贝恩战略分析方法市场营销customerloyalty019

1、1cu7030298imbauthor: jennifer mcenroe tarr bccustomer loyaltycontributors: kara gruver, ruma sanyalmarch 1998copyright 1998 bain & company, inc. reviewer: rob markeybc2loyaltycustomer loyaltyagenda what is loyalty?evolution of the loyalty practiceloyalty economicshow bain helps clients maximize

2、the value of their customer baseexampleloyalty toolsbc3loyaltywhat is loyalty?loyalty is a perspective on business strategy which emphasizes the delivery of superior value to the best customers and employees. since their loyalty is key to profit and growth, their acquisition, defection, share of rel

3、evant wallet provide focal points for measurement, learning and improvement.customer loyaltybc4loyaltycustomer loyaltybain & company.is responsible for virtually all the economic research, financial analysis and consulting in the field of customer retention and recoverycouncil on financial compe

4、titionloyalty is a bain & company innovationbc5loyaltycustomer loyaltyagenda what is loyalty?evolution of the loyalty practiceloyalty economicshow bain helps clients maximize the value of their customer baseexampleloyalty toolsbc6loyaltyevolution of the loyalty practicecustomer retentioncustomer

5、 loyaltykeeping customers: goodlosing customers: badcustomers who buy more: goodsome customers will never buy moreros/rms doesnt work in servicesquantification of retention economicscredit/casualty losseslow spenders or non-borrowersshare of wallet economicsmaryland nationalmbnacommercialbaxter ivd

6、& iv systemsamerican expressstate farmbankinterfirst commercefundamental insights:what led to the insights:some examples:over the years, the training on loyalty has evolved from “dont lose any customers” to “how do i maximize the value of my customer base”.early in evolution:current view:custome

7、r loyaltybc7loyaltycustomer loyaltyretention vs. loyaltywhat is the difference between retention and loyalty?loyalty is an approach to business strategy that emphasizes the retaining and growing of profitable customer segments. it is particularly powerful in clients who are in low fixed asset busine

8、sses (i.e., service businesses)retention is a tool we use in diagnosing and measuring a clients success in maximizing the value of their customer bases. other tools include share of wallet and customer segmentation.retention is often confused with loyalty because the early insights of the loyalty pr

9、actice were around the retention of customers. however, using retention rate alone to assess loyalty may mislead clients and not maximize value. remember, not all customers create value. we want to help clients retain valuable customers.bc8loyaltyprofitability drivers - ros/rms (profit vs. share)bee

10、r industrysoft drinks industry anheuser-millerschlitzpabstolympiaoperating income10%9876543210(percent of sales)relative market share3.0 x2.01.00.70.40.30.20.10.050.5buschcottdr. pepperr.c.7-uppepsicokerelative market share3x210.70.50.40.30.20.1.050operating profit22%2018161412108642(percent of sale

11、s)we start with the empirically based belief that in many industries, market share is the key driver of profitability.customer loyaltybc9loyaltyprofitability drivers - ros/rms(profitability vs. portfolio size)r = .022* claims and expenses as a percent of premium incomesource: bests, property & c

12、asualty premium rankingsinsurance industry example0%50%100%150%200%0%50%100%150%200%amicausaa casualtynationwide mutualfarmers exchangeprudential propertyaetna casualtyliberty mutualallstatestate farmprofitability (combined ratio*)rms (net premiums written in 1989)customer loyaltyhowever, many servi

13、ce industries (or other low fixed cost businesses) show no relationship between rms and profitability.bc10loyaltyprofitability drivers(profitability vs. retention)for these industries, retention is a better driver of profitability. companies with higher retention utilize their customer assets more e

14、ffectively.r = .82*claims and expenses as a percent of premium incomesource: bests, estimated retention ratesinsurance industry120%100%80%75%85%95%prudential propertyliberty mutualaetna casualtyfarmers exchangeallstatenationwide mutualstate farmusaa casualtyamicaprofitability (combined ratio*)custom

15、er retention ratecustomer loyaltybc11loyaltyprofitability drivers(profitability vs. retention)midwestgothamchesapeakelibertygreat lakes0%1%2%3%4%70%80%90%100%profitability(pre-tax roa, 5 year average)retention rate omnicomwpp*fc&bgreyinterpublicleo burnett0%2%4%6%8%10%12%14%16%18%profitability90

