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Name:Nandini Kumari Roll No: PGSF1922

Concept of value creation

A report on study and understanding on case of complaining customers and creating long term loyal customers which was covered on 22 nd July, 2019.

Creating Long Term Loyal Customers

When good service is experienced by customers, they are much more likely to do business with the company again. The first rule is to stay in touch. Let your customers know they can count on the company to solve their problems even after the sale is made.

The consumers of today expect companies to listen and respond to them. Consumers are better

educated and better informed than ever, and they have the tools to verify companies’ claims and

seek out superior value alternatives.

To improve loyalty and retention, following points should be taken into consideration:

1.

Interact closely with customers

2.

Develop loyalty programs

3.

Reduce the rate of defection

4.

Increase longevity

5.

Enhance share of wallet

6.

Terminate low-profit customers

7.

Focus more effort on high-profit customers

Case of the Complaining Customer- Presto Cleaners

Presto has been Mr Shelton’s main laundry store because of its opening and closing hours. One day Presto decided to get a computerized system and things all went downhill for Mr Shelton when his laundry went missing. He never had a problem like this before so he was very frustrated. Mr

Shelton has tried everything to get through to the complaint officer but there was no answer.

Eventually, when he did get through to Mr Hoffner he was waiting for 2 weeks for a claim form. Presto would do nothing for Mr Shelton only tell him his clothes would come up which they did in the end. Mr. Shelton writes an angry letter to the president of the company narrating the complete incident.

Mr. Sheltons value at Presto Cleaners

Average $20 and $30 of dry cleaning every week.

Over past year, done more than $1000 worth of business

Convenience of location, extra early and late hours of operations

Helpfulness of staff made up for cost

Customer Lifetime value-

Basis

Year 1998(approx.)

Year 1999(approx

)

Purchases a year

$1000

$1300

No. of times visit at store/

52 times (365/7)

52 times

year

Purchases a week

$19.24 (1000/52)

$25 (20+30=50/2)

Time Horizon for estimating CLV- 5 years Average of year 1988 & 1989- (1000+1300)/2= $1150 CLV- 1150*5= $5,750

If Mr. Shelton continues operating with Presto Cleaners, he can give company business

amounting to $5,750 (approx.) in next five years.

Necessary Action

The customer expectations are the standard by which the services are judged. Mr. Shelton’s disappointment stems from bad customer service rather than bad technology. Mr. Sewickley should be prepared to “buy the problem”, spend the $235, the cost of the new shirts and the dry cleaning order. In addition, should call Mr. Shelton and apologize for his experience and send a gift voucher for next free dry cleaning service from Presto Cleaners.

Mr. Sewickley should replace Paul Hoffner. His response and consequently Presto Cleaner’s to the situation appears to be oriented toward driving customers away, not toward building a business.

Additionally, Mr. Sewickley should use this complaint and the company’s response as a learning opportunity for the company. The organization must establish a clear model of customer relations and service standards at the top.

Conclusion

The company must improve the attitudes of its staff by creating an environment that promotes the

best in people. There are three rules of thumb for creating an effective customer service focus in

an organization: understand and respond to customers’ expectations, do whatever it takes to be

perceived as “easy to do business with,” and be good at problem solving.