Chapter 5 - Creating long-term loyalty relationships. In this chapter, we will address the following questions: What are customer value, satisfaction, and loyalty, 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 the right customers and cultivate strong customer relationships? What are the pros and cons of database marketing?
Phillip Kevin Lane Kotler • Keller Marketing Management • 14e a h C r e t p Creating Long-term Loyalty Discussion Questions What are customer value, satisfaction, and loyalty, 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 the right customers and cultivate strong customer relationships? What are the pros and cons of database marketing? Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide of 34 Customer Value, Satisfaction, and Loyalty Holistic Marketing ã Inform ã Engage ã Energize Copyright â 2012 Pearson Education, Inc Publishing as Prentice Hall Slide of 34 e r u g i F Traditional Organization vs Customer-Oriented Organization Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide of 34 Customer Perceived Value Customerperceived Value Economi c Evaluating Obtaining Functiona l Using Psychologic al Disposing Total Customer Benefit Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Total Customer Cost Slide of 34 e r u g i F Determinants of Customer Perceived Value Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Customerperceived value Total customer benefit Total customer cost Product benefit Monetary cost Services benefit Time cost Personal benefit Energy cost Image benefit Psychological cost Slide of 34 Value Concepts - Caterpillar Profit Price $6,00 Worth to farmer: $20,000 $20,00 Customer Value -0- 5,000 19,000 $1,000 4,000 18,000 2,000 3,000 17,000 3,000 2,000 16,000 4,000 1,000 15,000 5,000 -0- 14,000 6,000 Cost to produce: $14,000 Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide of 34 Choice Processes and Implications Friends with salesperson Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Lowest purchase price wins Slide of 34 d e in f e D Customer Loyalty “A deeply held commitment to rebuy or repatronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior.” Oliver Maximizing Customer Lifetime Value 20% of Customer s 80% of Profits Customers Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide 20 of 34 Customer Profitability Customer Profitability Analysis Profitable Unprofitabl e Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Customer Lifetime Value Slide 21 of 34 d e in f e D A Profitable Customer A person, household, or company that over time yields a revenue stream exceeding by an acceptable amount the company’s cost stream for attracting, selling, and serving that customer e r u g i F Customer-Product Profitability Analysis Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide 23 of 34 Cultivating Customer Relationships Customer Information • Differentiate • Customize • Personalize • Share Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide 24 of 34 Customer Relationship Management (CRM) Personalizing Marketing Customer Empowerment Customer Reviews & Recommendations Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide 25 of 34 Personalizing Marketing Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide 26 of 34 One-to-One Marketing Identify prospects and customers Interact with each customer Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Differentiat e customers Customiz e Slide 27 of 34 Customer Empowerment Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Brand Evangelists Slide 28 of 34 Customer Reviews/Recommendations Create Buzz Negative reviews Customer ratings Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide 29 of 34 Customer Retention Acquiring new customers costs 5x more than retaining current customers The average company loses 10% Of its customers yearly Reducing customer defections by 5% can increase profits from 25% to 85% Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide 30 of 34 Attracting and Retaining Customers Manage customer base Reduce Defections 1.Define and measure 2.Determine causes 3.Compare CLV to costs Retention Dynamics Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide 31 of 34 e r u g i F The Marketing Funnel Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide 32 of 34 Building Loyalty Interact with customers Create institutional ties Develop loyalty programs Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide 33 of 34 Databases & Database Marketing Customer databases • Name, address, telephone # • Purchase history • Demographics • Psychographics • Mediagraphics Data mining Data Warehouses Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide 34 of 34 ... Concepts - Caterpillar Profit Price $6,00 Worth to farmer: $20,000 $20,00 Customer Value -0 - 5, 000 19,000 $1,000 4,000 18,000 2,000 3,000 17,000 3,000 2,000 16,000 4,000 1,000 15, 000 5, 000 -0 - 14,000... Prentice Hall Slide 17 of 34 Customer Complaints 5% 54 % - 70% Buy again if resolved 95% Complain 25% Dissatisfi ed Tell people If resolved quickly 95% Stop buying Copyright © 2012 Pearson Education,... customers costs 5x more than retaining current customers The average company loses 10% Of its customers yearly Reducing customer defections by 5% can increase profits from 25% to 85% Copyright ©