16、%92%94%96%98%100%retention ratecredit card industry (disguised)advertising industrycustomer loyaltybc12loyaltysource: bain survey, bain & companycustomer satisfaction was the traditional measure of quality in service businesses. but there is little correlation between customer satisfaction indic

17、es and financial measures.012345020406080customer satisfaction indicesrevenue100revenue(40)(30)(20)(10)00204060801001020304050revenue change (%)customer satisfaction indiciesrevenue growth04080120160200020406080100customer satisfaction indicesprofit240profitcustomer satisfaction profitabilitycustome

18、r loyaltybc13loyaltycustomer loyaltyagenda what is loyalty?evolution of the loyalty practiceloyalty economicshow bain helps clients maximize the value of their customer baseexampleloyalty toolsbc14loyaltycustomer valuethe first step in viewing customers as long term assets is calculating lifetime cu

19、stomer value.$15,000$15single purchaseretained for 10 yearsno matter how valuable i was telling them a customer was, our people needed to have that magnitude in their mental balance sheet.phil bressler, dominos pizzacustomer loyaltybc15loyaltycustomer profit patterncustomers are costly to acquire. t

20、he longer a customer stays with a company, the more they recover the original acquisition cost and earn additional profit streams.typical evolution of profit by customer01234567(1)01234567company profityearacquisitionvolumecost improvementreferralsprice premiumacquisition costscustomer loyaltymethod

21、ology bc16loyaltycustomer profit pattern(credit card example)50%67%75%80%88%90%retention rate:companies with high customer turnover will continually be replacing profitable, mature customer relationships with unprofitable new ones.012345678910(51)30424449555860626567(60)(40)(20)020406080annual profi

22、tsyearcustomer loyaltybc17loyaltysource: the loyalty effect, bain & company, inc.impact of 5% retention rate increase on customer npvdepending on the industry, a 5% increase in customer loyalty can increase profitability by 40-95%.advertisingagencylife insurancebank branchdepositsauto/homeinsura

23、ncepublishingauto servicecredit cardind.distributionindustriallaundryindustrialbrokerageofficebuildingmanagement95%90%85%85%84%81%75%50%45%45%40%0%20%40%60%80%100%increase in customer net present valuecustomer loyaltybc18loyaltyloyalty as a growth driver012345678910$0mm$20mm$40mm$60mm$80mm$100mm$120

24、mm$140mm$160mmyearpretax net income (millions of dollars)90% retention rate 95% retention rateimproved customer retention greatly accelerates growth.customer loyaltybc19loyaltysource: bain loyalty practiceloyalty leaders growth vs. industryloyalty leaderindustrycompanyindustryrelative ratedeere &

25、; co.lawn equipment5%1%5xa.g. edwardsstock brokerage26%7%4xintuitfinancial software60%36%2xlexusluxury autos67%4%17xmbnabank card27%9%3xstate farminsurance8%3%3xusaafinancial services8%3%3xrevenue growth (1989-94)companies with the highest customer loyalty rates have typical growth rates 2x to 5x th

26、e industry average.customer loyaltybc20loyaltycustomer loyaltyagenda what is loyalty?evolution of the loyalty practiceloyalty economicshow bain helps clients maximize the value of their customer baseexampleloyalty toolsbc21loyaltystrategic approach to loyaltylifetime customer valuesegmentationlifecy

27、cle needsretention impactfull potentialnot all customers are equalsegments differ in value based onneedspreferencesbehaviorcapturing 100% share of relevant wallet requiresdynamic vs. static view of purchasestracking and projecting how needs evolve with lifestageattrition rate must be used to discoun

28、t expected cash flowsattrition differs by segment and lifestageretention impactcustomer behaviors are changeablevalue of customers can be increased through targeted value sharing incentivesproperly capturing customer lifetime value has four requirements.customer loyaltybc22loyaltycustomer value segm

29、entsdifferent customer segments create different levels of value for a company.best customersother customershouseholdsannual variable contributionfully-costed contribution(50%)0%50%100%150%customer loyaltybc23loyaltycustomer value segmentshousehold value:$1,118$91number of services per household: 4.

