Creating Customers for Life

Creating Customers for Life
Creating Customers for Life
In today’s world where your brands are
quickly becoming the most important
assets on your financial statements, the
connection between marketing and brand
equity has become well understood.
What remain elusive, however, are the
exact measurements; the ROI and the
effects of marketing efforts and levers on
profitability.

Consumer loyalty, satisfaction, and value
have all had their turn as the key to your
consumer profitability, but have proven
to be poor indicators of future consumer
behavior. So, what measures should you
gauge for optimal brand performance,
for immediate sales return and future
brand strength?
Creating Customers for Life
Creating Customers for Life
The Problem with Customer Satisfaction and Loyalty
For three decades, the marketing research industry has revolved around the notion that satisfaction was necessary and sufficient
for profitable customer relationships. As a result, brands have gotten pretty good at satisfying customers. The promised
financial payoff, however, has not followed.

Data from the auto industry, for instance, shows that greater than 90% of new car buyers are very satisfied, but less than 40%
of them purchase their next vehicle from the same brand. Measuring satisfaction without measuring customers’ relationships
and how they got that way leaves employees chasing scores that most often do not predict future behavior.

Some seemingly satisfied and loyal customers remain simply because of convenience, or lack of a more appealing alternative,
while others have deep enduring relationships with your brand. Traditional measures never truly discriminate between these
groups of customers who have very different brand expectations and need very different focus from your company and brands.


Relationship Investment Model™ (RIM)
We, at TRGiSKY, understand this concept. Our Relationship Investment Model™ (RIM) steps into the gap and defines meaningful
connections between corporate actions, customers’ relationships with your brands, and profitable customer behaviors.

RIM guides you, the brand owners, through the sources and benefits of enduring customer relationships. The model is based
on an understanding of the processes and connections that transform performance satisfaction into long-term investment in
the relationship.




Case Study in Relationship Investment™
                                                               TRGiSKY used its proprietary Relationship Investment Model™
                                                               (RIM) to establish levels of customer investment at nationwide
                                                               dealerships of a leading automotive brand and overlaid this
                                                               fundamental ranking with important customer purchasing
                                                               and loyalty behaviors.

                                                               Key Findings:
                                                                 Invested customers each spend over $50 more than
                                                                 uninvested customers annually, even during their warranty
                                                                 period; when out-of-warranty, the difference jumps to
                                                                 $375 per customer.

                                                                  Dealerships with the most invested customers experienced
                                                                  half the attrition of those with the least invested customers
                                                                  by their third service visit.


                  For the complete report, please visit our website at www.trgisky.com
                            or contact one of our market research specialists.
Creating Customers for Life

Relationship Investment™
The Theory Behind

Customers’ relationships with a brand begin with satisfaction,
but that is only the start. Relationship Investment™ defines the       Quality
strength and nature of customer relationships and implies a          Reliability
durable motivation to act in profitable ways towards a brand,                                 Satisfaction
                                                                      Function
now, and in the future.
                                                                        Pricing
Satisfied customers believe a brand is competent and reliable,
which causes them to develop functional connections to that
brand. However, customers with strictly functional connections
                                                                                                                            Functional
act capriciously and have transitory brand relationships. They                                 Reliability
                                                                                                                            Connection
are also vulnerable to minor brand failures and to competitors’
actions. That is, they are less forgiving of brand failures and
are open to acting upon competitive offers.




It is when a brand demonstrates that it has the customer’s best
interests at heart that satisfied customers begin to feel that the
                                                                          Service
brand cares about them. When this happens, a level of trust
                                                                        Greeting                   Brand
and engagement with the brand ensues, the brand establishes                                       ‘Cares’
                                                                     Dependable
fidelity in the mind of the customer and a personal connection
                                                                          Timely
develops. Thus, only if a brand demonstrates reliability and
fidelity will a customer trust the brand, and trust is the secret                                                             Personal
to transforming satisfied customer experiences into meaningful                                    Fidelity
                                                                                                                             Connection
relationships.




Relationship Investment™ works where other measures and
methods fail because it captures, not only the immediate result
of customer experiences, but also their impact on relationships.
Fully invested customers have functional connections with the
brand, based on fulfilling their practical needs, and personal
connections, which indicate reciprocal loyalty and emotional                        Trust
investment.                                                                    Reliability
                                                                                                        Relationship Investment
Crucially, those customers who are invested in their brand                         Fidelity
                                                                                                             Functional Connection
relationship behave in different ways than those who are merely
satisfied; they are invested in keeping the relationship going                                                Personal Connection
long term, notice competitors less, check out their favored
brands products and services more often, spend more per
transaction and yield a greater share of wallet to their favored
brand. Thus they give greater financial payoffs to your brands.
Creating Customers for Life

Relationship Investment™
How it Works
Relationship Investment Model is an algorithmic model innovated by iSKY that is used to predict future customer
behavior. The model takes in market data, defines relationship investment in the brand and determines the drivers of desirable
consumer behavior.


                                                The 7P’s are indentified and
                                                   consumer behavior is
                                                         measured               RIM captures customer
                                                                                   attachments and
                                                                               psychological constructs
                                                                               defining the Relationship      RIM then determines the
                                                                                      Investment             drivers of Positive Behavior
                                                                                                            and recommends actionable
                                                                                                                 steps to strengthen
                                                                                                                customer relationship




There are 4 steps in the process that ends with actionable recommendations for sustained growth in revenue and brand
equity.


Step    1
Identify the 7 P’s - these may include hundreds of parameters and variables.

