creating long term loyalty

1. 5
Creating Long-Term
Loyalty Relationships
1

2. Chapter Questions
 What are customer value, satisfaction, and
loyalty, and how can companies deliver them?
 What is the lifetime value of customers and
how can marketers maximize it?
 How can companies attract and retain
customers and cultivate strong customer
relationships?
 What are the pros and cons of database
marketing?
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3. Harrah’s Builds Relationships
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4. Figure 5.1 Customer-Orientations
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5. Dell Reestablished
Its Commitment to Value
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6. What is
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 and the
perceived alternatives.
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7. Figure 5.2 Determinants of
Customer Perceived Value
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Image benefit Psychological cost
Personal benefit Energy cost
Services benefit Time cost
Product benefit Monetary cost
Total customer benefit Total customer cost

8. Caterpillar Maximizes
Customer Value
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9. 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
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10. Copyright © 2012 Pearson Education 5-10
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.

11. Copyright © 2012 Pearson Education 5-11
Top Brands in Customer Loyalty
 Apple iPhone
 Clairol
 Samsung
 Mary Kay
 Grey Goose
 Clinique
 Avis
 Wal-Mart
 Google
 Amazon
 Bing
 J.Crew
 AT&T Wireless
 Discover Card
 Verizon Wireless
 Cheerios

12. Establishing Value
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13. Copyright © 2012 Pearson Education 5-13
Measuring Satisfaction
 Periodic surveys
 Customer loss rate
 Mystery shoppers
 Monitor competitive performance

14. Managing Customers
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15. Copyright © 2012 Pearson Education 5-15
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.

16. Copyright © 2012 Pearson Education 5-16
Maximizing Customer Lifetime Value
Customer Profitability
Customer Equity
Lifetime Value

17. Figure 5.3 Customer-Product
Profitability Analysis
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18. Copyright © 2012 Pearson Education 5-18
Estimating Lifetime Value
 Annual customer revenue: $500
 Average number of loyal years: 20
 Company profit margin: 10
 Customer lifetime value: $1000

19. Copyright © 2012 Pearson Education 5-19
What is
Customer Relationship Management?
CRM is the process of carefully managing
detailed information about individual
customers and all customer touch points to
maximize customer loyalty.

20. Copyright © 2012 Pearson Education 5-20
Framework for CRM
 Identify prospects and customers
 Differentiate customers by needs and value to
company
 Interact to improve knowledge
 Customize for each customer

21. Amy’s Maximized Word of Mouth
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22. Copyright © 2012 Pearson Education 5-22
Attracting and
Retaining Customers
 Reduce the rate of defection
 Increase longevity
 Enhance share of wallet
 Terminate low-profit customers
 Focus more effort on high-profit customers

23. Figure 5.4 The Marketing Funnel
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24. Loyalty Programs
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25. Database Key Concepts
 Customer database
 Database marketing
 Mailing list
 Business database
 Data warehouse
 Data mining
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26. Copyright © 2012 Pearson Education 5-26
Using the Database
 To identify prospects
 To target offers
 To deepen loyalty
 To reactivate customers
 To avoid mistakes

27. Copyright © 2012 Pearson Education 5-27
Don’t Build a Database When
 The product is a once-in-a-lifetime purchase
 Customers do not show loyalty
 The unit sale is very small
 The cost of gathering information is too high

28. For Review
 What are customer value, satisfaction, and
loyalty, and how can companies deliver them?
 What is the lifetime value of customers and
how can marketers maximize it?
 How can companies attract and retain
customers and cultivate strong customer
relationships?
 What are the pros and cons of database
marketing?
Copyright © 2012 Pearson Education 5-28