Customer loyalty case studies and industry-specific strategies

Table of contents:
Understanding customer loyalty
How to build customer loyalty
Measuring customer loyalty
Customer loyalty case studies and industry-specific strategies
Customer retention: Long-term strategy
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Customer satisfaction and loyalty are unique challenges for each business, and businesses in each vertical industry must be creative in devising strategies to attract and retain satisfied customers. These case studies illustrate the customer

loyalty issues companies must confront, and offer real-world solutions for keeping customers loyal and doing an analysis of loyalty programs' success. Find tips in these case studies on building successful customer satisfaction programs and determining customer loyalty.

Customer loyalty case studies in the travel and retail industries
JetBlue Airways acted quickly to try to salvage its reputation for customer service in the wake of a Valentine's Day 2007 storm that left its planes stranded on icy runways and its customers fuming. The company's founder and CEO, David Neeleman, made a vow to customers that this wouldn't happen again, outlining a "customer's bill of rights" in a video posted on JetBlue's Web site. Under the customer bill of rights, JetBlue pledged to compensate customers based on the length of time their flights are delayed with vouchers ranging from $25 up to the full price of the ticket. The fiasco did take its toll on the low-cost airline, which is well-known for its customer service. JetBlue has received praise from some CRM analysts for its approach to customer service. It has also earned CRM accolades for its early use of at-home agents, allowing service representatives to take reservations at home. JetBlue's cache of customer service served it well during the storm.

The Bon-Ton Stores Inc., a York, Pa.-based department store chain, hopes to transition to a customer-centric organization, and it's the marketing department that's leading the charge. Bon-Ton deployed predictive analytics software from Chicago-based SPSS Inc. to analyze and segment its customers. Bon-Ton began its efforts measuring its media mix, determining where media spend is making the greatest difference -- be it radio, television or more direct efforts. Bon-Ton's journey toward becoming a customer-centric organization began with laying out a strategic agenda to the CEO on how and why the company needs to understand its customer base at a local level. Once management was on board, Bon-Ton hired a director of research and analytics.

KarmaLoop, an online seller of urban street wear, has found a way to save on its marketing expenses by letting customers do the work. The company counts 750,000 unique visitors a year to its Web site and has just one paid marketer on staff. Yet it has established itself as a leader in urban clothing and the top online marketplace for young adults seeking unique apparel. The Boston-based company relies on its customers to market the site and the business. KarmaLoop was able to create an active and loyal customer base by railing against the large and trendy clothing stores found in malls. 60% of the traffic to KarmaLoop's corporate Web site is direct load -- people type "karmaloop.com" directly into the address bar on their browser. That's thanks to a highly successful -- and unusual -- rep program the company has established. KarmaLoop encourages its customers to become sales reps for the company.

Dallas-based CompUSA Inc., with more than 240 retail stores, turned to outside help in getting its online customer review program up and running. CompUSA launched an application from Bazaarvoice, an Austin, Texas-based company. Bazaarvoice hosts the application, provides a team of readers to check the reviews to ensure they follow established guidelines, and offers actionable analysis on the content. CompUSA has seen some impressive early results. Customers who came to CompUSA after finding a review on AOL, Google, MSN and Yahoo! had a 50% higher conversion rate and spent an average of 20% more per order than the typical CompUSA visitor.

Expert Michael Lowenstein advises a Harley-Davidson dealer trying to decide between a loyalty program and discounting. "The Harley-Davidson clothing, and the logo displayed on it, can and should be viewed as free local advertising and promotion for the dealership; so, it might be useful to reframe the discount as that kind of investment," Lowenstein told the reader. "This could perhaps be further leveraged through local H.O.G. events. In regards to loyalty programs and discounting, it's rarely an either-or situation. The only thing discounting does, like any price rollback, is help commoditize the value proposition. If the dealer "brand" connotes enough value in everything that's offered to a customer, it should not be necessary to reduce prices to make a sale."

Customer loyalty case studies in telecommunications and finance
At DriveSavers Data Recovery Inc., the Novato, Calif.-based data recovery company, they've done away with interactive voice response (IVR), automated answering systems and lengthy phone trees. At DriveSavers, the endless menu of touch-tone options is not a factor because there isn't one. Customers generally call with some sort of emergency -- many are looking for help recovering data after a fire. That means a call must be answered quickly and by a live person. There are about 80 employees at DriveSavers, and everyone, including the CEO himself, answers the phone. The company has a filtering system where incoming calls first reach a group of about 25 inbound marketers. If those calls aren't answered after a ring or two, they're forwarded to another group of about 20 who take calls but also have other responsibilities, and then they go on to the engineers and then to management.

EarthLink's support staff works magic by serving its 5 million customers consistently. To promote its customer strategy internally, the ISP recently created the "I am EarthLink" campaign to empower all employees to do whatever it takes to help the customer. All employees in the support organization, whether customer-facing or not, must listen to calls to understand the customer point of view. Offering a variety of support channels -- phone, email, Internet chat and Web self service -- is an important part of EarthLink's customer strategy. Another key to a smooth running support operation is backing from top management.

For Sprint, the Reston, Va.-based telecommunications company, text chat has already proven its value, and the company is planning to expand chat on its Web store. Currently, Sprint uses both proactive and reactive chat. Visitors to the company Web site can hit the "click to chat" button when they need help, and predefined business rules can trigger a session. Chat is paying off for Sprint. Its Web store grew from 3% of total sales to 4% between 2004 and 2005, and the company attributes 15% of that growth to chat. According to RightNow Technologies CEO Greg Gianforte, the real uptake in chat has come over the past year because of a growing trend -- customers are increasingly taking control of relationships.

Wachovia Corp. already scores at the top of the annual Customer Satisfaction Index compiled by the University of Michigan, but it is now embarking on a new initiative to define and promote customer equity. Back in 1999, Wachovia began placing an emphasis on customer satisfaction, and the focus on customer equity has evolved from that. In fact, customer loyalty is one of the company's top seven priorities over the next five years, according to a spokesperson. It's long been a priority at Wachovia, and CEO Ken Thompson continues to push for it.

Customer loyalty case studies in the healthcare industry
Humana Military, a provider of healthcare for active-duty and retired military personnel and their families, must be able to link customer satisfaction to revenue. If they get negative ratings from policy holders, the company loses government funding. In July 2004, Humana launched AnswerCenter, a natural language search tool from Minneapolis-based Spanlink Communications Inc. that provides results in a question-and-answer format rather than a list of keywords. Also, agents in the company's call center use the tool as their own knowledge base, providing customers with a consistent set of answers. So far, the company has kept its positive customer ratings with the government and expects self-service usage to expand.

Blue Cross of Northeastern Pennsylvania replaced a touch-tone response system with a speech-enabled interactive voice response (IVR) application from Aspect Software at the end of 2003. The speech-enabled IVR system handles about 20% of all calls into the insurer's contact center. That shift has delivered efficiency gains and greatly expanded the customer base's access to service. Customers are more satisfied because they can quickly find information via the speech-enabled IVR system, and because call center representatives have more time to address customers' complex questions and issues. Blue Cross of Northeastern Pennsylvania is also in the process of using its IVR application to enhance employee performance by implementing speech-enabled IVR post-call surveys.