                                             Friendly/Helpful      B=.017


                                             Knowledgeable         B=.455

                                                Give Sound                             In-Store
                                                                   B=.072
                                                  Advice                              Appearance

                                            Keep me informed       B=.368
                                             about safety and
                                                 recalls

                                               Easy to find
                                              shopping cart        B=.062                          B=.373               Personal
                                                or basket
                        Television Ads                                                                                                                     Store Brand Purchase &
                                                  Clean            B=.286
                                                                                                                                                                Consideration
                                                                                       Personnel
  Possible RIM         Newspaper Ads           Modern and
                                                                   B=.144
                                                inviting                                                                                    Relationship
  Drivers "7Ps"                                                                                    B=.162                                   Strength to        Pay More
                                               Well laid out
                           Circulars          and organized        B=.227                                                                     Retailer
  People
  Process                                    Efficient Checkout    B=.339
                          Radio Ads                                                   Check-Out
  Product                                                                                                                                                  Encourage Friends
  Promotion                                 Accurately Charged     B=.446
                        Magazine Ads
  Price                                                                                            B=.193             Functional
  Packaging                                   Favorite Canned
                                                                   B=.114
                                                   Items                             Favorite Items
  Placement          NIn-Store Promotions                                               Stocked
                                            Favorite Boxed Items   B=.235
                                                                                                   B=.076
                         Internet Ads
                                              Locally Grown
                                                                   B=.073
                                                 Produce
                                                                                                   B=.076
                                             Organic Products      B=.092


                                              Blood Pressure                           In-Store
                                                                   B=.083            Convenience
                                                 Machine

                                               ATM Machine         B=.143


                                                 CoinStar          B=.072
Creating Customers for Life

Step    2
Measure the customer, including buying behavior, spend and general brand interactions.


                             Customer A spent $ X on BRAND in June 2009.
                                                                                                           Telemarketing
            Surveys          Customer B blamed BRAND packaging for choosing a competitor’s                   Campaigns
                             product in a recent survey.
                             Customer C makes a BRAND purchase on average every 3 months.
              Client         Customer D purchased 4 BRAND SKUs in the month before the 2008
                             Thanksgiving Sale promotion and 2 in the month following it.                    POS
              CRM
                                                                                                             Data
                             Customer E has a dedicated link to BRAND page on Facebook.




Step    3
Capture Customer Motive: Why do consumers buy the brands they do? What is the correlations between what consumers
think and what they actually do? What, if any, are the disconnects between opinion and behavior?

Investment considerations
I am a committed BRAND customer
I feel a sense of loyalty towards BRAND
BRAND is my favorite brand

Personal Connection considerations                                What Customer                     What Customer
BRAND is very responsive to my needs
                                                                  THINKS                            DOES
BRAND will do anything to make me happy                             •   Functional                 •   Spends
I feel a sense of personal relationship with BRAND                  •   Personal                   •   Gives wallet share
                                                                    •   Direct                     •   Becomes loyal
Functional Connection considerations                                •   Indirect                   •   Recommends
I know what to expect from BRAND
I am satisfied with my BRAND experience
I buy BRAND because I get a good value for my money




Step    4
Determining the link between customer and brand: RIM determines statistically significant links between historical
outcomes (customer spend, frequency of store visit, survey response, etc.) and brand association. It yields a model of
the drivers of strong invested relationships that allows brand managers to identify where to place resources and for
what potential gain.

Brand owners want to know how much of their customers’ RI is caused by parameters included in the 7 Ps: Product Quality |
Price Point | Advertising | Brand Perception | ‘Hand Raising’ Activity (social media, loyalty clubs, etc.) | Channel | Other. These
represent the marketing and operational levers available to the brand owners. Brand owners can then target their efforts and
resources towards initiatives that directly impact RI.
Creating Customers for Life

RIM is Highly Customizable and Universal

RIM takes a holistic point of view that includes both the functional (i.e., sales experience, interaction with customer service,
product durability, etc) and the personal (i.e., I trust the brand, I feel good using the brand, etc). While the concept that
relationships matter is not new, RIM takes general theory and pinpoints the component building blocks of deeply invested
relationships, tying these to practical business recommendations and strategies. The results encompass the entire customer
experience, empowering different segments of your organization to make better strategic and tactical decisions.

RIM also helps with forecasting models to support improvement initiatives by giving insight at the granular level, paving the
way to fully invested customers.


Customer Loyalty Redefined

Fully invested customers are loyal by any measure. They spend more, engage more often, and are virtually immune to other
brands’ competitive advances. They overcome obstacles that deter customers who are simply satisfied or merely intend to be
l o ya l . F u l l y i nvested c u sto m e rs a re p ro f i ta b l e a n d m a i nta i n a p e rs o n a l i nte rest i n a b ra n d ’s s u c c es s .

For companies seeking to acquire and nurture customers that will be loyal and profitable over the long term, a new approach
that considers their relationship investment in their brand(s), and the operational and financial drivers that affect this connection,
is a necessary first step to building sustainable brand value.


About TRGiSKY
TRGiSKY is a market research, analytics and consulting firm that specializes in providing customer behavior and market insight.
TRGiSKY has taken a leadership position in the development of innovative solutions for the management of customer relationships;
from the first interactive customer follow-up program to the leading-edge Relationship Investment Model™, the company has
been at the forefront of market research for over 20 years. TRGiSKY is a wholly owned subsidiary of The Resource Group (TRG),
a global provider of business process outsourcing and customer management solutions. TRG has over 50 locations in five
continents and employs over 5,000 professionals worldwide.


Contact Us
To learn more about our market research solutions or the Relationship Investment Model™
please contact one of our market research experts.

Steve Newman
Executive Vice President & General Manager
+1 240 377 7983

Suite 350
14401 Sweitzer Lane
Laurel, MD 20707
www.trgisky.com
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