Maintaining Loyal Customers and Customer Service Strategy

transcript

Maintaining Loyal CustomersCNI’s journey

Kenny OngCNI Holdings Berhad

Contents:

Agenda:• Introduction• Philosophy• Customer Focus• Strategy Example• Next Steps

Introduction

The basis for all our Customer Loyalty strategies

Intro: CNI

1. 17 years old

2. Main Board Public Listing: August 2005

3. Products: Consumer Goods and Services

4. Core Business: MLM

5. Others: Contract Manufacturing, Export/Trading, eCommerce

6. Malaysia, Singapore, Brunei, Indonesia, India, China, Hong Kong, Philippines

7. Staff force: ± 500

8. Distributors: ± 250,000 Malaysia

Intro: MLM

1. Sell through people

2. Relationship & people skills

3. Compensation Plan

4. Follow-up

5. Integrity

6. R&D

7. Training

8. Functions & Events

9. Tight regulations

Philosophy

The anchor for all decisions

Philosophy:

Goods Return Policy“I don’t care if they return a

Goodyear tire. If they said they paid $200, pay them $200.”

Nordstrom does not sell tires

Philosophy

“In business after business, 60% to 80% of lost customers reported on a survey just prior to defecting that they were satisfied or very satisfied.”

HBR March/April 1996

Philosophy

“CNI is more than business.

We strongly believe that every individual has the opportunity to

attain a better living through CNI.”

Philosophy

Ultimate Objective of Marketing: “Get more people, to buy more things, more frequently, at higher prices.”

Sergio Zyman

“Retention and Loyalty useless if No Conversion is happening.”

Philosophy

Loyalty is Useless…

• Virtual Consumption vs. Real Consumption

Philosophy

Loyalty is misleading…

• Heavy Consumption ≠ Loyalty

• Loyalty ≠ Heavy Consumption

*Today’s focus is on Loyalty, not Consumption.

*To increase consumption, refer Marketing

Philosophy

1.Loyalty = Relationship (something like Dating)

2.Loyalty ≠ Points3.Loyalty ≠ Redemption4.Loyalty = Get more people, to buy

more, more frequently, at higher prices

Customer Focus

Keeping an eye on the right thing

1. Targeting

2. Alignment

Focus: Segment & Target

Know your “Customer”

1. User

2. Distributor

3. Leaders

4. Super Leaders

5. DCO

6. SPO

7. Corporate

Targeting based on Value of the Customer:

Value of Customer = RFM = Recency x Frequency x Monetary

Targeting based on Value of the Customer:

Present Value

Potential Value

Conversion Micro Support

No action Maximize

Low High

Loyalty

Experience Swing Former

Opposition

Loyalty 1: Experience

Loyalty = Experience vs. Expectations

Solution Strategy: Value Disciplines

"They are the most innovative"

"Constantly renewing and creative"

"Always on the leading edge"

"A great deal!"

Excellent/attractive price

Minimal acquisition cost and hassle

Lowest overall cost of ownership

"A no-hassles firm"

Convenience and speed

Reliable product and service

"Exactly what I need"

Customized products

Personalized communications

"They're very responsive"

Preferential service and flexibility

Recommends what I need

"I'm very loyal to them"

Helps us to be a success

Product Leadership

OperationalExcellence

CustomerIntimacy

* Treacy & Wiersema, The Discipline of Market Leaders, 1995

Product/Service Attributes Relationship Image

Product/Service Attributes

Quality

Selection

Smart Shopper

Relationship Image

Operational Excellence: Quality and selection in key categories with unbeatable prices

Function

Best Product

Relationship Image

Product Leadership: Unique products and services that push the standards

Service Trusted Brand

Relationship Image

Customer Intimacy: Personal service tailored to produce results for customer and build long-term relationships

Relations

Loyalty 2: Swing

Loyalty = Best alternative at the current moment until I find another alternative

Solution Strategy: Base Retention

Loyalty 2: Swing

Swing Customers are “loyal” because:• Individual Relationships• Convenience (at that point in time)• Tied-up• Product Uniqueness• Promotions• No better alternative• Downlines• No known alternative• Psychologically lazy

Financial

“To satisfy our stakeholders, what Financial objectives must we accomplish?”

Internal Process

“To satisfy our customers, in which internal business processes must we excel?"

Customer

“Who are our target customers?

What is our value proposition?”

Learning & Growth

“What capabilities and tools do our employees require to help them execute our strategy?

Focus: Corporate Alignment

Financial

Learning & Growth

Internal Process

Customers / Distributors

Revenue Growth

ProductivityMarket Value

Department Operations

Supplier & Alliances

External Involvement

Target Markets

Products/ Services

Channel Strategies

Human Resources

Technology

Information & IntelligenceSystems &

Processes

Financial

Learning & Growth

Internal Process

Customers / Distributors

Profit after Tax. Revenue. Cash-to-cash cycle. Operating cash flow

Customer Complaints. Customer Acquisition Rate. Product Availability. Product Quality & Service. Renewal Annual Subscription. Distributor Rank Achievement. No. of Active Distributor. No. DC/Regional Sales. Distributor with commission

Customer Database Availability. Accuracy of Forecast Planning. Continuous Improvement. Response Time to Customer Needs. Perfect Order Fulfillment. Inventory Turnover. Number of Effective Sponsoring Program. On Time Delivery. No. of Effective Training. Number of Effective A&P

% of staff evaluated on Core Competency Framework. % of staff with Career Development Plans. No. of training hours completed per staff. % of staff with access to strategic information. Q12 Index. % staff evaluated on Culture alignment

Strategy Example

What we have done and why

Strategy

• Mamak stall

Strategy

1. Value Disciplines

2. Base Retention

3. 4-wheels

Operational Excellence(low cost producer)

Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995

Product Leadership(best product)

Customer Intimacy(best total solution)

Strategy: Value Disciplines

Zig Ziglar

“Most prospects that don’t buy are confused

about the offer”

Operational Excellence

• Competitive price

• Error free, reliable

• Fast (on demand)

• Simple

• Responsive

• Consistent information for all

• Transactional

• 'Once and Done'

Operational Excellence

• Competitive price

• Error free, reliable

• Fast (on demand)

• Simple

• Responsive

• Consistent information for all

• Transactional

• 'Once and Done'

Customer Intimacy

• Management by Fact

• Easy to do business with

• Have it your way (customization)

• Market segments of one

• Proactive, flexible

• Relationship and consultative selling

• Cross selling

Customer Intimacy

• Management by Fact

• Easy to do business with

• Have it your way (customization)

• Market segments of one

• Proactive, flexible

• Relationship and consultative selling

• Cross selling

Product Leadership

• New, state of the art products or services

• Risk takers

• Meet volatile customer needs

• Fast concept-to- counter

• Never satisfied - obsolete own and competitors' products

• Learning organization

Product Leadership

• New, state of the art products or services

• Risk takers

• Meet volatile customer needs

• Fast concept-to- counter

• Never satisfied - obsolete own and competitors' products

• Learning organization

• Operational Excellence• Move know-how from top performing

units to others• Benchmark against best in class• Ensure operations training for all

employees• Use disciplines like TQM for continuous

learning to reduce costs and improve quality

• Customer Intimacy• Capture knowledge about customers• Understand customer needs• Empower front line employees• Ensure that everyone knows the

customer• Make company knowledge available to

customers

• Product Leadership• Reduce time to market• Commercialize new products fast• Ensure that ideas flow• Reuse what other parts of the company

have already learned• Ensure there are multiple sources of

funding

The McPlaybook*

Make it easy to eat• 50% drive-thru• Meals held in one

Make it easy to prepare• High Turnover• Tasks simple to learn

& repeat

Make it quick• “Fast Food”• Tests new products

for Cooking Times

Make what customers want• Prowls market for new

products• Monitored field tests

*Adapted from: Businessweek , Februrary 5th 2007

• Increase switching costs– Complex relationships - they will be reluctant to go through the

hassle of undoing those relationships in order to leave– Ensure no competitor will be able to come up with a big enough

offer to outweigh their switching cost– Increase switching cost, by providing valuable, but entangling,

services– E.g. Telcos, ERP, Microsoft, Consultants

• Tailor your offering– Understand customer behaviors and motivations to personalize

experience for its best customers– Share of Wallet– Information is KING– IBM, Amazon

Strategy: Base Retention

• Preempt Defections– Predict, Response, Execute– Keep track of customers’ changing value criteria– Be ahead of the customer’s decision cycle– Credit cards, Avis

• Bond with Customers– Most customers, under most circumstances, won’t evaluate a full

range of alternative products when making a repurchase decision– Brands create emotions– Need to influence customers to be on your side – e.g. Apple, Baby products

Strategy: Base Retention

• Mega packages• Community• Reward programs

(Points)• Membership Subscription• Email communication• Newsletters• Personalized alerts• Reminder & Gift

suggestion• Survey

• Suggestion Box• Self Profiles• Programs x Lifestyle

Matrix• Fun, Interactive programs

(e.g. design and submit your own: recipe, jewelry, greeting card etc.)

• Switching Techniques (e.g. Balance Transfer of credit cards)

Strategy: 4-Wheels

Culture

Corporate

ObjectiveCorporate

Strategy

StructureResources

Leadership

Person

Strategy: Framework

• Org Structure• Job Design• C&B• Policies & procedures• Decision making• Job fit• Management Systems• BSC and KPIs• Decentralized & Empower

Structure

Strategy: Framework

• Tools• Physical facilities• Peer support• Information• T&D Programs (internal)• ICT Systems• eCommerce

Resources

Strategy: Framework

• Role modeling• Vision/Mission/Philosophy• Leadership Style• F/L importance• Delegation & Empowerment• C&B, Promotions• Sense of Urgency• Speak regularly about customers

Leadership

Strategy: Framework

• Involve everyone in Customer Focus• Self managed teams• Recognition• Recruitment• Training• Profit sharing• Manager’s role• Values

Person

Person Development: BES

Strategy: Framework

• Focus point• Alignment• Quality• Innovation & Differentiation• Risk taking• Performance Management• Corporate obsession• Decision making

Culture

Strategy: Framework

Culture

Corporate

ObjectiveCorporate

Strategy

StructureResources

Leadership

Person

Mistakes and Challenges

1. ISO

2. Separating Sales, Marketing, and DCS

3. New products

4. Misinterpreting customer enthusiasm

5. Lack of Frontliners

6. Backoffice

7. Customers = Frontline

8. Lack of Training

9. ‘Talent’ Criteria

10.Internal Service

11.Hiring

12.2nd level CRM database

13.Balance between Service and Control

14.Feedback from the Field

Next Steps

Next Steps…

1. CRM

2. DC Online

3. eCommerce

4. Customer Intimacy

5. TNA reduction

6. APQP

7. Branding

8. Loyalty programs

9. Product R&D

10.External networks

11.Field support

12.Upgrade DCs

13.Smoothen supply chain

14.BES

15.Targeted marketing

For CNI:

Next Steps…

1. Customer philosophy

2. Review SOPs

3. Re-orientate staff

4. Training

5. Performance Mgmt System

6. C&B

7. Resources

8. Product Quality

9. Customer Service quality

10.Stop defections

11.Hiring

12.Set standards

13.Make it everyone’s responsibility

For starting up:

Thank You.

soft copy of slides: kennyong@cni.com.my