Head office of GoodLife was located in London, Ontario with the role of providing leadership and support for the franchisees and company-owned clubs. From the beginning, the company’s goal was to provide the best in equipment, facilities and high-quality service with a well-trained staff. Based on GoodLife’s philosophies and goals, the company has built its business on highly trained staff, innovative programming and reinvesting in its facilities. Apart from this, GoodLife’s strategy to raise the bar of service excellence and bring a new professionalism to fitness industry was also reason accounted for their success.
This is how they position themselves and make them so different from clubs which traditionally run by sports jocks who did not take a professional approach in managing their operations. The GoodLife motto, “Measurable Constant Improvement”, underlaid its plan to grow to 100 clubs by 2004. The GoodLife Kitchener Club was the top performer among GoodLife chains and it reopened at new location with better and newer facilities in 1998. Most new members joined the club through referral program and ads in a local free weekly newspaper, The Pennysaver.
Goodlife Fitness Essay Example
There are four groups of associates serving the club: sales, customer service, personal training and service associates. Most of the associates were on a part-time basis and all of them were involved in selling. 1 1. 2 The 7 P’s of Marketing There are several key issues we have to consider in a successful marketing. These considerations were known as the 7Ps – product, price, place, promotion, people, physical evidence, and process. In this case, GoodLife offers various types of fitness programs as their product.
Innovative fitness programs such as tanning, aerobic programs, strengths and cardiovascular training offer good selections to fulfill different needs of different customers. GoodLife also provides a wide range of cardio equipment and weights for their customers to choose from. The price for a new membership at GoodLife varied depending on different package or promotion. The company has developed an innovative client billing system with debited monthly membership fees ranging from $30 to $50 and excludes the needs for large up-front annual fee upon signing up.
For the location, over 40 clubs were distributed in a dense work population across Ontario and Quebec, Canada. The amount of advertising spending in GoodLife was about 6 percent of revenues by using “call to action” versus a “branding” approach. However, the company gave more weight on “call to action” approach by spending heavily in print ads like Yellow Pages and The Pennysaver. They also free 1 week trial for new members through referral program. People involve in Goodlife are sales associates, personal trainers, customer service and service employees and also members who are joining the club.
The physical evidence includes facilities exterior like exterior design, signage, and surrounding environment and also interior like best facilities, high-quality equipment and clean environment. Processes at Goodlife begin with enquiry in which sales associate would show customers the club and discuss the benefits of membership with them. Service employee was then introduced new members to the club and its philosophy through a series of programs on fitness and equipment use while personal trainers worked with individual club members on fitness programs.
In the end customers decide to stay or leave. 2 1. 3 Issue and Problems The main issue in this case was 60 percent average customer retention rate among 40 GoodLife clubs. Top management of GoodLife was not happy with this figure as they are losing 40 percent of its customers annually. With an increase of 1 percent customer retention rate, the company will earn $35,000 of gross revenue. There are several problems and intermediate causes that lead to the low customer retention rate issue and the cause-and-effect relationship was shown in diagram 1.
The major problems are low customer satisfaction, low brand equity and personal factors. Customer satisfaction in GoodLife is low mainly due to little or no personal relationship and equipment or facilities problems. GoodLife received dozens of verbal and written complaints or concerns every week dealt with equipments and staff problems. In addition, we have identified some intermediate causes that would lead to no personal relationship problem. For instance, shortage of database marketing and branding exercise might directly or indirectly induce this problem.
Also, branding exercise was seen as an important factor that contributes to low brand equity as a good brand equity consists of both brand awareness and brand meaning elements. Overall, we think that no personal relationship was the central problem that would directly or indirectly lead to the issue of low customer retention rate. We must focus on this problem if we want to increase customer retention rate in GoodLife. Low customer retention rate Low customer satisfaction Low brand equity Personal factors No personal relationship Equipment/ facilities problems No database marketing
High employee turnover Not a preferred company No branding exercise Unattractive compensation/reward plan Diagram 1: The cause-and-effect relationship at GoodLife Fitness Clubs 3 2. 0 SERVICE PROFIT CHAIN We must firstly understand the service profit chain to find out which aspect we should focus more in the implementation plan. Service-profit chain is a special kind of leadership that emphasizes the importance of each employee and customer (Diagram 2. ). It is an interrelation between profitability and revenue growth which in turn stimulated by customer loyalty.
