Understanding customer satisfaction,
loyalty, and Retention
to improve the efficiency of churn challenging.
(Provided by Ahmad Heshmat)

Tables of Contents
1- Quotations
2- Definitions
4- Types of Customer Churn
5- Dimensions of Loyalty
6- Reasons of Churn
7- Elements of Churn Reduction
8- How to handle ?

QUOTATIONS
‡ A customer is the most important person in any business
‡ A customer is not dependent upon us. We are dependent upon
him.
‡ A customer is not an interruption of our work. He is the sole
purpose of it.
‡ A customer does us a favor when he comes in. We aren't doing
him a favor by waiting on him.
‡ A customer is an essential part of our business--not an outsider.
‡ A customer is not just money in the cash register. He is a human
being with feelings and deserves to be treated with respect.

QUOTATIONS
‡ A customer is a person who comes to us with his needs and his
wants. It is our job to fill them.
‡ A customer deserves the most courteous attention we can
give him.
‡ He is the lifeblood of this and every business.
‡ He pays your salary.
‡ Without him we would have to close our doors.
‡ Don't ever forget it.
o Attributed to Sam Walton founder of Wal-Mart.

DEFINITIONS
Customer Satisfaction: is customer·s perception of the degree to which the
customer·s expectations have been fulfilled.µ
Customer Loyalty: Feelings or attitudes that incline a customer either to return to a
company, shop or outlet to purchase there again, or else to re-purchase a particular
product, service or brand.
Customer Churn: loss of customers. Also known Customer attrition.
Customer Retention: a strategy whose objective is to keep a company·s
customers and to retain their revenue contribution. Primarily it aims to prevent
customers from going to the competitor.
Complaint: is an expression of dissatisfaction made to an organization, related to its
products, where a response or resolution is explicitly or implicitly expected

Definition of customer
satisfaction
‡ Customer satisfaction is how well our PRODUCTS, SERVICE, SUPPORT and
ENGAGEMENT are able to meet the customer EXPECTATIONS.
‡ Break-down of the Definition
Customer satisfaction is a measure of how well our«
‡ PRODUCTS - Products including physical products and services.
‡ SERVICE - Customer service after sale. This includes responding to customer queries
and issues.
‡ SUPPORT - Repair, maintenance and upkeep of your products post sales.
‡ ENGAGEMENET - Engaging with customer, apart from the above mentioned
contexts (product, service and support). This includes offering new products,
schemes, up-sell, cross-sell, process reengineering and enhancement.

Definition of customer
satisfaction
«are able to meet the customer«
‡ EXPECTATIONS - Customer satisfaction is your delivery compared
with the expectations. The way a customer interprets your
delivery also defines customer satisfaction.
‡ Customer satisfaction is driven by ´how wellµ you manage your
delivery and ´how wellµ you manage customer expectations.
´Satisfied customer, could be open to the next better opportunityµ
´Loyal customer. Returns despite offers by the competitionµ

Definition of Customer
Retention
‡ Customer retention: is how well the customer STAYS and STAYS
ENGAGED with the organization OR with specific products and
services
‡ Break-down of the definition
‡ STAYS - Customer being active and user of your product and
service- This is mainly relevant to the products and services,
having an existing contract. This includes banking,
telecommunication and maintenance contracts.
‡ STAYS ENGAGED - Customer who maintain OR increase the level
of relationship. A customer could still be retained, while he
reduces his average, OR cancels two out of the three lines he has
got.

Customer Satisfaction and Customer
Retention is not absolutely the ³same´
³same´
You may have situations where a customer is satisfied,
but is still not retained.
You may have situations where a customer will not be
satisfied, but still retained.

Customer Satisfaction and Customer
Retention is not absolutely the ³same´
³same´
Satisfied Customer, but still churning:
‡ Your products are doing the right things, but they are not the right
products. Your products and services could be meeting customer
expectations, but customer could be attracted to more creative and
functionally better products.
‡ Customer wants to try something new. Customer may get bored of
your product, and they just want to try something new.
‡ Customer going for more competitive products, Competition is giving
better price vs. value equation.

Customer Satisfaction and Customer
Retention is not absolutely the ³same´
³same´
Dissatisfied customer, but retained
‡ Existing account yet to expire.
‡ Supplier market, More demand than supply (e.g. scratch cards).
‡ Customer expectations are not well managed, but customer is
staying due to the value proposition of your product.
‡ High Exit cost to the customer. example- Exit load for early
termination

Points to consider for Customer
Satisfaction and Customer Retention
Customer Satisfaction leads to Customer Value
‡ Customer Satisfaction has a great co-relation with customer lifetime
value.
A satisfied customer:
‡ adds to his current value, but more importantly it·s the lifetime value
which the organization will gain.
‡ will go for repeat purchase more often.
‡ will give you valuable references.

Customer Life Cycle Model

Dimensions of Loyalty
‡Rarely reassess purchase decision
Emotive loyalist ‡Strongly feel that chosen brand is
the best
‡infrequently reassess purchase decision
Loyalist Passive loyalist ‡Uninvolved; don¶t consider change or,
feel it doesn¶t worth effort.
‡Frequently reassess purchase decision
Deliberative loyalist ‡Reaffirm chosen brand through rational
criteria
Customer basic
behavior
Lifestyle Churner ‡Reassess purchase decisions
because of change in needs
‡Frequently reassess purchase
Deliberative Churner decisions
Churner ‡Choose new brand through rational
criteria
‡Actively dissatisfied
Dissatisfied Churner ‡May be prompted to reevaluate
because of specific experience

Emotive loyalist
‡ Emotive customers are the most loyal. Feeling strongly
that their current purchases are right for them and that
their chosen product is the best,
‡ they rarely reassess purchasing decisions.
‡ These feelings can reflect a product·s long record of
good History, but they are often fostered by intangible
factors.
‡ Research suggests that emotive customers generally
spend more than those who deliberate over purchases,
and churn at a much lower rate

Passive Loyalist
‡ Inertial customers, like emotive ones, rarely reassess
their purchases, but their inaction results from high
switching costs or a lack of involvement with
products.
‡ Although these customers aren·t intending to spend
more or less than they currently do, influencing
them, benefits as much opportunity as influencing
emotive customers, largely by making them less
likely to churn in response to shocks such as price
hikes, isolated cases of bad service, and lifestyle
changes.

Deliberators
‡ Deliberators; both those who maintain their
spending and those who spend less³are on
average the largest group.
‡ The rewards from influencing deliberators can be
twice as high as the rewards from influencing
emotive and inertial customers.
‡ Deliberators frequently reassess their purchases by
criteria such as a product·s price and performance
and the ease of doing business with a company.

Types of Churn
‡ Voluntary Churn where customers choose to switch carriers or
terminate their use of wireless services
‡ Involuntary Churn where service is deactivated Involuntarily,
due to missed payments, bad debts, etc.

statistics about customers
‡ It can cost five times more to buy new customers than retain existing
Ones
‡ Reducing customer defections can boost profits by 25-85%
Institute of Customer Service:
‡ 68% of customers are prepared to pay 20% more for good service
(2006 National Complaints Culture Survey)
BSI Survey (1,715 respondents):
‡ Only 2% of those surveyed have not had an adverse experience from
customer service
‡ 76% have moved to a competitor because of poor customer service

Churn or interest in churn due to Dissatisfaction
with operator (%)

Churner¶s top reasons for Dissatisfaction (%)

Customer retention drivers ± impact in %

Complaints leading to churn
‡ Incomplete information shared during Sales Call and wrong
commitment by sales person
‡ Billing - Wrong Plan, Bill Not explained / Not able to be explained,
Wrong bill, wrong plan, Bill not delivered
‡ Network coverage issues
‡ Call barring due to non payment
‡ Calls from Credit for payment, company concerned with Collection
and not service
‡ Long pending request, issues unresolved
‡ Wrong SLA stated
‡ Systems not working
‡ SERVICE Executives· incapable to understand and explain

Complaints leading to
churn
‡ No assurance to Service continuity
‡ Difference in communication from back office and
front line.
‡ No permanent solution only temporary solution
provided

Are these previously mentioned
only reasons for Churn?
‡ These are physical unsatisfied needs prompting Churn playing 51% of the actual reason to Churn.
‡ The remaining 49% is due to:
‡ ´Service fast and bestµ when Customer shouts attitude
‡ The way the customer is heard, understood and
‡ Is his complain being taken seriously ² Actions of SERVICE EXECUTIVES
‡ Inappropriate answers, Rude behavior and inadequate system knowledge
‡ No viewing of Customer Category and History prior to handling customer query to decide on the intensity
of the problem and the required intensity to service
‡ Actual problem not captured / understood by SERVICE EXECUTIVES and temporary solution provided.
‡ Can I be assured that my problem will be resolved
‡ Unknown System response and System error ²Communication in times of System failure

8 Elements to reduce Churn

How to handle?
Know your loyalty stages and ensure your customers are moving through them.
‡ Customers become loyal to a company and its products and service one step at a
time. By
‡ understanding the customer·s current loyalty stage, you can better etermine
what·s necessary to
‡ move that customer to the next level of loyalty. Our Profit Generator Œ Loyalty
System comprises six stages:
‡ Suspect
‡ Prospect
‡ First time customer
‡ Repeat customer
‡ Client
‡ Advocate.

How to handle?
Serve first. Sell second.
‡ Today·s customers are smarter, better informed and
more intolerant of ¶being sold· than ever before.
‡ They expect doing business with you to be as
hassle-free and gratifying for them as possible.
When
‡ they experience good service elsewhere, they bring
an if-they-can-do-it-why-can·t²you? Attitude.

How to handle?
Aggressively seek out customer complaints.
‡ For most companies, only 10% of complaints get articulated by
customers.
‡ The other 90% are unarticulated and manifest themselves in
many negative ways:
o unpaid invoices
o lack of courtesy to your front line service reps
o negative word of mouth.
‡ Make it easy for customers to complain, and treat complaints
seriously.

How to handle?
Get and stay responsive.
Research shows that responsiveness is closely tied to a
customer·s perception of good service.

How to handle?
Know your customer·s definition of value.
The loyalty password is ´valueµ.
‡ Knowing how your customers experience value &
then delivering on those terms is critical to building
strong customer loyalty.
‡ But knowing our customer·s true definition of value is
not easy because your customers· value definitions
are constantly changing.

How to handle?
Win back lost customers.
‡ Research shows that a business is twice as likely to
successfully sell to a lost customer as to a brand
new prospect. Yet, winning back lost customers is
frequently the most overlooked source for
incremental revenue in many firms.

How to handle?
Use multiple channels to serve the same customers
well.
‡ Research suggests customers who engage with a
firm through multiple channels exhibit deeper
loyalty than single channel customers.

6 Customer Interface Standards
Check Mobinil·s 6 standards for interfacing the customer, on the Intranet,
1) Customer feels valued from the outset and is able to feel confident that
the agent will help him/her.
2) Agent must demonstrate interest and a desire to find the best solution for
the customer.
3) Customer was involved in the decision making process and offered a
solution that was tailored to the customers' needs and explains the
reason behind it.
4) Customer feels confident that the right solution has been found for
him/her and makes a commitment.
5) The customer is clear on what will happen next and by whom.
6) Customer feels engaged and valued by the agent throughout the
transaction.

Thank you