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    Chapter 5

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    h.a.m Oman

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    © All Rights Reserved
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    Chapter 5

    Uploaded by

    h.a.m Oman
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    chapter 5

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    49 views24 pages

    Chapter 5

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    h.a.m Oman

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    Chapter

    5
    Creating Long-
    Term Loyalty
    Relationships

    Copyright © 2016 Pearson Education Ltd. 5-1


    Learning Objectives
    1. What are customer value, satisfaction, and
    loyalty, and how can companies deliver them?
    2. What is the lifetime value of customers, and
    how can marketers maximize it?
    3. How can companies attract and retain the right
    customers and cultivate strong customer
    relationships and communities?
    4. How do customers’ new capabilities affect the
    way companies conduct their marketing?

    Copyright © 2016 Pearson Education Ltd. 5-2


    Building Customer Value,
    Satisfaction, and Loyalty
    • Figure 5.1

    Copyright © 2016 Pearson Education Ltd. 5-3


    Building Customer Value,
    Satisfaction, and Loyalty
    • Customer-perceived value (CPV)

    – The difference between the prospective


    customer’s evaluation of all the benefits and
    costs of an offering and the perceived
    alternatives

    – Total customer benefit vs. total customer cost

    Copyright © 2016 Pearson Education Ltd. 5-4


    Figure 5.2
    Determinants of CPV

    Copyright © 2016 Pearson Education Ltd. 5-5


    CUSTOMER VALUE ANALYSIS
    1. Identify the major attributes and benefits that customers
    value
    2. Assess the quantitative importance of the different
    attributes and benefits
    3. Assess the company’s and competitors’ performances
    on the different customer values against their rated
    importance
    4. Examine how customers in a specific segment rate the
    company’s performance against a specific major
    competitor on an individual attribute or benefit basis
    5. Monitor customer values over time

    Copyright © 2016 Pearson Education Ltd. 5-6


    Building Customer Value,
    Satisfaction, and Loyalty
    • Customer-perceived
    value (CPV)

    – Choice processes

    – Delivering high
    customer value

    – Loyalty
    Copyright © 2016 Pearson Education Ltd. 5-7
    Building Customer Value,
    Satisfaction, and Loyalty
    • Total customer satisfaction
    – A person’s feelings of pleasure or
    disappointment that result from comparing a
    product or service’s perceived performance
    (or outcome) to expectations

    Copyright © 2016 Pearson Education Ltd. 5-8


    Building Customer Value,
    Satisfaction, and Loyalty
    • Monitoring satisfaction: many companies
    are systematically measuring how well
    they treat customers, identifying the
    factors shaping satisfaction, and changing
    operations and marketing as a result
    – Periodic surveys, customer loss rate, mystery
    shoppers, J. D. Power’s satisfaction ratings

    Copyright © 2016 Pearson Education Ltd. 5-9


    Building Customer Value,
    Satisfaction, and Loyalty
    • Product and service 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
    – Conformance quality vs. performance quality
    – Impact of quality

    Copyright © 2016 Pearson Education Ltd. 5-10


    Maximizing Customer Lifetime
    Value
    • Customer profitabillity analysis
    – Activity-based costing (ABC)

    Copyright © 2016 Pearson Education Ltd. 5-11


    Figure 5.3
    Customer-Product Profitability Analysis

    Copyright © 2016 Pearson Education Ltd. 5-12


    Maximizing Customer Lifetime
    Value
    • Customer lifetime value (CLV)
    – The net present value of the stream of future
    profits expected over the customer’s lifetime
    purchases

    Copyright © 2016 Pearson Education Ltd. 5-13


    Maximizing Customer Lifetime
    Value

    Copyright © 2016 Pearson Education Ltd. 5-14


    Maximizing Customer Lifetime
    Value

    Copyright © 2016 Pearson Education Ltd. 5-15


    Attracting and Retaining
    Customers
    • Reducing defection/customer churn

     Define and measure retention rate


     Distinguish/identify customer attrition causes
     Compare lost CLV to reducing defection rate

    Copyright © 2016 Pearson Education Ltd. 5-16


    Attracting and Retaining
    Customers
    • Retention dynamics/marketing funnel

    Copyright © 2016 Pearson Education Ltd. 5-17


    Attracting and Retaining
    Customers
    • Managing the customer base
    Reduce
    customer
    defection
    Focus on Increase
    high-profit customer
    customers longevity

    Terminate Share of wallet


    low-profit &
    customers cross/upselling

    Copyright © 2016 Pearson Education Ltd. 5-18


    Building loyalty

    Interact closely with customers

    Develop loyalty programs

    Create institutional ties

    Copyright © 2016 Pearson Education Ltd. 5-19


    Brand communities
    • A specialized community of consumers
    and employees whose identification and
    activities focus around the brand

    Copyright © 2016 Pearson Education Ltd. 5-20


    Table 5.5
    Value Creation Practices
    • Social networking • Community
    – Welcoming, engagement
    empathizing, – Staking, milestoning,
    governing badging,
    • Impression documenting
    management • Brand use
    – Evangelizing, – Grooming,
    justifying customizing,
    commoditizing
    Copyright © 2016 Pearson Education Ltd. 5-21
    Cultivating Customer
    Relationships
    • Customer relationship management
    (CRM)
    – The process of carefully managing detailed
    information about individual customers and all
    customer “touch points” to maximize loyalty
    – Customer value management (CVM)

    Copyright © 2016 Pearson Education Ltd. 5-22


    CRM

    • Personalizing/permissi
    on marketing
    • Customer
    empowerment
    • Customer reviews/
    recommendations
    • Customer complaints

    Copyright © 2016 Pearson Education Ltd. 5-23


    Copyright © 2016 Pearson Education Ltd. 5-24

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