Customer loyalty is a direct result of customer satisfaction while satisfaction is largely influenced by the value of services we offer to customers. The value of services is created by satisfied and loyal employees while employees’ satisfaction results primarily from highquality internal services and policies that enable employees to deliver good results to customers. In other words, employee satisfaction will eventually lead to customer satisfaction. In this case, GoodLife could obtain their good internal service quality by focusing on employee selection, job design, employee rewards and recognition.
GoodLife should select employees with the right attitude and rewarded employees for increasing customer retention. Besides, GoodLife could provide good external service value to their customers by having a good service concept. GoodLife must provide excellent service with knowledgeable and welltrained staff to exceed customers’ expectations. To increase customer satisfaction, GoodLife should focus on the sense of belonging and personal relationship with members. Lastly, highly satisfied and loyal customer will bring us retention, repeat business and also referrals. – Employee selection – Job design – Employee rewards & recognition Service concept: Results for customers – Retention – Repeat business – Referral – Service designed and delivered to meet targeted customers’ needs – Greeted by name – “Motivation” calls Diagram 2: The links in the Service Profit Chain 4 3. 0 RELATIONSHIP MARKETING 3. 1 Leaky Bucket Theory Relationship marketing is a modern concept in marketing and it can be defined as attracting, maintaining and enhancing consumer relationships (Berry, 1983). Relationship marketing essentially represents a forward motion within marketing – away from a dominant focus on sales transactions toward retention and satisfaction focus.
Relationship marketing is a strategic orientation which focuses on keeping and improving relationships with existing customers than on acquiring new customers. Due to the fact that customer retention is much more important than attracting new customers, firms shall pursue relationship marketing principles in designing strategies to develop close and lifelong relationships with the most profitable customers. However, it has been suggested that firms frequently focus on recruiting new customers to replace customers who move on, rather than paying focus to what they should do to keep these customers.
A scholar has coined the phrase “leaky bucket” to describe this syndrome and it a model that seeks to describe the process of customer gain and loss, otherwise known as customer churn (Ehrenberg, 1988). As illustrated in figure 1, marketing can be thought of as a big bucket with many holes at the bottom and firms are putting customers into the leaky bucket. Instead of preventing customers from leaking away through the holes, firms continually topping up the bucket with new customers. When customers are not satisfied with what they get, people start falling out of the bucket through the holes faster than they can be poured in through the top.
Constant flow of new customers Lost customers Picture 1: Leaky Bucket Theory of marketing 5 Customer acquisition and retention are vital elements of a company’s success. A company’s sales and revenue is generated by customers and the key to establish a business is attracting new customers while maintaining and growing a relationship with current customers. If customers are leaving as quickly as new customers are coming onboard, a business cannot flourish. To do customer acquisition, marketers will normally invest heavily in marketing campaigns like TV ads to attract and to create an impressive opinion in customer’s mindset.
A successful marketing campaign would help to bring in new customers and thus increase sales and total revenues. Customer acquisition is undeniable to be helpful in business growth but the cost in terms of time and money is higher as we need to develop strategies, find target markets and invest in advertising and marketing to acquire new customers. On the other hand, customer retention is a decisive success factor in today’s highly competitive marketplace. Customer retention is the single most important factor in enhancing a company’s value.
Historically, high customer retention rates consistently and strongly correlate with sustainable high profits. It is far cheaper to keep a customer than gain a new one. In addition, retained and loyal customers have a better understanding of your brand’s benefit and value and they are easier to find and communicate with. They are less price sensitive, less attracted by competitors, cost less to serve, repeat purchasing, voluntary performance and most importantly positive word-of-mouth. This is because those happy and highly satisfied customers will do some of new customer acquisition through word-of-mouth referrals.
Therefore, GoodLife should focus on providing excellent service in retaining customers than doing sales to recruit new customers. 6 3. 2 Ladder Marketing Relationship marketing is about developing a fruitful long-tem relationship with customers as customers move further along this relationship continuum. The primary goal of relationship marketing is to build and maintain a base of committed customers who are beneficial for the firm. As mentioned earlier, it is important to retain existing customers as attracting new customers is six times more expensive than holding onto current customers.