30、42.8retention:92%83%share of business:44%16%best customerother customerthese best customers tend to look quite different from the others.customer loyaltybc24loyaltystrategic approach to loyaltylifetime customer valuesegmentationlifecycle needsretention impactfull potentialnot all customers are equal

31、segments differ in value based onneedspreferencesbehaviorcapturing 100% share of relevant wallet requiresdynamic vs. static view of purchasestracking and projecting how needs evolve with lifestageattrition rate must be used to discount expected cash flowsattrition differs by segment and lifestageret

32、ention impactcustomer behaviors are changeablevalue of customers can be increased through targeted value sharing incentivesproperly capturing customer lifetime value has four requirements.customer loyaltybc25loyaltycustomer corridor(automobile example)customer entryshoppingpurchasedeliveryservicetra

33、de-inrepurchaseservice retentiontrade-inpoints where value is captureda loyalty leaders view of their customer goes beyond the initial product or service purchased to capture the total share of wallet.points of customer interactioncustomer loyaltybc26loyaltycreating a loyalty-based business system(l

34、exus example)customer targetingcustomer experienceadvertisingdealer networkdealer trainingmeasurescadillac/mercedesremove the flawsloyalty themepartner with select fewloyalty driverspercent repurchase and servicelexus developed a business system that emphasized the customer and removed the flaws cus

35、tomers experienced with competitive products.customer loyaltybc27loyaltyautomobile repurchase rates45%61%78%0%10%20%30%40%50%60%70%80%90%industryhondalexus (target)repurchase rate75-80%lexus target repurchase rates are 50% higher than the industry.customer loyaltybc28loyaltyautomobile repurchase rat

36、eslexus is approaching their goal with 68% of previous lexus owners replacing their car with a new lexus.acuraprevious vehiclenew vehicle percentagelexusmercedesbmwlincolncadillacinfinitijeepjaguarvolvosaab68342324 1-121442425171-11113543-241-31841164712-1-31185411-117112-354111-29-2253-221523-22116

37、-2-25-3-4141285 9212-21-29 2189679-10221282audilexusmercedesbmwlincolncadillacacurainfinitijaguarvolvosaabaudicustomer loyaltybc29loyalty123456789100%20%40%60%80%100%service retention (percent)age of vehicleservice retention: auto dealerlexushondafordin addition, lexus service retention is significa

38、ntly higher than competitors.customer loyaltybc30loyaltystrategic approach to loyaltylifetime customer valuesegmentationlifecycle needsretention impactfull potentialnot all customers are equalsegments differ in value based onneedspreferencesbehaviorcapturing 100% share of relevant wallet requiresdyn

39、amic vs. static view of purchasestracking and projecting how needs evolve with lifestageattrition rate must be used to discount expected cash flowsattrition differs by segment and lifestageretention impactcustomer behaviors are changeablevalue of customers can be increased through targeted value sha

40、ring incentivesproperly capturing customer lifetime value has four requirements.customer loyaltybc31loyaltycustomer lifecycle profits(insurance example)annual profits($300)($200)($100)$0$100$200$300$400$500age 18-24age 25-3412345678910yearlooking only at customer lifetime value, this insurer would c

41、onclude that both segments could be profitable.customer loyaltybc32loyaltycustomer retention rates vary widely by age segment (insurance example)35%36%37%41%45%52%61%70%85%9%13%17%23%28%36%45%58%72%100%0%20%40%60%80%100%12345678910percent of customers retained100%yearage 18-24age 25-34cumulative ret

42、ention rateshowever, the 18-24 year old segment had much higher defection rates.customer loyaltybc33loyalty(customer npv)insurance example$450($70)($100)$0$100$200$300$400$500age 18-24age 25-34net present value unless the 18-24 year old retention could be improved, they would not be a profitable seg

43、ment to target.customer loyaltybc34loyaltyroot cause analysis: why customers drop outconvenienceserviceemployeesmistakesprocessing delaysunavailability of exclusive servicespeed of service (long lines)location of branch or atmhours(inconvenient)farbad accesshomeworkdrive- thruparking walk throughcha

44、rges and feesfeesfinestoo highnot reversedinterest ratesversus the competitionminimum balanceunfriendlyproblem- solvingdont know metakes too longknowledge and demeanorunprofessionalunknowledgeablepolicy not waived in certain circumstancesconcerns about check coveragespecial treatmentsafe deposit box

