1. 5 Creating Customer Value, Satisfaction, and Loyalty
MARKETING STRATEGY 5
Creating
Customer Value,
Satisfaction, and Loyalty

2. Organizational Chart
Successful marketing companies follow the chart where customers are at the top; next in importance are front line people who meet, serve, and satisfy customers; under them are middle managers, whose job is to support the front-line people; and at the base is top management, whose job is to hire and support middle managers.
Even managers at every level must be personally involved in knowing, meeting and serving customers

3. Customer perceived Value
Customer perceived Value: is the difference between the prospective customer’s evaluation of all the benefits and all the costs of an offering.
Total customer Value: perceived momentary value of the bundle of economic, functional and psychological benefits customers expect from a given offering.

4. Loyalty A deeply held commitment to re-buy a preferred product
or service in the future despite situational
influences and marketing efforts having
the potential to cause switching behavior.

5. The Value Proposition The whole cluster of benefits the
company promises
to deliver (BMW – ‘The ultimate
driving machine’, Red Bull –
‘Giving winds’)

6. Total Customer Satisfaction
Satisfaction: is a person’s feelings (attitudes) of pleasure or disappointment resulting from comparing a product’s perceived performance (or outcome) in relation to his / her expectations.

7. Measuring Satisfaction
One key to customer retention is customer satisfaction; a satisfied customer stays loyal, longer, buys more, talks favorably, and is less price sensitive.
Periodic surveys; respondents are asked questions
Monitor Customer loss rate; contact customers who have stopped buying
Monitor competitive performance

8. Product and Service 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.

9. Quality Conformance to requirements
Performance level (e.g. Lexus provides higher performance quality than a Hyundai; better ride, faster, lasts longer)
However, both may offer the same conformance quality if all units deliver the promised quality.

10. Total Quality Management
TQM is an organization-wide
approach to continuously
improving the quality of
all the organization’s processes,
products, and services.

11. Maximizing Customer Lifetime Value
Customer profitability: is a person, household, or company that over time yields sufficient revenue.
Customer equity: the consumer’s objective assessment of the utility of an offering based on perceptions. The more loyal the customers are, the higher the customer equity.
Lifetime value

12. Framework for CRM Stronger bonds with their customers
Identify prospects and customers; maintain reach customer database.
Differentiate customers by needs and value to company; spend proportionately more effort on the most valuable customers.
Interact to improve knowledge about individual needs and to build stronger relationships.
Customize products, services and messages for each customer

13. CRM Strategies (cont/d)
Reduce rate of defection; selecting and training employees to be knowledgeable and friendly increases the likelihood that all questions from customers will be answered satisfactorily
Increase long life; being involved with the company
Enhance share of wallet; sells more of a product and other supplement products
Terminate low-profit customers or make them more profitable
Focus more effort on high-profit customers

14. Table 5.1 Mass vs. One-to-One Marketing
Average customer
Customer anonymity
Standard product
Mass production
Mass distribution
Mass advertising
One-way message
Economies of scale
One-to-One
Individual customer
Customer profile
Customized market offering
Customized production
Economies of scope
Share of customer

15. Customer Retention
More companies recognize the importance of satisfying and retaining customers.
Acquisition of customers can cost 5 times more than retaining current customers.
The customer profit rate increases over the life of a retained customer.
The average company loses 10% of its customers every year.

16. Describing Market Dynamics; How easily & often customers can enter and leave
Prospects can be converted into first-time customers then into repeat and then into clients (special and knowledgeable treatment)
Permanent capture markets; Once a customer always a customer
Simple retention markets; customers can be lost after each period
Customer migration markets; customers can leave and come back

17. Building Loyalty
Different levels of investment in customer relationship building
Basic: the SP simply sells the product
Reactive: sells and encourages the customer( by calling for questions, comments or complaints)
Accountable: check if the product is meeting expectations, give suggestions for improvement
Proactive: the SP calls customers from time to time with suggestions and new products
Partnership: work continuously with its large customers to improve performance

18. Database Key Concepts
Customer database: collection of comprehensive information about customers
Database marketing: building, maintaining & using customer database
Mailing list: set of names, addresses & telephone numbers
Business database: business customers’ past purchases – volume, prices & profits
Data warehouse: personnel can capture, query, and analyze the data
Data mining: mktg statisticians can extract useful information about individuals, trends and segments from the mass of data

19. Using the Database To identify prospects through response features
To target offers by setting up criteria describing the ideal target market
To deepen loyalty by remembering customer preferences
To reactivate customers by sending birthday and anniversary cards
To avoid mistakes