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Chapter 5 creating customer value, satisfaction and loyalty

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by Group 4, Markma: Chapter 5 - Creating Customer Value, Satisfaction and Loyalty
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Chapter 5: Creating Customer Value, Satisfaction and Loyalty Group 4 Crisostomo, Kathleen Lizette Jongco, Kristoffer Pinon, Ralph Raymund Siton, Galicano
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Page 1: Chapter 5  creating customer value, satisfaction and loyalty

Chapter 5:Creating Customer Value, Satisfaction

and Loyalty

Group 4Crisostomo, Kathleen LizetteJongco, KristofferPinon, Ralph RaymundSiton, Galicano

Page 2: Chapter 5  creating customer value, satisfaction and loyalty

Selected Presentation

Page 3: Chapter 5  creating customer value, satisfaction and loyalty

Visual Model: Creating Customer Value, Satisfaction and Loyalty

Raymund C. PiñonMarketing Management V57

April 27, 2010

Page 4: Chapter 5  creating customer value, satisfaction and loyalty

Rationale

• The 3rd important task of Modern Marketing:

Page 5: Chapter 5  creating customer value, satisfaction and loyalty

ObjectivesAt the end of the presentation, the participants should be able to understand

concepts related to the 3rd marketing task of CONNECTING WITH CUSTOMERS

1. Customer Value, Customer Satisfaction, Customer Loyalty and how do we deliver them?

2. What is the lifetime value of customers?3. How can companies cultivate strong customer

relationships?4. How can companies both attract and retain customers?5. What is database marketing?

Page 6: Chapter 5  creating customer value, satisfaction and loyalty

To Win Customers and ….Beat Competition!!!

Traditional

Customer-centered

X

Page 7: Chapter 5  creating customer value, satisfaction and loyalty

To Win Customers and ….Beat Competition!!!

Value

Satisfaction

Loyalty

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Customers’ Perceived ValueCustomers are value maximizers

Total Costs

Money

Time

Effort

Psychological

Total Benefits

Product

Service

Personnel

Image

DeliveredValue

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Steps in Customer Value Analysis

Identify features & benefits customers value Assess qualitative importance

of attributes & benefits

Assess company’s and competitors’ performance on different values against ratedperformance

Examine ratings of specific segments Monitor customer values over tme

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Delivering High Customer Value

Value Proposition Value Delivery System

Page 11: Chapter 5  creating customer value, satisfaction and loyalty

Total Customer Satisfaction

_ =

Perceived Performance

Buyer’sExpectation Satisfaction

Page 12: Chapter 5  creating customer value, satisfaction and loyalty

Total Customer SatisfactionSatisfaction is Related to Loyalty

Page 13: Chapter 5  creating customer value, satisfaction and loyalty

Total Customer SatisfactionInfluence of Customer Satisfaction

Page 14: Chapter 5  creating customer value, satisfaction and loyalty

Total Customer SatisfactionMonitoring Customer Satisfaction

Periodic SurveysCustomer Loss Rate

Mystery ShopperCompetitors’ Performance

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Total Customer SatisfactionSatisfaction Will Also Depend on Quality

Page 16: Chapter 5  creating customer value, satisfaction and loyalty

• Totality of features and characteristics of products or services that satisfy stated or implied needs

What is Quality?

= or >

Product or ServiceMeets or exceeds

Expectations

Page 17: Chapter 5  creating customer value, satisfaction and loyalty

Customer Lifetime ValueArt of attracting and keeping profitable customers

Page 18: Chapter 5  creating customer value, satisfaction and loyalty

Maximizing Customer Lifetime Value

Customer Profitability

Customer Equity Lifetime Value

Page 19: Chapter 5  creating customer value, satisfaction and loyalty

Maximizing Customer Lifetime ValueCustomer Profitability Analysis

C1 C2 C3

P1 + + +Highly profitable product

P2 + Profitable product

P3 - - Unprofitable product

P4 -Highly unprofitable product

High-profit customer

Mixed-bag customer

Losing customer

Page 20: Chapter 5  creating customer value, satisfaction and loyalty

Maximizing Customer Lifetime ValueCustomer Profitability Analysis

Activity-Based Costing

Customer Portfolios• acquaintances• friends• partners

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Maximizing Customer Lifetime ValueMeasuring Customer Lifetime Value

Year 0 Year 1 Year 2 Year 3 Year 4

Number of Customers

Revenue per Customer

Variable Cost per Customer

Margin per Customer

Acquisition Cost per Customer

Total Cost or Profit

Present Value

Page 22: Chapter 5  creating customer value, satisfaction and loyalty

Maximizing Customer Lifetime ValueMeasuring Customer Lifetime Value

Year 0

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Number of Customers

Revenue per Customer

Variable Cost per Customer

Margin per Customer

Acquisition Cost per Customer

Total Cost or Profit

Present Value

Page 23: Chapter 5  creating customer value, satisfaction and loyalty

Cultivating Customer Relationships

Page 24: Chapter 5  creating customer value, satisfaction and loyalty

Customer Relationship ManagementKey to retaining customers is relationship marketing

