industrial marketing

BCO 316 Industrial Marketing

Class 4: Dealing with B2B Customers complaints

Prof. Dessy Todorova

Spring 19/20

Lecture Objectives

• How to measure customer loyalty. • Results of study on how companies deal with

customer complaints. • Learn about the process of a Customer-at-Risk

Strategy

How Do You Measure Customer Loyalty?

• Recency of purchase

• Frequency of purchase

• Amount of purchase

• Referrals

A Satisfied Customer is Loyal

100%

40%

L o y a lt y

Satisfaction

Extremely Dissatisfied

Slightly Dissatisfied

Extremely Satisfied

Zone of Defection

Zone of Indifference

Terrorist

Apostle

Zone of Affection

80%

In a Recent Study of 200 Companies

• 80% have a formal system for contacting customers on a regular basis

• 11% know the lifetime value of their customers

• 10% have an early warning system

• 90% claimed to have a system in place to determine why a customer left

Customer Has a Problem: 4 Possible Outcomes

Customer complains and is satisfied with the response

Customer complains and is mollified, but not completely satisfied with the response

Customer complains and is not satisfied with the response

Customer does not complain and remains dissatisfied

Reasons People Do Not Complain

It is not worth the trouble

They do not know where or how to complain

They do not believe the company will do anything

Who They Complain To • 80% complain to sales representatives

• 75% are satisfied

• 25% are not satisfied

• Of those dissatisfied • one in five complain to middle management

• of these, 80% are satisfied

• Of the 20% still dissatisfied, 50% will complain to top management

Complaining Outcomes

• Retaliation • customer takes deliberate action designed to damage the marketer or hurt future business

• High = physically damaging or going out of one’s way to communicate negative info to other customers

• Medium = creates minor inconveniences and only tells a few people about his/her problem

• Low = no retaliation (other than bad feelings)

The Product’s Role in Complaints

• Small-ticket Items • 96% of those with a problem do not complain

• 63% do NOT buy again

• Large-ticket Items • 27% of those with a problem do not complain

• 41% do NOT buy again

Impact of Complaint Handling

Market

Action

Outcome Behavior Satisfaction Repurchase Recommend

No

Problem

88% 67%

Problem 61% 43%

Complain Satisfied 90% 64%

Mollified 62% 45%

Dissatisfied 34% 20%

Do Not

Complain

57% 41%

Customers at Risk Formula

Overall % Experiencing a Problem

X

% Specific Problem Frequency (delivery, service, quality)

X

% Customers Not Likely to Repurchase

=

% of Customers at Risk

Customers At Risk Example

Problem

Experienced

(Total = 45%)

Problem

Frequency

Will Not

Repurchase

Might Not

Repurchase

Minimum

Customers Lost

Maximum

Customers Lost

Missed

delivery dates

27% 10.5% 52.6% 1.3% 6.4%

Product not

available when

promised

23% 0.0% 7.7% 0.0% 0.8%

Missed

commitments/

follow-through

21% 30.0% 70.0% 2.8% 6.6%

Product not

fixed the first

time

20% 22.2% 66.7% 2.0% 6.0%

Inadequate

post-sale

interaction

19% 10.0% 50.0% 0.9% 4.3%

Process of a Customer-at-Risk Strategy

• Remember that getting customers to complain without solving the problems will just lose you more customers.

• Step One: Contact the customer after the sale

• Don’t just rely on those who complain

• Thank the customer & then ask about any problems experienced

• Then ask if they will/will not purchase again or offer a referral

Process of a Customer-at-Risk Strategy

• Step Two: Quantify those at risk

• Step Three: Concentrate resources on correcting those problems with the highest probabilities of defectors.

• Step Four: Let the customers know what you have done to correct the problem(s)