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Week 7

Creating Long-Term LoyaltyRelationships

1

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Chapter Questions

What are customer value, satisfaction, andloyalty, 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?

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Figure 5.1 Customer-Orientations

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Dell Reestablished

Its Commitment to Value

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The team was managing

cost instead of managing

service and quality

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What is

Customer Perei!ed Value"

Customer perei!ed !alue is thedifference between the prospectivecustomer+s evaluation of all the benefits

and all the costs of an offering and theperceived alternatives&

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igur

e

5.2

Customer-

perceived value

Total customer

benefit

Total customer

cost

Product benefit Monetarycost

Services

benefit

Time

cost

Personal

benefit

Energy

cost

Image

benefit

Psychological

cost

eterminantsof Customer#erceived -alue

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Value Conepts - Caterpillar

Worth tofarmer./!,!!!

Cost to produce.

/"*,!!!

#rofit #riceCustomer

-alue

/0,!!! /!,!!! (!(

',!!! "1,!!! /",!!!

*,!!! "2,!!! ,!!!

),!!! "3,!!! ),!!!,!!! "0,!!! *,!!!

",!!! "',!!! ',!!!

(!( "*,!!! 0,!!!

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#teps in a

Customer Value $nal%sis

%dentify ma4or attributes and benefits thatcustomers value

5ssess the 6ualitative importance of different

attributes and benefits 5ssess the company+s and competitor+s

performances on the different customer valuesagainst rated importance

$xamine ratings of specific segments 7onitor customer values over time

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Deli!ering high ustomer !alue&

What is 'o%alt%"

'o%alt%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 thepotential to cause switching behavior&

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(op )rands in Customer 'o%alt%

5pple i#hone Clairol 8amsung 7ary 9ay :rey :oose Clini6ue 5vis Wal(7art

:oogle 5mazon ;ing = Wireless iscover Card -erizon Wireless Cheerios

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Value Proposition

=he luxury car that treats life like the greatest luxury of all&&

Core positioning& 8afety

Vol!o

Other bene*its& :ood performance esign $nvironmentally

friendly

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Value Deli!er% #%stem

@5ll the experiences the customer will have onthe way to obtaining and using the offering+

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Customer #atis*ation

$xpectations

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+onitoring #atis*ation

Customer

Complaints

+easurement

(ehni,ues

In*luene o*

Customer

#atis*ation

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+easuring #atis*ation

#eriodic surveys Customer loss rate 7ystery shoppers 7onitor competitive performance

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What is Qualit%"

Qualit%is the totality of features and

characteristics of a product orservice that bear on its

ability to satisfystated or implied needs&

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Culti!ating Customer RelationshipWhat is Customer Relationship +anagement"

CR+is the process of carefully managingdetailed information about individual

customers and all customer touch points to

maximize customer loyalty&

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Customer Relationship +anagement&

Frameor *or CR+

Ane(to(one 7arketing. %dentify prospects and customers ifferentiate customers by needs and value to

company %nteract to improve knowledge Customize for each customer

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Customer Relationship

+anagement&

$ttrating and Retaining Customers%ncreasing -alue of the customer base. Beducing the rate of customer defection %ncreasing the longevity of the customer relationship

$nhancing the growth rate of each customer 8hare of wallet

p(selling > cross(selling

7aking low profit customers more profitable orterminating them Docusing disproportionate effort on high(value

customers

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)uilding 'o%alt%

%nteracting with customers eveloping loyalty programs #ersonalizing marketing Creating institutional ties

Win backs

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'o%alt% Programs

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THE END

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