1. Identify prospects and customers

2. Differentiate customers in terms of: a. Their needs b. Their value to your company

3. Interact with individual customers to improve knowledge about needs and build stronger relationships

4. Customize products, services and messages to each customer

Page 25: Chapter 5  creating customer value, satisfaction and loyalty

Customer Relationship ManagementIncreasing Value of Customer Base

1. Reduce customer defection

2. Increase longevity of relationship

3. Enhance growth potential of each customer

4. Make low-profit customers profitable or weed out

5. Focus on high-value customers

Page 26: Chapter 5  creating customer value, satisfaction and loyalty

Customer Relationship Management Focuses on attracting and keeping right customers,

and satisfying their needs

Page 27: Chapter 5  creating customer value, satisfaction and loyalty

Customer Relationship ManagementAttracting and Retaining Customers

Reducing Defections Retention Dynamics

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Disqualified ProspectsPotentials

Prospects

1st-TimeCustomer

RepeatCustomer

Clients

Members

Advocates

Partners

Inactive or Ex-Customers

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Customer Relationship ManagementBuilding Customer Loyalty

Interacting with Customers Creating Loyalty Programs

Personalizing Marketing Creating Institutional Ties

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Customer Database and Database Management

Customer Database

Data Warehousing

Data Mining

Page 31: Chapter 5  creating customer value, satisfaction and loyalty

Customer Database and Database Management

Identify prospectsChoose which customers receive a particular offer Deepen loyalty

Reactivate customer purchases Avoid mistakes

Page 32: Chapter 5  creating customer value, satisfaction and loyalty

SummaryThe 3rd important marketing task of

CONNECTING WITH CUSTOMERS

1. Customer Value, Customer Satisfaction, Customer Loyalty and how do we deliver them

2. Lifetime value of customers3. How companies cultivate strong customer relationships4. How companies attract and retain customers5. Database marketing

Page 33: Chapter 5  creating customer value, satisfaction and loyalty

Individual Reports

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Crisostomo, Kathleen Lizette C.MARKMAChapter 5 - Creating Customer Value, Satisfaction, and Loyalty

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The CUSTOMER is now a top priority in the modern organization chart

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Customer Perceived Value (CPV) = Difference between all benefits and costs of an offering and the perceived alternatives

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Loyalty = 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

Quality = totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs

Page 38: Chapter 5  creating customer value, satisfaction and loyalty

Marketing is the art of ATTRACTING and KEEPING profitable customers

Profitable Customer = revenue from person/household/company is greater than the company’s cost of attracting, selling and servicing

Satisfaction = Customer Lifetime Value

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Customer Relationship Management = carefully managing detailed information about individual customers and all customer touch points to maximize customer loyalty

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Framework for CRM:1. Identify prospects and customers

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2. Differentiate customers by needs and value to company

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3. Interact to improve knowledge

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4. Customize for each customer

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CRM Strategies (how winning companies improve their customer base):1. Reduce the rate of defection

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2. Increase longevity

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!

3. Enhance share of wallet

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!

4. Terminate low-profit customers

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!

5. Focus more effort on high-profit customers

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Creating Customer Value, Satisfaction and Loyalty

KRISTOFFER Z. JONGCOAPRIL 27, 2012

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Objective:How is this created?

• Through customer value• Steps in customer value analysis?• Through customer satisfaction• The CRM Framework?• Through customer loyalty• Customer retention: using database

Page 51: Chapter 5  creating customer value, satisfaction and loyalty

Customer Value

• What customer gets from a product & what he has to give to attain it

Page 52: Chapter 5  creating customer value, satisfaction and loyalty

Steps:Customer Value Analysis

• Know major attributes & benefits • Assess importance• Assess performances• Examine ratings

• Monitor customer values

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Customer Satisfaction

Measured

by number of repeat and happy customers

Page 54: Chapter 5  creating customer value, satisfaction and loyalty

CRM Framework

• Identify customers• Differentiate customers• Interact• Customize for each customer

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Customer Loyalty

Measure of success of supplier in retaining

a long term relationship with customer

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Customer Retention

• Use Database

-Identify/attract prospects-Target offers-Deepen loyalty-Reactivate customers-Avoid mistakes

Page 57: Chapter 5  creating customer value, satisfaction and loyalty

CUSTOMERS

Customer Value

Customer SatisfactionCustomer Loyalty

Framework

5 Steps:

Retention

Page 58: Chapter 5  creating customer value, satisfaction and loyalty

Summary

• What is customer value• 5 Steps in customer value analysis• Customer satisfaction and framework• What is customer loyalty• All about customer retention• Using Database

Page 59: Chapter 5  creating customer value, satisfaction and loyalty

Creating Customer Value, Satisfaction and Loyalty

by Galicano Siton

Page 60: Chapter 5  creating customer value, satisfaction and loyalty

Creating Customer Value, Satisfaction and Loyalty

Value

CustomersFrontline People

Middle Management

Top Management

Loyalty

Profit for the stakeholders

Customer Satisfaction

Quality Perceived by the Customer


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