Chapter 5 – Creating Customer Value Satisfaction And Loyalty

Md Afnan Hossain – Lecturer SouthEast UniversityCourse Code: Mkt 3123 (D,E)

Contents Source: Kotlar, Keller, Koshy, Jha (2014) Marketing Management.

Forbes, The Economist, Wall Street Journal, Financial Times, Business Week, CNN Business

Marketing Management

Determinants of Customer Perceived Value

Image benefit Psychological cost

Personal benefit Energy cost

Services benefit Time cost

Product benefit Monetary cost

Total customer benefit Total customer cost

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

Amazon And Samsung Unseat Apple In 2013

Customer Loyalty Engagement Index

Samsung (taking the #1 spot from Apple in Smartphones),

Amazon (which took the #1 spot from Apple in Tablets) and kept its #1 ranking for its Kindle E-readers,

Hyundai and Ford (tied for #1 in Automotive, with Ford moving up in a big way),

Dunkin’ Donuts (in both Packaged and Out-of-Home Coffee Categories),

Subway (in Quick Serve, who served up enough emotional engagement to unseat McDonald’s (now #3)

http://www.forbes.com/sites/marketshare/2013/02/05/amazon-and-samsung-unseat-apple-as-2013-customer-loyalty

engagement-index-ids-seismic-shifts-in-consumer-emotional-engagement-oh-and-11-ca

Consumer satisfaction

Satisfaction is person’s feelings of pleasure

or disappointment resulting from comparing a

product’s perceived performance (or

outcome) in relation to his or her

expectations.

Measuring Satisfaction

Periodic Surveys

Customer Loss Rate

Mystery Shoppers

Monitor competitive

performance

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.

Maximizing Customer Lifetime Value

Customer

Profitability

Customer

Equity

Lifetime

Value

Consumer profitability

is a person, household, or company that over

time yields a revenue stream that exceeds by

an acceptable amount the company’s cost

stream of attracting, selling, and servicing

that customer.

Customer-Product Profitability Analysis

Consumer lifetime value

Describes the net present

value of the stream of future

profits expected over the

consumer’s lifetime purchases.

Framework for CRM

Identify prospects and customers

Differentiate customers by needs

and value to company

Interact to improve knowledge

Customize for each customer

CRM Strategies

Reduce the rate of defection

Increase longevity

Enhance “share of wallet”

Terminate low-profit

customers

Focus more effort on

high-profit customers

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.

The Customer Development Process

Prospects

Suspects

Disqualified

First-time

customersRepeat

customersClients Members

PartnersEx-customers

Using the Database

To identify prospects

To target offers

To deepen loyalty

To reactivate customers

To avoid mistakes

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