45、esdirect depositpricedepositor root causes of defectionroot cause is typically utilized to determine causes of defection. it, too, must be analyzed on a segmented basis.customer loyaltybc35loyaltydifferent customer segments defect for different reasonsa segmented view will lead up to develop differe

46、nt strategies for best versus other customers.abcdnumber ofhouseholdssegment profitcontribution(50%)0%50%100%150%percent of totalundisclosedotherwait timelife eventconveniencerateservicesegment aoverallcustomer base0%10%20%30%40%50%60%70%80%90%100%reason for defection as percent of totalcustomer loy

47、altybc36loyaltystrategic approach to loyaltylifetime customer valuesegmentationlifecycle needsretention impactfull potentialnot all customers are equalsegments differ in value based onneedspreferencesbehaviorcapturing 100% share of relevant wallet requiresdynamic vs. static view of purchasestracking

48、 and projecting how needs evolve with lifestageattrition rate must be used to discount expected cash flowsattrition differs by segment and lifestageretention impactcustomer behaviors are changeablevalue of customers can be increased through targeted value sharing incentivesproperly capturing custome

49、r lifetime value has four requirements.customer loyaltybc37loyaltyoptimizing customer baseall other customers strategybest customer strategyidentify the most valuable customers to retain and penetratedevelop a robust value proposition to sustainably meet these customers needs better than competitors

50、find and attract more of these customersinternal candidatesexternal prospectsreduce the costs to servetransition to alternative delivery vehiclesprocess/product redesignbusiness system redesignselective automationoutsourcingpartnershipsprice products and services for profitmaximizing the value of th

51、e customer base requires prioritization of segments, and the development of tailored approaches.customer loyaltybc38loyaltyvalue proposition - right customers(bank example)at each point of contactplatformtelleratmstatementsteleservicehigher service levelsbetter pricingrethink qualifying balances for

52、 discounts, bundled productsloans and deposits and investments balancesinfrequent overdraft feescheck order feesconsolidated statementsplatform identifiersteller/atm identifiersdedicated personal bankersseparate teller linesseparate teleservice phonelinesgrace period to requalifytotal vs. deposit ba

53、lance criteriafree checksoverdraft to savings/mmaaction implications:banking example:for your target customers, you must translate their needs into an improved value proposition.customer needs:demonstrate that you know us“treat us better because we are good customers”“recognize the impact of life ev

54、ents on our needs”“do not nickel and dime me”“do these, and i will be willing to consolidate my business with you”customer loyaltybc39loyaltyvalue proposition - right customers(bank example) productservicedeliverycommunicationbundled product to include:checkingbankcardservice discountsfree checkstie

55、red savings rates cd bonus tierstotal vs. deposit-only balance qualificationcreate links with investments, annuities, etc.assign a well-trained personal banker to each customeraccess mma/savings account to cover overdraftspre-approve loansoffer financial planningoffer premium service at each point o

56、f contactseparate teleservice line with shorter wait times, higher qualityseparate teller linesemphasize targeted vs. mass forms of communicationtargeted mailingshigh value phone calls/ telemarketingsemi-annual statement on benefits of product, current usage of featuresclear, consolidated statement

57、for all accountsbank co. offered a new integrated value proposition to high value customers.customer loyaltybc40loyaltyproduct simplification - low value customers(bank example)free30 minimum to openmonthly maintenanceper check chargesbalance for no chargeatm card issuancefree automated transactions

58、basic checkinginsurance checkingpremiumchecking simple new bundle$50$50.55 over 5n/a$5.0010$50$8.990.20 over 35n/a $5.0010 $50$7.990.20 over 20 $700 $5.0010bankcardapr discount1st year feeready reserveapr discount1st year feenoyesnoyesyeswaivednoyes yeswaivednoyes yeswaivedyeswaived incentive for no

59、t using branch for transactionsno no no yes l3 products1 product: lower costslincentive to use alternative deliverylincentives for bundling other productsone standard price, fee, and balance structureconsolidate/eliminateyou also need to reduce resources serving the non-target customers. bank co. st

60、reamlined service to low value customers.customer loyaltybc41loyaltyoptimizing customer base - summary(bank example)at bank co, streamlining offer to low value customers drove near-term profitability which was used to invest in value proposition for higher value customers.high value customerslow value customers% of households20%20-40%