Trg I Sky Relationship Investment Model 2008

A systematic approach to building strong customer relationships and long-term profitability

Building Customer Relationships The iSKY Relationship Investment Model

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Table of Contents

• Introduction to iSKY

• “Very Satisfied” Dilemma

• The iSKY Relationship Investment Model

• Case studies

• What We Deliver

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About iSKY

• Founded in 1984

• Originally focused on automotive customer satisfaction measurement

• Acquired By TRG Holdings Headquartered in Washington, DC 6,000 Employees 100+ clients Global BPO

• Acquisition fueled product development, new senior management team

• iSKY Today – market research, analytics and database integration services to help clients adopt the strategic imperative of building strong customer relationships.

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The “Very Satisfied” Dilemma

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Ser

vice

Sat

isfa

ctio

n

Product Satisfaction

•Satisfaction movement victim of its own success

•Better product and service quality were achieved, BUT…

Blue dots represent different automotive manufacturers. There is little variance between them on product or service customer satisfaction levels.

Source: JD Powers

Satisfaction no longer differentiates brands

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But Most Marketing Research Does A Poor Job of Predicting Loyalty

JDP - CSI versus Customer Loyalty

Source: JD Powers

■ Individual Auto

Manufacturers (e.g. BMW, Toyota, GM)

“Ideal” relationship line if Cust sat is perfect predictor of repeat purchase

■ Individual Auto

Manufacturers (e.g. BMW, Toyota, GM)


% of customers who buy next car from same manufacturer as current vehicle

Summative measure of product and service quality satisfaction at manufacturer level

There is weak relationship between C-sat scores and repeat purchase.

Satisfaction Has Weak Link to Future Customer Behavior

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The Relationship Investment ModelProves to be a Strong Predictor of Future Behavior

So, what is it? And why is it Different?

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1. When we measure Investment in the brand relationship we capture the motive or intent behind loyal behavior (e.g. repeat purchase, share of wallet, referral). We refer to this as “attachment”.

2. The model is a complex, psychological construct rather than a measure of loyalty behaviors subject to situational factors.

3. The model captures customer experiences and brand perceptions together.

4. It is proven to predict future customer behavior.

5. The model provides the diagnostic information to affect Customer Attachment and behaviors.

Why Relationship Investment Modelis More Useful

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Commitment Is the Closest Thing We Have To A Perfect Predictor Of Future Behavior

Customer Investment Levels and Customer Loyalty

Relationship Investment Levels - a Better Predictor of Loyalty

■ Individual Auto

Manufacturers (e.g. BMW, Toyota, GM) based on Cust Sat scores

● Location based on RS scores


■ Individual Auto

Manufacturers (e.g. BMW, Toyota, GM) based on Cust Sat scores

● Location based on RS scores


Customer Investment strongly outperforms C-sat on predictive power of future customer behavior (e.g. repeat purchase)

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A Retail Case Study

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• Data from:• Transactions• CRM• Survey (e.g. share

wallet)

ProfitProfit

The Relationship Investment Model – The Conceptual Starting Point

We Measure:

Operational & Marketing Levers under Client’s Control that Influence Commitment:

• Processes• People• Product• Placement• Promotion• Price• Package

We Link:

•Findings are highly actionable because the strategic marketing framework we use assures we measure influencers of Commitment under your control.

•ROI for any suggested change is knowable because we link the specific levers that influence Commitment (e.g. marketing program, training) to customer spending behavior.

Attachment

Functional Connection

Personal Connection

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Commitment Segmentation…Retail Case StudyThe Relationship Investment Model Delivers Brand

Differentiation

Dots are individual retailers. This is based on study of 5,000 consumers capturing customer attachment for each retailer. There is a lot of variance, meaning, there is ample opportunity to differentiate on personal and functional connections.

Fully InvestedFunctionally Invested

Uninvested Personally Invested

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Does It Really Impact The Bottom Line?…Retail Case Study

Willingness To Pay More

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20

40

60

80

100

PayMore

Ind

ex

$ Spend

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20

40

60

80

100

$ Spent

Ind

ex

Uninvested Functionally Invested Personally Invested Fully Invested

Actual $$ spent

Willingness to pay more for the brand

Invested Customers Deliver Greater Profitability

We captured actual spend of 2,000 of the 5,000 customers interviewed for this retail study by re-interviewing them six months later.

Fully Invested spend 3x as much

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Does It Really Impact The Bottom Line?… Retail Case Study

Market Share

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20

40

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100

Market Share

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Number of Visits

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60

80

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Visits

Ind

ex

Uninvested Functionally Invested Personally Invested Fully Invested

Target brand's share of purchases during the time specified

Actual number of visits to the brand's store

Invested Customers Deliver Greater Profitability

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Saks RELATIONSHIP INVESTMENT Predictor Map

0.35

0.37

0.39

0.41

0.43

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0.47

0.49

0.51

0.53

0.55

60 70 80 90 100 110 120

Quick Checkout

Stands Behind Service

Friendly Employees

Attentive Service

Happy Employees

Special Shopping Experience

Organized Stores

Easy to Return Merchandise

Prices

Carries Favorite Brands

PERFORMANCE

IMPORTANCE

Variety of Merchandise

Managers Quickly Resolve Problems

Employees Easy to Find

Underperforming areas negatively impact Saks Relationship Investment Strength and Profitability.

The RIM model can answer the business question of which to address based on ROI.

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What We Do & What We Deliver

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Attachment

Functional Connection

Personal Connection

• Data from: Transactions CRM Survey (e.g. share of

wallet)

ProfitProfit

The Relationship Investment Model

We Measure:

Operational & Marketing Levers under Client’s Control that Influence RIM:

Processes People Product Placement Promotion Price Package

We Link:

• Findings are highly actionable because the strategic marketing framework we use assures we measure influencers of customer investment in relationship under your control.

• ROI for any suggested change is knowable because we link the specific levers that influence Customer Relationship Investment (e.g. marketing program, training) to customer spending behavior.

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Fu

nct

ion

al C

on

nec

tio

ns

Personal Connections

Personally Invested

Functionally Invested

Uninvested

Fully Invested

What is Delivered….The Relationship Investment Segmentation

This can be,

• Overlaid on existing segmentation schemes

• Done for your customers or competitor’s

• Can be at conducted at all organizational levels

• Used to score your CRM database

• Combined with existing data to develop rich profiles/personas

You will know the size of each segment, who is in each and why

You will know the size of each segment, who is in each and why

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Relationship Investment Index – A summative measure to provide senior management with a way to easily track progress.

Simulator – This is a “what-if” scenario tool allowing managers to easily assess the impact of specific marketing and operational changes on market share, profitability or other relevant financial metrics.

Customized CRM Improvement Plans – Tactical plans with a Relationship Strength driven managerial strategy providing highly specific action steps, expected outcomes and a project management plan to make it all happen.

The iSKY Relationship Investment Model Drives Profitable Change

The iSKY Relationship Investment Model Drives Profitable Change

What is Delivered….SummaryWe Also Deliver…

Trg I Sky Relationship Investment Model 2008

Business

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