♦ArthurAndersen&Co.,SC.1995.AllRightsReserved.CustomerSatisfaction&RetentionAnalysisManagementBriefingAugust8,1995♦ArthurAndersen&Co.,SC.1995.AllRightsReserved.♦ArthurAndersen&Co.,SC.1995.AllRightsReserved.ArthurAndersen’sresearchintoBestPracticesInCustomerSatisfactionprovidesinsightintohowleadingcompaniesarebuildingloyalandprofitablecustomerrelationships.Today,wewilldiscusshowthesecompaniesaregainingamorecompetitiveunderstandingoftheircustomer’sprioritiesandhowthecompanyshouldfocusonimprovingperformance.ArthurAndersen’sresearchintoBestPracticesInCustomerSatisfactionprovidesinsightintohowleadingcompaniesarebuildingloyalandprofitablecustomerrelationships.Today,wewilldiscusshowthesecompaniesaregainingamorecompetitiveunderstandingoftheircustomer’sprioritiesandhowthecompanyshouldfocusonimprovingperformance.Today’sObjectives♦ArthurAndersen&Co.,SC.1995.AllRightsReserved.ExistingCustomersBecomeMoreProfitableEachYearSource:HarvardBusinessReview,Sept/Oct1990,Reichheld&SasserProfitGeneratedByAverageCustomerOver5YearsIndustrialDistributionYear12345$4599121144168♦ArthurAndersen&Co.,SC.1995.AllRightsReserved.WhyCustomersBecomeMoreProfitableOverTimeIncreasedPurchases:Over40%ofhighlysatisfiedcustomersincreasetheirpurchasesbasedupontheirpositiveexperience.AcquisitionCost:Itcostsfivetimesmoretoattractanewcustomerthantoretainanoldcustomer.PricePremium:Highcustomersatisfactioncompaniescharge9percentmorethanpoorcustomersatisfactioncompanies.Referrals:Over60%ofsalesmayresultfromreferrals.Conversely,theaveragedissatisfiedcustomerwilltell10othersabouttheirbadexperience.ReducedOperatingCosts:Intheinsuranceindustry,a5%increaseincustomerretentionlowersthecostperpolicyby18%.CustomerExperienceCycleFirstTimeRepeatAdvocate♦ArthurAndersen&Co.,SC.1995.AllRightsReserved.ForeachoftheCompany’stargetmarketsegments:☑Analyzecurrentcustomerretentionrates-repeatpurchases,increasedpurchases,andreferrals☑Determinesourcesofdissatisfactionleadingtodefectionsorswitchingtosubstitutes☑Estimatefinancialbenefitsofimprovedcustomerretention-loweracquisition&operatingcosts,sourcesofrevenuegrowth☑Exploreopportunitiestoimprovecustomerretentionthroughanenhancedvalueproposition,processimprovements,andemployeecommitment☑Identifycomponentsofanon-goingcustomerretentionperformancemeasurementprocessForeachoftheCompany’stargetmarketsegments:☑Analyzecurrentcustomerretentionrates-repeatpurchases,increasedpurchases,andreferrals☑Determinesourcesofdissatisfactionleadingtodefectionsorswitchingtosubstitutes☑Estimatefinancialbenefitsofimprovedcustomerretention-loweracquisition&operatingcosts,sourcesofrevenuegrowth☑Exploreopportunitiestoimprovecustomerretentionthroughanenhancedvalueproposition,processimprovements,andemployeecommitment☑Identifycomponentsofanon-goingcustomerretentionperformancemeasurementprocessCustomerRetentionAnalysis♦ArthurAndersen&Co.,SC.1995.AllRightsReserved.CustomerAcquisition&RetentionModelNumberofCustomersYear1Year2TenuredCustomersNewCustomers(Year2)YearlingsRecoveredCustomersLoyalCustomersNewCustomersLostCustomersDefections&Substitutions“AtRisk”“Opportunists”♦ArthurAndersen&Co.,SC.1995.AllRightsReserved.IdentifyBottom-LineOpportunitiesIdentifyBottom-LineOpportunitiesDeriveBehavioralDeriveBehavioralRatesRatesBehaviorInterviewsBehaviorInterviewsCustomerRetentionAnalysisApproachAnalyzeComp...
