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Creating Customer Value,

Satisfaction,
and Loyalty

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¢igure 5.1 Organizational Charts

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¢igure 5.2 Determinants of
Customer Perceived Value

Total customer benefit Total customer cost

Product benefit Monetary cost

Services benefit Time cost

Personal benefit Energy cost

Image benefit Psychological cost

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Úhat is 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.

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The Value Proposition

The whole cluster of


benefits the
company promises
to deliver

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Measuring Satisfaction

Periodic Surveys

Customer Loss Rate

Mystery Shoppers

Monitor Competitive
Performance

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.D. Power Rates
Customer Satisfaction

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Úhat is Quality?

±  is the totality of features and


characteristics of a product or
service that bear on its
ability to satisfy
stated or implied needs.

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Maximizing Customer Lifetime Value

Customer
Profitability

Customer Lifetime
Equity Value

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Estimating Lifetime Value

ð Annual customer revenue: $500


ð Average number of loyal years: 20
ð Company profit margin: 10
ð Customer lifetime value: $1000

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Úhat is Customer Relationship Management?

 is the process of carefully managing


detailed information about individual
customers and all customer touchpoints to
maximize customer loyalty.

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¢ramework for CRM

Identify prospects and customers

Differentiate customers by needs


and value to company

Interact to improve knowledge

Customize for each customer

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CRM Strategies

Reduce the rate of defection

Increase longevity

Enhance ³share of wallet´

Terminate low-profit
customers

¢ocus more effort on


high-profit customers
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Customer Retention

ð Acquisition of customers can cost five times more


than retaining current customers.
ð The average company loses 10% of its customers
each year.
ð A 5% reduction to the customer defection rate can
increase profits by 25% to 85%.
ð The customer profit rate increases over the life of a
retained customer.

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¢igure 5.5 The Customer
Development Process

Suspects

Prospects Disqualified

¢irst-time Repeat
customers customers Clients Members

Partners
Ex-customers

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Creating Customer Evangelists

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Database Key Concepts

ð Customer database ð Business


ð Database database
marketing ð Data warehouse
ð Mailing list ð Data mining

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ßsing the Database

To identify prospects

To target offers

To deepen loyalty

To reactivate customers

To avoid mistakes

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Thank You