5 Creating Long-Term Loyalty...
Transcript of 5 Creating Long-Term Loyalty...
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5 Creating Long-Term Loyalty Relationships
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Chapter Questions
§ What are customer value, satisfaction, and loyalty, and how can companies deliver them?
§ What is the lifetime value of customers and how can marketers maximize it?
§ How can companies attract and retain customers and cultivate strong customer relationships?
§ What are the pros and cons of database marketing?
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 5-2
Harrah’s Builds Relationships
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Figure 5.1 Customer-Orientations
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Dell Reestablished Its Commitment to Value
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What is Customer Perceived Value?
§ Customer perceived value is the difference between the prospective customer’s evaluation of all the benefits and all the costs of an offering and the perceived alternatives.
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Figure 5.2 Determinants of Customer Perceived Value
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Image benefit Psychological cost
Personal benefit Energy cost
Services benefit Time cost
Product benefit Monetary cost
Total customer benefit Total customer cost
Caterpillar Maximizes Customer Value
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Steps in a Customer Value Analysis
§ Identify major attributes and benefits that customers value
§ Assess the qualitative importance of different attributes and benefits
§ Assess the company’s and competitor’s performances on the different customer values against rated importance
§ Examine ratings of specific segments § Monitor customer values over time
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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 5-10
What is Loyalty?
Loyalty is a deeply held commitment to re-buy or re-patronize a preferred product or
service in the future despite situational influences and marketing efforts having the
potential to cause switching behavior.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 5-11
Top Brands in Customer Loyalty
§ Apple iPhone § Clairol § Samsung § Mary Kay § Grey Goose § Clinique § Avis § Wal-Mart
§ Google § Amazon § Bing § J.Crew § AT&T Wireless § Discover Card § Verizon Wireless § Cheerios
Establishing Value
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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 5-13
Measuring Satisfaction
§ Periodic surveys § Customer loss rate § Mystery shoppers § Monitor competitive performance
Managing Customers
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 5-14
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 5-15
What is Quality?
Quality is the totality of features and characteristics of a product or
service that bear on its ability to satisfy
stated or implied needs.
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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 5-16
Maximizing Customer Lifetime Value
Customer Profitability
Customer Equity
Lifetime Value
Figure 5.3 Customer-Product Profitability Analysis
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 5-17
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 5-18
Estimating Lifetime Value
§ Annual customer revenue: $500 § Average number of loyal years: 20 § Company profit margin: 10 § Customer lifetime value: $1000
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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 5-19
What is Customer Relationship Management?
CRM is the process of carefully managing detailed information about individual
customers and all customer touch points to maximize customer loyalty.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 5-20
Framework for CRM
§ Identify prospects and customers § Differentiate customers by needs and value to
company § Interact to improve knowledge § Customize for each customer
Amy’s Maximized Word of Mouth
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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 5-22
Attracting and Retaining Customers
§ Reduce the rate of defection § Increase longevity § Enhance share of wallet § Terminate low-profit customers § Focus more effort on high-profit customers
Figure 5.4 The Marketing Funnel
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Loyalty Programs
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Database Key Concepts
§ Customer database § Database marketing § Mailing list
§ Business database § Data warehouse § Data mining
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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 5-26
Using the Database
§ To identify prospects § To target offers § To deepen loyalty § To reactivate customers § To avoid mistakes
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Don’t Build a Database When
§ The product is a once-in-a-lifetime purchase § Customers do not show loyalty § The unit sale is very small § The cost of gathering information is too high
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For Review
§ What are customer value, satisfaction, and loyalty, and how can companies deliver them?
§ What is the lifetime value of customers and how can marketers maximize it?
§ How can companies attract and retain customers and cultivate strong customer relationships?
§ What are the pros and cons of database marketing?
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 5-28