04 Creating Customer Value Satisfaction and Loyalty An

04 Creating Customer Value, Satisfaction, and Loyalty: An Strategic Marketing Goal

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

Customer Experience Management (CEM) • Managing the customers’ interactions with the organization at all levels and at all touch-points so that the customer has a positive impression of the organization, is satisfied with the experience, and will remain loyal to the organization. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5 -3

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 5 -4

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

The Value Proposition The whole cluster of benefits the company promises to deliver Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5 -6

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

What is Satisfaction • It is a person’s feeling of pleasure or disappointment resulting from comparing a product’s perceived performance (or outcome) in relation to his or her expectations. • Satisfaction = function (perceived performance /expectations) Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5 -8

Benefits of Highly Satisfied Customer • • Stays Loyal Longer Buys more Talks favorably about the company Offer products and services ideas to the company • Costs less to serve than new customer Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5 -9

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 5 -10

Maximizing Customer Lifetime Value Customer Profitability Customer Equity Lifetime Value Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5 -11

Customer Relationship Management (CRM) • Customer relationship management is the process of identifying prospective buyers, understanding them intimately, and developing long-term perceptions of the organization and its offering so that buyers will choose them in the marketplace. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5 -12

What is Customer Relationship Management? CRM is the process of carefully managing detailed information about individual customers and all customer touchpoints to maximize customer loyalty. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5 -13

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 5 -14

CRM Strategies Reduce the rate of defection Increase longevity Enhance “share of wallet” Terminate low-profit customers Focus more effort on high -profit customers Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5 -15

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 5 -16

The Customer Development Process Suspects Prospects First-time customers Disqualified Repeat customers Clients Ex-customers Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Members Partners 5 -17

Database Key Concepts • Customer database • Database marketing • Mailing list • Business database • Data warehouse • Data mining Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5 -18

Using the Database To identify prospects To target offers To deepen loyalty To reactivate customers To avoid mistakes Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5 -19

• Basic Marketing: selling the product • Reactive Marketing: selling the product and encouraging further contact • Accountable Marketing: Follow up on Customers satisfaction. • Proactive marketing: involving customers in product and company improvements • Partnership marketing: encouraging the customer to become a stakeholder in the company Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5 -20