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Creating Long-Term Loyalty Relationship

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66 views21 pages

Creating Long-Term Loyalty Relationship

Uploaded by

Ahanaf
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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5

Creating Long-term Loyalty


Relationship
Figure 5.1 Organizational Charts
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.
Figure 5.2 Determinants of
Customer Perceived Value

Total customer benefit Total customer cost

Product benefit Monetary cost

Services benefit Time cost

Personal benefit Energy cost

Image benefit Psychological cost


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
Choice Process and Implications

 Low price
 Buyer Retirement
 Long-term friendship
Delivering High Customer Value

Loyalty : 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.
Value Proposition: Cluster of Promised
benefits.
Top Brands in Customer Loyalty

• Google • Land’s End


• L.L. Bean • Coors
• Samsung (mobile • Hyatt
phones) • Marriott
• Yahoo! • Verizon
• Canon (office • KeySpan Energy
copiers) • Miller Genuine Draft
• Amazon
Total Customer Satisfaction

Satisfaction????
Measuring Satisfaction And
Influences
Periodic
Periodic Surveys
Surveys

Customer
Customer Loss
Loss Rate
Rate

Mystery
Mystery Shoppers
Shoppers

Monitor
Monitor Competitive
Competitive Performance
Performance
Product and Service Quality and
Impact

Quality is the totality of features and


characteristics of a product or
service that bear on its
ability to satisfy
stated or implied needs.
Maximizing Customer Lifetime Value

Customer
Profitability

Customer Lifetime
Equity Value
Figure 5.3 The 150–20 Rule

Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5-13


Figure 5.3 Customer-Product
Profitability Analysis
Measuring Lifetime Value

??????
Attracting & Retaining Customers

• Acquisition of customers can cost five times


more than retaining current customers.
• The average customer loses 10% of its
customers each year.
• A 5% reduction to the customer defection
rate can increase profits by 25% to 85%.
• The customer profit rate increases over the
life of a retained customer.
Building Loyalty

 Interact Closely With Customers


 Develop Frequency Programs
 Create Institutional Ties
What is Customer Relationship
Management?

CRM is the process of carefully


managing detailed information about
individual customers and all customer
touchpoints to maximize
customer loyalty.
Framework for CRM

Identify prospects and customers

Differentiate customers by needs


and value to company

Interact to improve knowledge

Customize for each customer

Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5-19


CRM Strategies

Reduce
Reduce the
the rate
rate of
of defection
defection

Increase
Increase longevity
longevity

Enhance
Enhance “share
“share of
of wallet”
wallet”

Terminate
Terminate low-profit
low-profit customers
customers

Focus
Focus more
more effort
effort on
on high-profit
high-profit
customers
customers

Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 5-20


Marketing Discussion

 Choose a business and show how


you would go about developing a
quantitative formulation that captures
the concept of customer lifetime value.

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