5. Objectives
At the end of the presentation, the participants should be able
to understand concepts related to the 3rd marketing task of
CONNECTING WITH CUSTOMERS
1. Customer Value, Customer Satisfaction, Customer
Loyalty and how do we deliver them?
2. What is the lifetime value of customers?
3. How can companies cultivate strong customer
relationships?
4. How can companies both attract and retain customers?
5. What is database marketing?
6. To Win Customers and
….Beat Competition!!!
Customer-centered
X Traditional
7. To Win Customers and
….Beat Competition!!!
Satisfaction
Value Loyalty
8. Customers’ Perceived Value
Customers are value maximizers
Total Total Costs Delivered
Benefits Value
Money
Product
Time
Service
Effort
Personnel
Psychological
Image
9. Steps in Customer Value Analysis
Identify features & benefits Assess company’s
customers value Assess qualitative importance and competitors’
of attributes & benefits performance on different
values against rated
performance
Examine ratings of specific segments Monitor customer values over tme
16. What is Quality?
• Totality of features and characteristics of products or services that
satisfy stated or implied needs
Product or Service Expectations
Meets or exceeds
= or >
21. Maximizing Customer Lifetime Value
Measuring Customer Lifetime Value
Year 0 Year 1 Year 2 Year 3 Year 4
Number of Customers
Revenue per Customer
Variable Cost per Customer
Margin per Customer
Acquisition Cost per Customer
Total Cost or Profit
Present Value
22. Maximizing Customer Lifetime Value
Measuring Customer Lifetime Value
Year Year Year Year Year Year Year Year
0 1 2 3 4 5 6 7
Number of Customers
Revenue per Customer
Variable Cost per Customer
Margin per Customer
Acquisition Cost per Customer
Total Cost or Profit
Present Value
24. Customer Relationship Management
Key to retaining customers is relationship marketing
2. Differentiate customers in terms of:
1. Identify prospects and customers a. Their needs
b. Their value to your company
3. Interact with individual customers to 4. Customize products, services
improve knowledge about needs and and messages to each customer
build stronger relationships
25. Customer Relationship Management
Increasing Value of Customer Base
1. Reduce customer defection
2. Increase longevity of relationship
3. Enhance growth potential
of each customer
4. Make low-profit
customers profitable
or weed out
5. Focus on high-value customers
28. Partners
Advocates
Members
Clients
Repeat Inactive or
Customer Ex-Customers
1st-Time
Customer
Prospects
Disqualified
Potentials Prospects
29. Customer Relationship Management
Building Customer Loyalty
Interacting with Customers Creating Loyalty Programs
Personalizing Marketing Creating Institutional Ties
30. Customer Database and
Database Management
Customer Database
Data Warehousing
Data Mining
31. Customer Database and
Database Management
Choose which customers
Identify prospects receive a particular offer Deepen loyalty
Reactivate customer purchases Avoid mistakes
32. Summary
The 3rd important marketing task of
CONNECTING WITH CUSTOMERS
1. Customer Value, Customer Satisfaction, Customer
Loyalty and how do we deliver them
2. Lifetime value of customers
3. How companies cultivate strong customer relationships
4. How companies attract and retain customers
5. Database marketing
36. Customer Perceived Value (CPV) =
Difference between all benefits
and costs of an offering and the
perceived alternatives
37. Loyalty = 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
Quality = totality of features and
characteristics of a product or
service that bear on its ability to
satisfy stated or implied needs
38. Marketing is the art of
ATTRACTING and KEEPING
profitable customers
Profitable Customer = revenue
from
person/household/company is
greater than the company’s cost
of attracting, selling and
servicing
Satisfaction = Customer
Lifetime Value
39. Customer Relationship Management =
carefully managing detailed information
about individual customers and all
customer touch points to maximize
customer loyalty
50. Objective:
How is this created?
• Through customer value
• Steps in customer value analysis?
• Through customer satisfaction
• The CRM Framework?
• Through customer loyalty
• Customer retention: using database
51. Customer Value
• What customer gets from a product & what he
has to give to attain it
58. Summary
• What is customer value
• 5 Steps in customer value analysis
• Customer satisfaction and framework
• What is customer loyalty
• All about customer retention
• Using Database
60. Creating Customer Value, Satisfaction
and Loyalty
Value Quality Perceived by
the Customer
Customers
Customer Satisfaction
Frontline People
Loyalty
Middle
Management
Top Management
Profit for the stakeholders
Editor's Notes
The CUSTOMER is now on top of the organizational hierarchy
Customer Perceived Value (CPV) = Difference between all benefits and costs of an offering and the perceived alternatives
Loyalty (dog) = 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 behaviorQuality (check) = totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs
Magnet = marketing is the art of ATTRACTING and KEEPING profitable customersProfitable Customer (thumbs up) = revenue from person/household/company > company’s cost of attracting, selling and servicingSatisfaction (smiley face) = Customer Lifetime Value
Customer Relationship Management(Stick figure 2)= carefully managing detailed information about individual customers and all customer touch points to maximizecustomer loyalty
Framework for CRM:1.Identify (eyes) prospects and customers
2. Differentiate (nose) customers by needs and value to company
3. Interact (smile) to improve knowledge
4. Customize (ears)for each customer
CRM Strategies (how winning companies improve their customer base):1. Reduce (2 hearts crossed out) the rate of defection
2. Increase (heart going up) longevity
3. Enhance (heart with exclamation point) share of wallet
4. Terminate (broken heart) low-profit customers
5.Focus more effort (heart with explosion)on high-profit customers