1 4 Creating Long-Term Loyalty Relationships1 4 Creating Long-Term Loyalty Relationships

2 Chapter Questions How can companies deliver customer value, satisfaction, and loyalty? What is the lifetime value of customers and how can marketers maximize it? How can companies attract and retain customers and cultivate strong customer relationships? What are the pros and cons of database marketing? Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall

3 Harrah’s Builds RelationshipsCopyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall

4 Figure 4.1 Determinants of Customer Perceived ValueTotal customer benefit Total customer cost Product benefit Monetary cost Services benefit Time cost Personal benefit Energy cost Image benefit Psychological cost Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall

5 Steps in a Customer Value AnalysisIdentify 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 © 2011 Pearson Education, Inc.  Publishing as Prentice Hall

6 What is Loyalty? Loyalty is 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. Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall

7 Top Brands in Customer LoyaltyApple iPhone Clairol Samsung Mary Kay Grey Goose Clinique Avis Wal-Mart Google Amazon Bing J.Crew AT&T Wireless Discover Card Verizon Wireless Cheerios Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall

8 Measuring SatisfactionPeriodic surveys Customer loss rate Mystery shoppers Monitor competitive performance Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall

9 Managing Customers Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall

10 What is Quality? Quality is the totality of features andcharacteristics of a product or service that bear on its ability to satisfy stated or implied needs. Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall

11 Maximizing Customer Lifetime ValueCustomer Profitability Customer Equity Lifetime Value Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall

12 Figure 4.2 Customer-Product Profitability AnalysisCopyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall

13 Estimating Lifetime ValueAnnual customer revenue: $400 Average number of loyal years: 20 Company profit margin: 10 Customer lifetime value: $1000 Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall

14 What is Customer Relationship Management?CRM is the process of carefully managing detailed information about individual customers and all customer touch points to maximize customer loyalty. Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall

15 Framework for CRM Identify prospects and customersDifferentiate customers by needs and value to company Interact to improve knowledge Customize for each customer Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall

16 Attracting and Retaining CustomersReduce the rate of defection Increase longevity Enhance share of wallet Terminate low-profit customers Focus more effort on high-profit customers Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall

17 Figure 4.3 The Marketing FunnelCopyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall

18 Loyalty Programs Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall

19 Database Key Concepts Customer database Database marketingMailing list Business database Data warehouse Data mining . Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall

20 Using the Database To identify prospects To target offersTo deepen loyalty To reactivate customers To avoid mistakes Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall

21 For Review How can companies deliver customer value, satisfaction, and loyalty? What is the lifetime value of customers and how can marketers maximize it? How can companies attract and retain customers and cultivate strong customer relationships? What are the pros and cons of database marketing? Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall