4 Creating Longterm Loyalty Relationships Dosen Citra Kusuma

4. Creating Long-term Loyalty Relationships Dosen: Citra Kusuma Dewi SE. , MBA

Chapter Questions. . 1. What are customer value, satisfaction and loyalty, and how can companies deliver them? 2. What is the lifetime value of customers, and how can marketers maximize it? 3. How can companies attract and retain the right customers and cultivate strong customer relationship and communities? 4. How do customers’ new capabilities affect the way companies conduct their marketing? Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 2 of 34

Customer Value, Satisfaction, and Loyalty product and sales philosophy holistic marketing philosophy: strong customer relationship Holistic Marketing • Inform • Engage • Energize Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 3 of 34

Traditional Organization vs. Modern Customer-Oriented Organization Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 4 of 34

i f e D d e n Customer Perceived Value Customer-perceived value (CPV) is the difference between the prospective customer’s evaluation of all the benefits and all the costs of an offering and the perceived alternatives. Customerperceived Value Economic Evaluating Obtaining Functional Using Psychological Disposing Total Customer Benefit Total Customer Cost

e r gu 2. 5 i F Determinants of Customer Perceived Value Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Customerperceived value Total customer benefit Total customer cost Product benefit Monetary cost Services benefit Time cost Personal benefit Energy cost Image benefit Psychological cost Slide 6 of 34

i f e D d e n Satisfaction A person’s feelings of pleasure or disappointment that result from comparing a product’s perceived performance to (or outcome) to expectations.

Customer Satisfaction Expectations Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 8 of 34

Customer Expectations Previous purchases Friends advice Marketers’ / competitors Expectations Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 9 of 34

Monitoring Satisfaction Customer Complaints Measurement Techniques Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Influence of Customer Satisfaction Slide 10 of 34

Measurement Techniques Periodic Surveys Mystery Shopper Customer Loss Rate pose as potential buyers and report on strong and weak points experienced in buying the company’s and competitors’ products . . Video mystery shopping by YOUR CUSTOMER'S EXPERIENCE (1). mp 4 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 11 of 34

Customer Complaints 5% 54% - 70% Buy again if resolved 95% Complain 25% Dissatisfied Tell 5 people If resolved quickly 95% Stop buying Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Tell 11 people Slide 12 of 34

Influence of Customer Satisfaction Customer satisfaction stays loyal longer, buys more talks favorably to others pays less attention to competing brands less sensitive to price, offers product or service ideas to the company, and • costs less to serve than new customers because transactions can become routine. • • • Marketing tool Speed of communication the Internet provides a tool for consumers to quickly spread both good and bad word of mouth to the rest of the world Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 13 of 34

Product and Service Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy needs. Satisfaction Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Quality Profitability Slide 14 of 34

Maximizing Customer Lifetime Value 20% of Customers 80% of Profits Customers Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 15 of 34

i f e D d e n A Profitable Customer A person, household, or company that over time yields a revenue stream exceeding by an acceptable amount the company’s cost stream for attracting, selling, and serving that customer.

Why is retaining existing customers so important? Acquiring new customers costs 5 x more than retaining current customers The average company loses 10% Of its customers yearly Reducing customer defections by 5% can increase profits from 25% to 85% Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 17 of 34

The Marketing Funnel Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 18 of 34

i f e D d e n Customer Loyalty “A deeply held commitment to rebuy or repatronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior. ” -- Oliver

Building Loyalty Interact with customers Create institutional ties Develop loyalty programs Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 20 of 34

Brand Communities Specialized community of consumers and employees whose identification and activities around the brand. Characteristics: 1. A “consciousness of kind” or a sense or felt connected to the brand, company, product or other community members 2. Shared rituals, stories, and traditions that help convey the meaning of community 3. A shared moral responsibility or duty to both community as a whole and individual community members. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 21 of 34

Customer Relationship Management (CRM) Customer relationship management (CRM) is the process of carefully managing detailed information about individual customers and all customer “touch points” to maximize loyalty. Personalizing Marketing Customer Empowerment Customer Reviews & Recommendations Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 22 of 34