The overriding goal of relationship marketing is to move customers up the ladder or along the relationship continuum as illustrated in figure 2. The ladder started from the point at which customers are strangers that need to be attracted (acquiring), satisfied and retained customers, and also longterm customers whose relationship with the firm has been enhanced. Each types of customer should be treated in a different way like separate targeted messages and diverse value propositions. Strangers are those customers who have not yet had any transactions with a firm and may not even be aware of the firm.
The firm’s primary goal with these potential customers is to initiate communication with them in order to attract them and to acquire their business. Once customers are aware and try the service of the firm before, familiarity is established and the relationship between customers and the firm has become acquaintance. Primary goal for the firm at this stage is to satisfy customers by proving a value proposition to customers comparable with their competitors. As a customer continues to make transactions with a firm, the firm begins to acquire knowledge of the customer’s needs and transform relationship from acquaintance to friendship.
This transition requires the development of trust and the primary goal for firms at this stage is customer retention. As a customer continues to interact with a firm, the level of trust often deepens and this creation of trust will leads to the creation of commitment. At the partnership stage, the firm is concerned with enhancing the relationship. The formulation of satisfaction, trust and commitment corresponds to the customer’s willingness to more fully engage in an exchange relationship as an acquaintance, friend and partner, respectively. However, we should always bear in mind that satisfaction is not enough to create loyalty.
We have to put some efforts to transform customer from satisfaction-based acquaintanceships to trust-based friendships to commitment-based partnerships. Perhaps we should consider sources of competitive advantage in the evolution of customer relationships. 7 Sources of competitive advantage for exchange relationships as stranger, acquaintance, friend and partner are attractiveness, satisfaction, satisfaction and trust, and satisfaction and trust and commitment, respectively. Satisfaction is very important and it should be exist in every stages of ladder. Figure 2: Goals of relationship marketing 3. 3 Customer Profitability Segments Virtually all firms are aware that their customers differ in profitability at certain level. Firms always try to identify customer segments or tiers of customers that differ in the relationship value or future profitability to a firm. It is neither practical nor profitable for a firm to meet all customers’ expectations and allocate resources equally to all customers in different profitability segments. The customer pyramid is a framework that describes the profitability tiers and enables a firm to leverage difference in customers’ behavior and profitability.
After identifying profitability tiers, firms can offer products and service levels in line with the identified tiers’ interest and profitability. Customers could be categorized into four tiers based on their profitability, namely platinum, gold, iron and lead as shown in the customer pyramid (figure 3). In particular, the smallest group of customers frequently accounts for the highest proportion of sales or profits. This is what we called the “80/20 rule” in which 20 percent of customers produce 80 percent of sales or profits. 0 percent of these customers normally constitute the top tier of the customer pyramid and they are referred as the platinum tier. The platinum tier was described as the firm’s most profitable customers and committed customers of the firm. Customers in gold tier are less profitable and more price sensitive if compared to platinum tier. This is mainly because customers in this tier require price discounts that limit margins and they are not as loyal. The iron tier contains essential customers who provide the volume needed to utilize the firm’s capacity but their profitability is not substantial enough to receive special attention or reatments. The lead tier consists of customers who are costing the firm’s money to serve them. There are more complaints from this group and they incur more costs than profits. As a result of the biggest size of customers, this tier normally ties up the firm’s resources. In this case, the “20-20-60” phenomenon describes the segment of customer profitability. The first 20 percent of the club members were hard-core fitness and health people. These members visited the club frequently and they would tolerate a lot as long as it didn’t interfere with their training.
The second 20 percent were enthusiastic and wanted to get fit new members. Over time they either became committed or not. The remaining 60 percent were members who came on an irregular basis. The first 20 percent of club members can be categorized into platinum tier; the second 20 percent of committed members fall into gold tier; 9 the second 20 percent of uncommitted members in iron tier; and the remaining 60 percent of club members fall into lead tier. As a conclusion, GoodLife should focus more on the first 20 percent of club members and provide partnership and special treatments to this group of people.
