1. Creating Customer Value, Satisfaction, and Loyalty Marketing Management, 13 th ed 5

2. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-2 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?

3. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-3 Figure 5.1 Organizational Charts

4. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-4 Figure 5.2 Determinants of Customer Perceived Value Image benefitPsychological cost Personal benefitEnergy cost Services benefitTime cost Product benefitMonetary cost Total customer benefitTotal customer cost

5. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-5 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

6. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-6 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

7. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-7 Measuring Satisfaction Periodic Surveys Customer Loss Rate Mystery Shoppers Monitor competitive performance

8. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-8 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.

9. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-9 Maximizing Customer Lifetime Value Customer Profitability Customer Equity Lifetime Value

10. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-10 Figure 5.3 The 150-20 Rule

11. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-11 Figure 5.4 Customer-Product Profitability Analysis

12. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-12 Framework for CRM Identify prospects and customers Differentiate customers by needs and value to company Interact to improve knowledge Customize for each customer

13. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-13 CRM Strategies Reduce the rate of defection Increase longevity Enhance “share of wallet” Terminate low-profit customers Focus more effort on high-profit customers

14. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-14 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.

15. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-15 Figure 5.5 The Customer Development Process Prospects Suspects Disqualified First-time customers Repeat customers ClientsMembers Partners Ex-customers

16. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-16 Using the Database To identify prospects To target offers To deepen loyalty To reactivate customers To avoid mistakes