© Dr V.Kumar V. Kumar PROFITABLE CUSTOMER ENGAGEMENT Concepts, Metrics & Strategies

Chapter 5 Linking Brand Value to Customer Value Chapter 5 Linking Brand Value to Customer Value Instructor’s Presentation Slides 2

© Dr V.Kumar Link Brand Value to Customer Value 3

© Dr V.Kumar How to Link Brand Value to Customer Value  Select a set of customers  Survey these customers on a 10-point scale and compute various components of CBV  For the same customers compute CLV based on their transaction data  The following equations explain how an individual’s brand knowledge translates into brand attitude, brand purchase intention, brand behavior, and finally to his or her lifetime value to a firm. 4

© Dr V.Kumar How to Link Brand Value to Customer Value  Brand Attitude = f(Brand Knowledge)  Trust = f (Awareness, Image)  Affect = f (Awareness, Image)  Brand Behavior intention = f(Trust, Affect)  Pintent = f (Trust, Affect)  Brand Behavior = f (Brand Behavior Intention)  Brand Attitude = f(Brand Knowledge)  Trust = f (Awareness, Image)  Affect = f (Awareness, Image)  Brand Behavior intention = f(Trust, Affect)  Pintent = f (Trust, Affect)  Brand Behavior = f (Brand Behavior Intention) 5 Cont’d….

© Dr V.Kumar Linking Brand Value to Customer Value  Brand Behavior = f (Brand Behavior Intention)  Loyalty = f (Pintent)  Pprice = f (Loyalty)  Advocacy = f (Loyalty)  CLV = f (Pprice, Advocacy)  Brand Behavior = f (Brand Behavior Intention)  Loyalty = f (Pintent)  Pprice = f (Loyalty)  Advocacy = f (Loyalty)  CLV = f (Pprice, Advocacy) 6

© Dr V.Kumar Linking Brand Value to Customer Value  CLV is calculated based on customer behavior outcome  Brand building is the most important as it eventually leads to favorable brand behavior outcomes  Hence, when components of CBV are simultaneously optimized CLV scores are maximized for a customer 7

© Dr V.Kumar 8 Implementation Step 7: Reach Potential Customers Step 6: Branding Strategies Step 5: CBV & CLV Optimization Step 4: Link CBV to CLV Step 3: Measure individual customers' Brand Value (i.e. CBV) Step 2: Selection of Customers Step 1: Measure CLV

© Dr V.Kumar  By examining the various components of customers brand value, companies can evaluate the brand value for each customer  Develop branding strategies to address any branding shortcomings that may exist in current branding communications  By strengthening the brand, companies eventually maximize the CLV of each customer 9 Implementation

© Dr V.Kumar Segmentation strategies to manage CLV and CBV 10 ACQUAINTANCES Increase Brand Investment Build Customer Relationships. ACQUAINTANCES Increase Brand Investment Build Customer Relationships. TRUE LOYALISTS Brand Investment to maintain High Brand Value. Nurture the Customer Relationship. TRUE LOYALISTS Brand Investment to maintain High Brand Value. Nurture the Customer Relationship. POOR PATRONS Align the Brand with the right customer segment. POOR PATRONS Align the Brand with the right customer segment. STRANGERS Kill the Brand if no association. Invest in the Brand if association exists. STRANGERS Kill the Brand if no association. Invest in the Brand if association exists.

© Dr V.Kumar Conclusion  By understanding the individual CBV scores of customers, companies will be in a better position to develop strategies to strengthen the customer–firm relationship  By enhancing customer–firm relationships, firms will be in a position to positively impact the behavior of its customers thereby maximizing their profits. 11

© Dr V.Kumar End of Chapter 5 12