On the other hand, GoodLife should get rid of the problem members in the lead tier who often complaints and cost more to serve. GoodLife must work either to change the customers’ behavior or to make them more profitable through increases in revenue. Most profitable customers Least profitable customers Figure 3: The customer pyramid 10 4. 0 RECOMMENDATION OF CUSTOMER RETENTION PLAN After identified the issues of GoodLife Fitness Clubs, our group would like to suggest a customer retention plan with goal “To be professional fitness club with excellent service quality”.
The time period for this customer retention plan is 6 months. The first measurable outcome is to increase customer retention rate by 5%. The second outcome of the plan is the improvement of current phenomenon of 20-20-60 to 40-40-20 within the 6 months. 4. 1 Brand Equity Company’s presented brand Brand awareness Brand equity Non-controllable external brand communications Brand meaning Customer experience with company Figure 4: Service branding model According to Leonard Berry, an expert in service branding state that “Strong brands enable customer to better visualize and understand intangible products.
They reduce customers’ perceived monetary, social, or safety risk in buying services, which are difficult to evaluate prior to purchase. Strong brands are the surrogates when the company offers no fabric to touch, no trousers to try on, no watermelons or apples to scrutinize, no automobile to test drive. ” Figure 4 shows the relationships among the main elements in creating a strong brand. In this case, GoodLife Fitness Club did not have a strong service brand. It is referred as ‘factories’ which did not take the professional approach in managing their operation. The negative brand equity works pposite effect on customer retention. Brand equity is invisible yet powerful tool in competitive market. 11 Brand awareness is defined as customer ability to recall and also recognition of the brand. Brand awareness has positive relationship with brand equity. When consumers are aware to the brand, it brings in constructive quality to the brand equity. The presented brand is the part of the brand image that the company controls and disseminates through all personal and impersonal channels. GoodLife Fitness Clubs should not neglect the importance of creating brand awareness through mass communication.
For impersonal communication channels, GoodLife Fitness Clubs may carry its message through media such as print media like health magazine especially at Women’s Health, Men’s Health, Health, and Natural Health. Basically, health magazines’ target market is people who like to live healthy. Besides that, display media such as billboard also can carry its message to everyone. Through these communication channels will easily helps to build up brand awareness to consumers. Brand meaning is attribute and character that associate with the brand in consumers’ mind.
This is customer’s perception and impression of the brand which giving a special meaning to customer. Thus, GoodLife Fitness club should develop brand meaning that are relevant to consumers. Firm must figure out what are the real experience that customer want. GoodLife Fitness Clubs can enhance their brand meaning by aligning customer experience with company. The experience is not only involving the actual interaction with service firm but also include any prior knowledge about the firm. Firstly, GoodLife Fitness Clubs must take concern on every element that relate to service quality.
Friendly service employees, excellent facilities, comfortable environment, professional training program, and harmony interaction among members are some example for ideal service quality. Secondly, firm should not neglect on communication effort to convey brand meaning. GoodLife Fitness Clubs must let their potential customer to learn about their company value. Firm must revise their advertising strategies which build on ‘call to action’ approach. The advertising expenditure must take ‘branding’ approach in to consideration in order to develop favorable brand meaning.
Lastly GoodLife Fitness Clubs should alert with non-controllable external brand communications that will bring indirect impact on brand awareness and brand meaning. It 12 involves information such as word-of-mouth communication and publicity. Normally, it can be positive or negative about the brand and cannot be fully controlled by the firm. GoodLife Fitness Clubs can try to encourage positive word-of-mouth by delighting customer and reduce the spread of negative buzz by providing proper platform for customer to release their dissatisfaction. 4. 2
Employee Retention Employees are playing an important role in achieving the goal of increasing customer retention rate. To build a customer-oriented, service-minded workforce, GoodLife Fitness Clubs must hire the right people, develop people to deliver service quality, provided needed support systems, and retain the best people. Each strategy also has specific sub-strategies for accomplishing the goal and motivates employees to deliver customer-oriented promises successfully. In this case, we only focus on most closed sub-strategies to complete the goal.
Figure 5: Strategy for delivery service quality through people 13 I. Hire the right people In order to deliver a good quality of service, considerable attention should be focused on recruiting and hiring the right service personnel. Be the preferred employer The first thing that GoodLife Fitness Clubs have to do is be the preferred employer. The good reputation of preferred employer in a particular industry or location has the advantage to attract the best people. GoodLife Fitness Clubs shall provide benefits for the employees such as retirement plan and wellness incentive for employees’ family.
