, the cashier knew I was unsure about what he just did. He asked me if everything's alright and tried to explain the process he just did. I understood what he was trying to do, but it did not say void or negative amount in one of the receipts. I figured I would just trust him and if he did charge me twice, I would not care about it since there would be nothing I can do.

However, when I was walking away from the cashier towards the fountain drink machine, the cashier knew I was walking while still trying to figure out the receipts. After I gave up and I was about to get my drink, he ran up to me and told me to wait here because he wanted to give me a gift card. I told him it was not a big deal and he did not have to do that. He insisted and he went inside the kitchen and came out after a moment. He gave me this gift card and he apologized to me because he made me confuse and it was his entire fault in the first place. I thanked him for his kindness and concern.

His action made me delighted. The food was always good, but that cashier did something extra that I was not expecting him to do. I perceived their performance to be higher than my expectation. I was satisfied, and they had successfully practice their consumer retention effort. I am even more loyal to the restaurant, and I keep telling my friend about how great the service perfomance was. “Delighted customers not only make repeat purchases, they become ‘customer evangelists’ who tell others about their good experiences with the product” (see Kotler page 4).

The reason why a company should consider consumer retention is because it is an indicator of long-term viability of a firm, maintains product/service performance, builds strong customer loyalty and less expensive to maintain.

Here are some pictures of the gift card he gave me:






Hendy Kurniawan, Section E

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