PRINCIPLES TO BUILD CUSTOMER LOYALTY IN VIETNAM CARD INDUSTRY

PRINCIPLES TO BUILD CUSTOMER

PRINCIPLES TO BUILD CUSTOMER LOYALTY IN VIETNAM CARD INDUSTRY

 

ĐẠI HỌC QUỐC GIA HÀ NỘI
TRƯỜNG ĐẠI HỌC KINH TẾ

Chuyên ngành: Quản trị kinh doanh Mã số: 60 34 05

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

 

TABLE OF CONTENT

CHAPTER 1 INTRODUCTION 1
1.1 NECESSITY OF THE THESIS 1
1.2 PURPOSE 2
1.3 KEY RESEARCH AREA 2
1.4 METHODOLOGY 3
1.5 CONTRIBUTIONS OF THE THESIS 4
1.6 OUTLINE 4

CHAPTER 2 CUSTOMER LOYATY LITERATURE REVIEW 6

2.1 WHAT IS CUSTOMER LOYALTY 6
2.1.1 Customer development process 6
2.1.2 What is customer loyalty ? 8
2.1.3 Customer loyalty and customer satisfaction 8
2.1.4 Customer loyalty is a journey 10
2.2 THE BENEFITS OF CUSTOMER LOYALTY 10
2.2.1 The value of Predictability 11
2.2.2 No price of attraction 12
2.2.3 The ease of doing business 12
2.2.4 Word of mouth marketing 13
2.3 FIVE PRINCIPLES TO BUILD CUSTOMER LOYALTY 14
2.3.1 People do business with people 15
2.3.2 Differentiation 22
2.3.3 Value and Assurance 26
2.3.4 Effective communication 30
2.3.5 Focus 33

CHAPTER 3 RESEARCH ON CUSTOMER LOYALTY IN VIETNAM CARD INDUSTRY 37
3.1 VIETNAM CARD MARKET OVERVIEW 37

3.1.1 Vietnam card market 37
3.1.2 Export opportunities 44
3.2 RESEARCH ON CUSTOMER LOYALTY IN VIETNAM CARD INDUSTRY 45
3.2.1 Objectives of the research 45
3.2.2 Research methodology 45
3.2.3 Data analysis and results 48
3.2.5 CONCLUSION 61

CHAPTER 4 RECOMMENDATIONS TO BUILD CUSTOMER LOYALTY IN VIETNAM CARD INDUSTRY 63

4.1 DEVELOPE ACTIVITIES THAT SUPPORT PEOPLE DOING BUSINESS WITH PEOPLE 64
4.1.1 Test yourself how well you deal with your customers 64
4.1.2 Understand and effectively use the tool KUHL 65
4.1.3 Take the initiative visiting your customers 68
4.2 DEVELOPE ACTIVITIES THAT SUPPORT DIFFERENTIATION 68
4.2.1 Test yourself about your differentiation 68
4.2.1 Always think of something different 69
4.3 DEVELOPE ACTIVITIES THAT SUPPORT VALUE AND ASSURANCE 75
4.3.1 Test yourself about your value preposition and assurance 75
4.3.2 Create value preposition for every product line 76
4.3.3 Stand in your customer’s shoes to prepare value preposition 76
4.3.4 Be flexible in delivering values 77
4.3.5 Ensure promises are kept 78
4.4 DEVELOPE ACTIVITIES THAT SUPPORT EFFECTIVE COMMUNICATION 78
4.4.1 Take a test of your effective communication 78
4.4.2 Prepare well before you meet with your customer 79

4.4.3 Being dedicated during the meet 80
4.4.4 Send thank you note to your customer 81
4.4.5 Create a newsletter 82
4.4.6 Survey about customer satisfaction regularly 84
4.5 DEVELOPE ACTIVITIES THAT SUPPORT FOCUS 87
4.5.1 Examine your focus 87
4.5.2 Do not apply more favor offer to new customer 87
4.5.3 Focus your resources on current customers 88
CONCLUSION 89
REFERENCES 90
Appendix A – Questionnaire for Vietnam card companies 91
Appendix B – Questionnaire for Vietnam Card Customers 95
Appendix C – Sample of Product Installation 101
Appendix D – List of card vendors participated the survey 102
Appendix E – List of card customer 103

LIST OF TABLE

Table 3.1 – Vietnam Card Market Size Table 3.2 – Vietnam Card Related Products Table 3.3 – Samples Profiles
Table 3.4 – Satisfaction of Performance Table 3.5 – Time of business relationship
Table 3.6 – Likelihood of repurchase current card vendor’s products and services Table 3.7–Likelihood of switching to another competing brands when experience poor services
Table 3.8 – Likelihood of recommend current card vendor to others Table 3.9 – Relation between customer loyalty building and loyalty rate Table 4.1 – Examine how well you know about your customer
Table 4.2 – Understand your customer by asking questions Table 4.3 – Examine your difference
Table 4.4 – Examine your value preposition and assurance Table 4.5 – Examine your effective communication
Table 4.6 – Examine your focus

1.1 NECESSITY OF THE THESIS

Getting customers to come back again and again is the most important endeavor of every business. No business can be successful by continually dealing with new customers. Repeat customers are the source of all profit.

It is estimated that “acquiring new customers can cost five times more than the cost of satisfying and retaining current customers” *Philip Kotler, 2001+. Loyalty means profitability. When customers stay longer, they are easier to predict, likely to create emotional bond and recommend us to others. Meanwhile, serving cost reduce as we had experience and knowledge about our customers. Advertising expense is saved as customers already know about us, our products and services. Profit tends to increase and losing customer, especially old one means losing profit.

However, many companies in Vietnamese card industry suffer from high customer churn – they gain new customers only to lose many of them. A statistic research in MK Technology Group, a well-known brand in Vietnamese card industry showed that, “on average, retention rate of a Vietnamese card company is 45% after 5 years.” The number is low. According to International Card Manufacturing Association, average retention rate in 25 leading card

companies is 70%. For companies who pay great focus and efforts on building customer loyalty, this rate may reach 80%.

Surveys have shown that, Vietnam card companies generally aware the cost of losing customers, the benefits as well as the necessity of building customer loyalty. However, activities to earn customer loyalty are currently poorly conducted and how to build it effectively is still a question.

1.2 PURPOSE

The thesis has provided Vietnam card companies with an overview of customer loyalty theory, the necessity and the benefits of building customer loyalty. A survey was also conducted to help card companies have some ideas about current loyalty rate in Vietnam card market. The most essential part suggests some recommendation, guidelines to help Vietnam card companies effectively achieve customer loyalty.

1.3 KEY RESEARCH AREA
The thesis studies customer loyalty theory, opinions and experiences from different researchers and industries leaders. How to customize the theory to successfully apply in Vietnam card industry. Chapter two of the thesis is a research on Vietnam card industry with two main objectives:

1. To assess customer loyalty building activities.

2. To assess current customer loyalty

1.4 METHODOLOGY

Related documents on customer loyalty were gathered, compared, analyzed and customized for Vietnam card market. Various sources of information were combined for use: books, internet, media, direct talks with marketing experts. In chapter two, author has conducted 2 surveys with objectives as mentioned above For the first survey, author assesses customer loyalty building activities in card industry. The population is all Vietnamese card companies, which is estimated at 19 companies. As most companies are based in Hanoi and Ho Chi Minh City (HCMC), we will take the sample of 6 companies in Hanoi and 6 others in HCMC. These 12 companies account for about 90% Vietnamese card market share. This sample is typical enough to withdraw conclusions about Vietnam card industry. The questionnaires are delivered to key person in each company.

1.5 CONTRIBUTIONS OF THE THESIS

 Chapter 1: Introduction
 Chapter 2: Customer Loyalty Literature Review

 Chapter 3: Research on Customer Loyalty in Vietnam Card Industry
The chapter is divided into two sections. Through the first section, we will have a broad overview about Vietnam card industry: products, demand, trend, competition and export opportunities. The second section is a research about current customer loyalty in Vietnam card industry. Brief findings are presented by the end of the section.
 Chapter 4: Recommendations to Build Customer Loyalty in Vietnam Card Industry
Based on the literature in chapter 2 and the fact of customer loyalty in Vietnam card industry, chapter 4 gives instructions toward Vietnam card companies to create customer loyalty.

2.1 WHAT IS CUSTOMER LOYALTY

There are several truths around customer loyalty. For a better understand, we will review the customer development process. Then we come to the definition of customer loyalty. As often there is a misunderstanding between customer loyalty and customer satisfaction, we will discuss the difference between these two terms as well as the relevance between them.

2.1.1 Customer development process

Philip Kotler has summarized customer development process which involved in attracting and keeping customers. Figure 2.1 shows main steps of the process.

The starting point is Suspects – anyone who may buy our card product. We can collect customer database by segments: Banking (All banks are suspects for card programs, card issuing system, card acceptance devices); Telecom

(All telecom companies for internet card, mobiphone card); Hospitality (All restaurants, hotels, shops, bar clubs for loyalty programs); Enterprise (All enterprise may issue employee cards, universities, for student card, supermarket for customer card); Government (for National Identity Card, Security Card, Driving License), etc.

PRINCIPLES TO BUILD CUSTOMER

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