Beside, firm can offer competitive salaries by increase current $8 to $9 per hour for their employees. Additionally, attractive compensation like overtime claim, commission or bonuses of firm also attract best candidates comes to interview. GoodLife Fitness Clubs should provide an opportunity for career development. Firm is experiencing fast market expanding and employee will feel that they have a big chance to build their career in the future if they can work in this GoodLife Fitness Clubs. Also, GoodLife Fitness Clubs can strive for awards to provide tangible evidence to prove that they are excellent employer.
This is because most employees are looking for good reputation company to work for. They believe good reputation and high ranking of firm in best employer award would provide compatible internal service quality. Hire for service competencies and service inclination The second sub-strategy for hire the right people is hire for service competencies and service inclination. Service competencies mean necessary skills and knowledge needed to perform the job. On the other hand, service inclination is employee’s interest to do service-related work.
Service competencies and service inclination are important quality to deliver high service quality. GoodLife Fitness Clubs should reduce part timer and recruit more full time employee. This is because part time employee turnover rate is higher than full time employee. Besides that, firm can adjust their selection criteria. GoodLife Fitness Clubs should recruit candidates with physical education or kinesiology graduates as personal trainer. They have better 14 knowledge to the job. During interview, firm should pay attention to identify the characteristic and personality of the candidate.
Hiring right attitude people is important in service industry. GoodLife Fitness Clubs is needing passionate and extrovert employee to fit with their job. II. Develop people to deliver service quality GoodLife Fitness Clubs must develop its employee to be customer-oriented and qualityfocused. After hiring the right people, GoodLife must train its employees to ensure their performance of service. Empower employees Empowerment is important to give employees the authority, skills, tools, and desires to serve the customer.
It means that a company should give their employees an authority to make decision. But how could we make sure that employees will always make the right decision? In order to solve this problem, GoodLife must provide information and knowledge such as guideline or training to its employees to improve their knowledge and encourage its employees to make a right decision. Besides that, firm can also provide a room for creativity to show their employees’ talent or ideas. For example, GoodLife can give them a chance to develop a new fitness program.
Train technical and interactive skills To provide quality service, employees need ongoing technical and interactive skills training. For technical skills, GoodLife Fitness Clubs can arrange seminar related to nutrition and human biological knowledge for their employee to provide professional consultation. At the same time, on-the-job training is effective to train technical skill. It allows employee to learn in practical way such as how to operate the fitness club’s equipment. When employees are equipped with sufficient technical skill, they appear to be more confident and reliable to guide the customer.
Soft skill is important for service firm to develop social relationship with their customer. Interactive skill is critical for employee to listen to their customer, lead the conversation and appear to be caring as well as employees able to read their body language. Service frontline should not be afraid to initiate a communication with customer. 15 III. Provide supportive technology and equipment Firm must understand the tools needed by employee to deliver the service. Supportive technology and equipment ease the job of employee and increase effectiveness to the entire service process.
Right equipment and technology Employees will easily get frustrated in delivering desired service when they do not have the right or proper equipment to use. Thus, service employees need the right equipment and technology to reduce their burden and improve their work efficiency and effectiveness. For example, Customer Relationship Management (CRM) software works to provide organized up-to-date customer information. The benefits of CRM software automated analytics would improve customer experience with more focused marketing efforts.
Other than that, up-totrend and well maintained work out equipment would help GoodLife Fitness Clubs trainer to serve their customer better. IV. Retain the best people Employee retention is a crucial factor on sales performance for every firm in service industry which emphasize particularly on customer relationship. Resignation of employees especially the best service employees can be very detrimental to customer satisfaction, employee morale, and overall service equality. There are several strategies to support loyalty of best employees. Treat employees as customers To retain the best people, company should treat heir employees as customers. If employees feel valued and their needs are taken care of, they are more likely to stay with the organization. Thus, GoodLife Fitness Clubs must trust, respect and have faith in their employees. It is important to make employees realize that they are the most valuable asset in the organization. For example, GoodLife can involve them in major decision making process. The participation in decision making process will make them feel that they are a part of the firm and enhance the sense of belonging to the firm.
Next, firm should listen to employee needs and wants. For example, GoodLife should provide a comfortable pantry room for employee during their short rest and enjoy their meal in a comfortable environment. 16 Measure and reward strong service performers If a company wants to retain the strongest service performers, the company must fulfill their need for achievement. The way to retain the best people is through recognition and rewarding strong service performers. Rewards system may valued by productivity, sales, or some other dimension that can work against providing good service.
GoodLife Fitness Clubs must understand the motivation driver of particular employee to customize their reward. This is because different employee might have different desired benefit such as insurance, vacation and etc. In GoodLife Fitness Clubs’ customer retention plan, all employees will be given extra $100 monthly bonus if they achieve 1 percent of customer retention growth. Besides, monthly and yearly recognition will also be honored to the best performer. Employees are encouraged to supervise the performance of each other by personal evaluation and vote for the employee with outstanding service performance during “peer awards”.
It is important for employee to understand that firm is treating them fairly and reward them based on their performance because bias reward would evoke dissatisfaction and bad effect of morale among employee. 17 4. 3 Customer Relationship Relationship Development Model provides the rationale for firm in developing customer retention strategies. This model point out the three main relationship drivers would foster customer loyalty and bring benefits to both customer and firm. Figure 6: Relationship Development Model 4. 3. 1 Core Service Provision
Customer satisfaction, perceived service quality and perceived value are core service provision to build strong customer relationship. Firm must at least perform to fulfil their promise in service delivery to meet customer satisfaction. At the same time, firm should focus on improving service quality and value for long term relationship. Continuous improvement is essential for GoodLife Fitness Clubs to ensure perceived service quality and value is above customer expectation. Firm must listen to customer and employee to shape relevant strategies for upgrading the service.
Beside, firm should treat all complaint as important feedback to secure least customer satisfaction level. GoodLife Fitness Clubs must improve servicescape to support core service delivery. Members must be provided with clean environment, well maintained work out machine, facilities and et cetera. Personal trainers are playing critical role to portray professional level of the fitness club. 18 4. 3. 2 Switching Barrier Switching barrier is positively related to customer relationship. It has strong influence on customer decision to terminate the relationship.
Firm seek to increase switching barrier to keep their customer for repeat purchase. Customer inertia is an uncontrollable factor for firm to make improvement on it. Refuse for changes is nature of human being. Dissatisfied customer might decide to stay in the relationship due to the fear of consequences of breaking the relationship in their life. They are comfortable with current status and any changes would force them to reshape their life structure. Also, customer avoids making changes as they have high level of perceived effort to switch service provider. Switching cost consist of monetary cost and non monetary cost.
Customer will make decision by taking consideration on their investment on time, money and effort in the relationship. To exit from relationship, members of GoodLife Fitness Clubs would think about search cost to obtain information for alternative services and learning cost for them to gain knowledge of consuming new service. Firm can tie them better by building higher contractual cost in the relationship. GoodLife Fitness Clubs can offer lower price for long term subscription with the rules and condition of paying penalty for early termination. 4. 3. 3 Customer Relationship Bond
According to the Levels of Relationship Strategies framework developed by Leonard Berry and A. Parasuraman, customer retention strategy can be designed effectively by focusing on developing bond with customers. Different relationship marketing can be deployed across different level of customer relationship bond to strengthen current level or move forward to next level. Figure 7 below illustrates four levels of relationship strategies. 19 Figure 7: Levels of Relationship Strategies The increasing level of relationship bond between customer and firm create higher switching barrier for customer to exit from relationship.
They involve higher monetary and non-monetary cost to switch to competitors offer. Strong relationship bond help firm to elevate customer loyalty. It is critical competitive advantage for firm to survive and growth in intense competitive market. Financial Bond All customers primarily enter the relationship by engaging in first bond level which called financial bond. This is a transactional relationship between firm and customer which purely based on financial incentive. Financial bond is not sustainable competitive advantage as the can be easily imitated by competitors. It does not help to build customer loyalty.
Firm can encourage repeat purchase and attract potential customer to enter the relationship by offering money saving. Due to the inseparability characteristic of service, frequency reward works to encourage frequent visit thus enabling service delivery. The reward motivate customer to stay and experience the benefit of service. GoodLife Fitness Clubs can implement ‘Point Redemption’ system for member to collect point from each visit. Member will keen to visit and attend their session with the intention to collect points. Frequent visit member who collected sufficient points can redeem their point to get 30% discount for continue subscription.
