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
Focus
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
Focus: Segment & Target
Targeting based on Value of the Customer:
Value of Customer = RFM = Recency x Frequency x Monetary
Focus: Segment & Target
Targeting based on Value of the Customer:
Present Value
Potential Value
Conversion Micro Support
No action Maximize
Low High
High
Focus: Segment & Target
Loyalty
Experience Swing Former
Opposition
Loyalty 1: Experience
Loyalty = Experience vs. Expectations
Solution Strategy: Value Disciplines
Loyalty 1: Experience
"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
Loyalty 1: Experience
* Treacy & Wiersema, The Discipline of Market Leaders, 1995
Product/Service Attributes Relationship Image
Loyalty 1: Experience
* Treacy & Wiersema, The Discipline of Market Leaders, 1995
Product/Service Attributes
Price
Quality
Time
Selection
√
√
Smart Shopper
Relationship Image
Operational Excellence: Quality and selection in key categories with unbeatable prices
Loyalty 1: Experience
* Treacy & Wiersema, The Discipline of Market Leaders, 1995
Product/Service Attributes
√
Brand
Time
Function
√
√
Best Product
Relationship Image
Product Leadership: Unique products and services that push the standards
Loyalty 1: Experience
* Treacy & Wiersema, The Discipline of Market Leaders, 1995
Product/Service Attributes
√
√
√
√
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
Focus: Corporate Alignment
Financial
Learning & Growth
Internal Process
Customers / Distributors
Focus: Corporate Alignment
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
Strategy: Value Disciplines
• 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
Strategy: Value Disciplines
Strategy: Value Disciplines
• 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
Strategy: Value Disciplines
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
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
The McPlaybook*
Make it easy to eat• 50% drive-thru• Meals held in one
hand
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
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: