Markma group 4 chapter 5 Customer Value, Satisfaction and Loyalty
1. Visual Model: Creating
Customer Value,
Satisfaction and Loyalty
Chapter 5
Raymund C. Piñon
Marketing Management V57
April 27, 2010
2. Rationale
The 3rd important task of Modern Marketing:
3. 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 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?
4. To Win Customers and
….Beat Competition!!!
Customer-centered
X Traditional
5. To Win Customers and
….Beat Competition!!!
Total
Customer
Satisfaction
Build
Create and Deliver Customer
Superior Customer Value Loyalty
6. Customers’ Perceived Value
Customers are value maximizers
Total Total Delivered
Benefits Costs Value
Product Money
Service Time
Personnel Effort
Image Psychological
7. Steps in Customer Value Analysis
Identify features & benefits Assess company’s
that 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 time
14. 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 >
19. 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
22. 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
23. 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. Customer Database and
Database Management
Choose which customers
Identify prospects receive a particular offer Deepen loyalty
Reactivate customer purchases Avoid mistakes
29. Summary
The 3rd important marketing task of
CONNECTING WITH CUSTOMERS
1. Customer Value, Customer Satisfaction,
Customer Loyalty and how 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
30. Win Customers, Beat Competition Customer Lifetime Value
Satisfaction
Equity
= Profitability
+ Lifetime Value
Perceived Expectation
Benefits
Customer Relationship Management
Attract and Retain Customers
Customer Database & Database Mgt
Value
Proposition Value Delivery
System
Customer Value Loyalty
32. 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
33. Customer Value
What customer gets from a product & what
he has to give to attain it
40. 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
57. Creating Customer Value,
Satisfaction and Loyalty
Value
Quality Perceived by the
Customer
Customer
sFrontline
Satisfaction
Customer
People
Loyalty
Middle
Managemen
t
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 behavior Quality (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 customers Profitable Customer (thumbs up) = revenue from person/household/company > company’s cost of attracting, selling and servicing Satisfaction (smiley face) = Customer Lifetime Value
C ustomer Relationship Management (Stick figure 2) = carefully managing detailed information about individual customers and all customer touch points to maximize customer 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