Besides, GoodLife Fitness Clubs can also give the same offer to ‘Hit the Goal 20 Program. ’ When signing up for package, member would be request to set their goal and time period to achieve the desired goal. Thus, member will take the initiative to join every session in order to reach their aim. Firm may run a ‘Weight Lose Challenge’ as a competition to boost members’ effort to be the most weight reduced winner. The winner will be rewarded with $2000 cash dollar. It works as a motivator to push overweight member to attend classes.
Frequency reward gain member confidence toward GoodLife Fitness Clubs service quality when they see the result due to frequent attend exercise classes. GoodLife Fitness Clubs can offer bundling and cross selling to strengthen financial bond with customer. Firm must set lower price for longer commitment period and higher purchase volume. Sales promotion on long term subscription and add on program sign up is believed to be effective strategy that make the saving visible to member. Price discount for lump sum annual subscription and extra program sign up other than basic individual package should be given to provide financial incentive.
Social Bond The second level of customer relationship is called social bond. At this level, firm seek to build long term relationship through social and interaction. Personal relationship ties customer better than financial benefit alone because it involve emotional attachment. Service provider is trying to understand and develop friendship with customer. Firm enhance the relationship by developing sense of belonging. Customers feel comfortable in the service environment and position themselves as a part of business. Customer who strongly attached to the service firm has less tendency to switch even competitors is providing better offer.
Social relationship is important for customer retention because it is less viable for imitation. GoodLife Fitness Clubs must first emphasize on building personal relationship among service employee and member. All service employee and personal trainer should be introduced the practice of ‘Greet and Smile’. Similar to premium hotel practice, ‘Greet and Smile’ require service employee to greet their customer by name. Customers are not served as unknown. It is fundamental in building friendship and trust. Greet customer by name make them feel being respected and being treat as important guest.
At the same time, warm greeting arouse home feeling which turn customer into easy and receptive mood. Service employees and personal trainers will be supported by information technology about customer details to increase the understanding and ease the interaction. 21 Then, GoodLife Fitness Clubs should focus on creating social bond among customer. Firm must provide a platform to increase the interaction among members. It helps to develop sense of community by knowing other member in the club. Firstly, firm can set a sofa corner with comfortable seats and refreshment for member to mingle around before and after work out session.
Members are free to rest and relax at the sofa corner. They can get to know more friends and carry on various topic sharing. Secondly, GoodLife Fitness Clubs can hold group activities to encourage the interaction among members. Relationship among member can be build by increasing the time they spend together. For instance, firm can organize outdoor activities charity work, hiking, and vacation trip that enforce team work. It generates topic in future discussion as they gone through same experience in the activity. Thirdly, GoodLife Fitness clubs can invite members to attend annual dinner to facilitate social interaction among members.
Members are given the opportunity share their personal experience for their positive changes in physical appearance and health condition after joining the club. Overtime, the relationship between customer-to-customer would keep them from switching to other fitness club. They are fun and enjoy working out with friend in the club. Additionally, GoodLife Fitness Clubs also increase similarities among customer to improve social relations. For example, sales associates can persuade company to make group sign up for their employee at the acquisition process.
Thus, members for particular session are made up by people from same community such as same college or same company. They already know and have certain understanding about each other before joining the club. They are so much pleasure to exercise in group and open for the interaction as they have same interest. Continuous relationship should not be neglected in customer retention plan. Platinum tier member should be given privilege of presale advance purchase. Club can show appreciation for their loyalty through this special treatment. It makes member feel that they are being treated as important customer.
Other than that, firm can express concern and gratitude by sending birthday card to respective member. It improves the relationship with customer as they feel the sincerity of club to be caring but not solely profit oriented organization. Last but not least, GoodLife Fitness Clubs should come out with standard complaint handling procedure. A proper service recovery helps to retain dissatisfied customer from exiting the relationship. It works to gain customer feedback for continuous 22 improvement and prevent the spread of negative word of mouth.
