Kotler MM 13e Overheads 05
5
Creating Customer Value,
Satisfaction,
and Loyalty
Marketing Management, 13th ed
Chapter Questions
• What are customer value, satisfaction, and
loyalty, and how can companies deliver
them?
• What is the lifetime value of customers?
• How can companies cultivate strong
customer relationships?
• How can companies both attract and retain
customers?
• What is database marketing?
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
Figure 5.1 Organizational Charts
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
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
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
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
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
Top Brands in Customer Loyalty
•
•
•
•
Avis
Google
L.L. Bean
Samsung (mobile
phones)
• Yahoo!
• Canon (office
copiers)
•
•
•
•
•
•
•
•
Land’s End
Coors
Hyatt
Marriott
Verizon
KeySpan Energy
Miller Genuine Draft
Amazon
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
Measuring Satisfaction
Periodic
Periodic Surveys
Surveys
Customer
Customer Loss
Loss Rate
Rate
Mystery
Mystery Shoppers
Shoppers
Monitor
Monitor competitive
competitive
performance
performance
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
What is 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.
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
Maximizing Customer Lifetime Value
Customer
Profitability
Customer
Equity
Lifetime
Value
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
Figure 5.3 The 150-20 Rule
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
Figure 5.4 Customer-Product
Profitability Analysis
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
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
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
Customer Retention
• 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.
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
Figure 5.5 The Customer
Development Process
Suspects
Prospects
First-time
customers
Disqualified
Repeat
customers
Ex-customers
Clients
Members
Partners
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
Using the Database
To
To identify
identify prospects
prospects
To
To target
target offers
offers
To
To deepen
deepen loyalty
loyalty
To
To reactivate
reactivate customers
customers
To
To avoid
avoid mistakes
mistakes
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
Creating Customer Value,
Satisfaction,
and Loyalty
Marketing Management, 13th ed
Chapter Questions
• What are customer value, satisfaction, and
loyalty, and how can companies deliver
them?
• What is the lifetime value of customers?
• How can companies cultivate strong
customer relationships?
• How can companies both attract and retain
customers?
• What is database marketing?
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
Figure 5.1 Organizational Charts
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
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
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
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
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
Top Brands in Customer Loyalty
•
•
•
•
Avis
L.L. Bean
Samsung (mobile
phones)
• Yahoo!
• Canon (office
copiers)
•
•
•
•
•
•
•
•
Land’s End
Coors
Hyatt
Marriott
Verizon
KeySpan Energy
Miller Genuine Draft
Amazon
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
Measuring Satisfaction
Periodic
Periodic Surveys
Surveys
Customer
Customer Loss
Loss Rate
Rate
Mystery
Mystery Shoppers
Shoppers
Monitor
Monitor competitive
competitive
performance
performance
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
What is 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.
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
Maximizing Customer Lifetime Value
Customer
Profitability
Customer
Equity
Lifetime
Value
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
Figure 5.3 The 150-20 Rule
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
Figure 5.4 Customer-Product
Profitability Analysis
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
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
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
Customer Retention
• 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.
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
Figure 5.5 The Customer
Development Process
Suspects
Prospects
First-time
customers
Disqualified
Repeat
customers
Ex-customers
Clients
Members
Partners
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
Using the Database
To
To identify
identify prospects
prospects
To
To target
target offers
offers
To
To deepen
deepen loyalty
loyalty
To
To reactivate
reactivate customers
customers
To
To avoid
avoid mistakes
mistakes
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall