Phillip Kevin Lane Kotler Keller Marketing Management 14

Phillip Kevin Lane Kotler • Keller Marketing Management • 14 e

t p a h C 5 r e Creating Long-term Loyalty Relationships

Discussion 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 relationships? 4. What are the pros and cons of database marketing? Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 3 of 34

Customer Value, Satisfaction, and Loyalty Holistic Marketing • Inform • Engage • Energize Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 4 of 34

e r u g i F 1. 5 Traditional Organization vs. Customer-Oriented Organization Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 5 of 34

Customer Perceived Value Customerperceived Value Economic Evaluating Obtaining Functional Using Psychological Disposing Total Customer Benefit Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Total Customer Cost Slide 6 of 34

e r u g i F 2. 5 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 7 of 34

Value Concepts - Caterpillar Profit Price $6, 000 $20, 000 Worth to farmer: $20, 000 Customer Value -0 - 5, 000 19, 000 $1, 000 4, 000 18, 000 2, 000 3, 000 17, 000 3, 000 2, 000 16, 000 4, 000 15, 000 -0 - 14, 000 6, 000 Cost to produce: $14, 000 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 8 of 34

Choice Processes and Implications Friends with salesperson Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Lowest purchase price wins. Slide 9 of 34

D i f e 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

Value Proposition Volvo Core positioning: • Safety Other benefits: • Good performance • Design • Environmentally friendly Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 11 of 34

D i f e 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 13 of 34

Customer Expectations Previous purchases Friends advice Marketers’ / competitors Expectations Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 14 of 34

Monitoring Satisfaction Influence of Customer Satisfaction Measurement Techniques Customer Complaints Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 15 of 34

Measurement Techniques Customer Loss Rate Surveys Mystery Shopper Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 16 of 34

Influence of Customer Satisfaction Customer satisfaction Speed of communication Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 17 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 18 of 34

Product and Service Quality Performance Conformance Quality Satisfaction Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Profitability Slide 19 of 34

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

Customer Profitability Analysis Profitable Unprofitable Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Customer Lifetime Value Slide 21 of 34

D i f e 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.

e r u g i F 3. 5 Customer-Product Profitability Analysis Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 23 of 34

Cultivating Customer Relationships Customer Information • Differentiate • Customize • Personalize • Share Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 24 of 34

Customer Relationship Management (CRM) Personalizing Marketing Customer Empowerment Customer Reviews & Recommendations Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 25 of 34

Personalizing Marketing Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 26 of 34

One-to-One Marketing Identify prospects and customers Interact with each customer Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Differentiate customers Customize Slide 27 of 34

Customer Empowerment Brand Evangelists Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 28 of 34

Customer Reviews/Recommendations Create Buzz Negative reviews Customer ratings Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 29 of 34

Customer Retention 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 30 of 34

Attracting and Retaining Customers Manage customer base Reduce Defections 1. Define and measure 2. Determine causes 3. Compare CLV to costs Retention Dynamics Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 31 of 34

e r u g i F 4. 5 The Marketing Funnel Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 32 of 34

Building Loyalty Interact with customers Create institutional ties Develop loyalty programs Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 33 of 34

Databases & Database Marketing Customer databases • Name, address, telephone # • Purchase history • Demographics • Psychographics • Mediagraphics Data mining Data Warehouses Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 34 of 34