Service employee must show empathy and promise the same mistake will not happen again. Customization Bond Firm can further develop the relationship to third level by creating customization bond with customer. At this level, firm treat their loyal customer as partner. Customization bond create trust and commitment to the relationship. GoodLife Fitness Clubs can enhance the relationship through customer intimacy. It is an approach to enforce loyalty by developing one-to-one solution according to personal need. However, it is impossible to provide customization to every single customer because it involves higher cost.
It is important for firm to understand 80:20 rule. GoodLife Fitness Clubs should only provide customize service to platinum tier members. For instance, firm can provide special service for platinum tier member to make changes on the schedule by making appointment with personal trainer. Then, GoodLife Fitness Clubs can also foster the customization bond to all members by mass customization and innovation. Firm can offer varied specialize package at the price of standardize. Packages should be designed according to different segment customer needs.
For example, weight lose package, muscle build up package, and body shaping package. It increases the effectiveness to achieve goal thus motivate member to go on with the class and stay with the club. Also, GoodLife Fitness Clubs should alert to market trend and blend it into the package. It raises members’ interest and excitement in the class and feels meaningful to commit to the club. Structural Bond The highest level of relationship strategies is structural bond. It is the hardest for competitor to imitate. Structural bond create highest switching barrier for customer to terminate the relationship.
It requires investment from both parties and request customization of technology to facilitate the service delivery. Not all type of business worth to develop structural bond as it involve long term tie and huge amount of financial commitment. Therefore, it generally takes place in business-to-business context. 23 GoodLife Fitness Clubs is not encouraged and almost impossible to develop structural bond with their members. 4. 4 Database Marketing Database marketing is a systematic approach to gather, consolidate and process of consumer data that is maintained in a company.
Firm can create customer profiles that integrate different data sources including demographic, segmentation, usage information, customer satisfaction data and financial information. Database helps marketer to learn about customer, to track consumption pattern, select target customer for specific communication and campaign, and enhance service value by specialized offer. GoodLife Fitness Clubs should include the ‘swipe card’ technology in the customer retention plan. Database marketing helps to improve both employee and customer retention rate. The aesthetically designed ‘swipe card’ may introduced as membership card.
Firstly, the card is presented as tangible identity recognition for membership. It arouses sense of community when members receive the membership card print with their name and picture. Members feel they are connected to the clubs and turn to be less likely to switch to competitors. Secondly, the card facilitates the service employee to greet every member by name at the entrance. Members’ detail will be display at the monitor of service front desk when the members swipe their card to pass through the turnstile. Greet customer by name make them feel being respected and being treat as important guest.
They will keep the membership card in their wallet as important personal item. It creates sense of belonging as they are a part of the club. Lastly, ‘swipe card’ technology helps GoodLife Fitness Clubs to collect customer data. Firm would identify customer consumption pattern as attendance is being collected when member swipe the card to activate the turnstile at entrance. Firm can segment the member base on usage behavior. Service employee can effectively communicate to selective segment for particular objective. For instance, only send reminder to member who has never visited the club for past three month time. 4 5. 0 REFERRENCES Berry, L. L. (1983) Relationship Marketing: Emerging Perspectives on Service Marketing. Chicago, IL: American Marketing Association, pp. 25-28. Ehrenberg, A. S. C. (1988) Repeat Buying: Facts, Theory and Application. London: Charles Griffin. Heskett, J. L. , Jones, T. O. , Loveman, G. W. , Sasser Jr. , W. E. & Schlesinger, L. A. (2008). Putting the Service-Profit Chain to Work. Retrieved on 28 October 2012. http://hbr. org/2008/07/putting-the-service- profit-chain-to-work/ar/1 Strategies for Acquisition and Retention of Customers. Retrieved on 1 November 2012. ttp://allbatteryfranchise. com/strategies-for-acquisition-and-retention-of-customers/1822/ Svend Hollensen & Marc Oliver Opresnik. (2010) Marketing: A Relationship Perspective. Verlag Franz Vahlen GmbH. The Financial Express. (2012) Customer acquisition versus customer retention. Vol: 20, No: 290. Retrieved on 28 October 2012. http://www. thefinancialexpress-bd. com/innerpage. php? page_category_id=92&date=2012 05-14 Zeithaml, V. A, Bitnir, M, J & Gremier, D, D (2009). Service Marketing: Intergrating Customer Focus Across The Firm (5th edi) . NY: McGraw Hill.