CH05Creating--Customer-Value--Satisfaction--and-Lo

MARKETINGMANAGEMENT12thedition5CreatingCustomerValue,Satisfaction,andLoyaltyKotlerKeller5-2ChapterQuestionsWhatarecustomervalue,satisfaction,andloyalty,andhowcancompaniesdeliverthem?Whatisthelifetimevalueofcustomers?Howcancompaniesbothattractandretaincustomers?Howcancompaniesdelivertotalquality?Whatisdatabasemarketing?5-3LoyaltyAdeeplyheldcommitmenttore-buyorre-patronizeapreferredproductorserviceinthefuturedespitesituationalinfluencesandmarketingeffortshavingthepotentialtocauseswitchingbehavior.5-4TheValuePropositionThewholeclusterofbenefitsthecompanypromisestodeliver5-5MeasuringSatisfactionPeriodicsurveysCustomerlossrateMysteryshoppersMonitorcompetitiveperformance5-6ProductandServiceQualityQualityisthetotalityoffeaturesandcharacteristicsofaproductorservicethatbearonitsabilitytosatisfystatedorimpliedneeds.5-7QualityConformancePerformance5-8TotalQualityManagementTQMisanorganization-wideapproachtocontinuouslyimprovingthequalityofalltheorganization’sprocesses,products,andservices.5-9MaximizingCustomerLifetimeValueCustomerprofitabilityCustomerequityLifetimevalue5-10EstimatingLifetimeValueAnnualcustomerrevenue:$500Averagenumberofloyalyears:20Companyprofitmargin:10Customerlifetimevalue:$10005-11DriversofCustomerEquityValueequityBrandequityRelationshipequity5-12FrameworkforCRMIdentifyprospectsandcustomersDifferentiatecustomersbyneedsandvaluetocompanyInteracttoimproveknowledgeCustomizeforeachcustomer5-13CRMStrategiesReducerateofdefectionIncreaselongevityEnhanceshareofwalletTerminatelow-profitcustomersFocusmoreeffortonhigh-profitcustomers5-14Table5.1Massvs.One-to-OneMarketingMassAveragecustomerCustomeranonymityStandardproductMassproductionMassdistributionMassadvertisingOne-waymessageEconomiesofscaleOne-to-OneIndividualcustomerCustomerprofileCustomizedmarketofferingCustomizedproductionEconomiesofscopeShareofcustomer5-15CustomerRetentionAcquisitionofcustomerscancost5timesmorethanretainingcurrentcustomers.Theaveragecustomerloses10%ofitscustomerseachyear.A5%reductiontothecustomerdefectionratecanincreaseprofitsby25%to85%.Thecustomerprofitrateincreasesoverthelifeofaretainedcustomer.5-16DescribingMarketDynamicsPermanentcapturemarketsSimpleretentionmarketsCustomermigrationmarkets5-17BuildingLoyaltyBasicReactiveAccountableProactivePartnership5-18ReducingCustomerDefectionDefineandmeasureretentionrateDistinguishcausesofcustomerattritionEstimateprofitlossassociatedwithlossofcustomersAssesscosttoreducedefectionrateGathercustomerfeedback5-19FormingStrongCustomerBondsAddfinancialbenefitsAddsocialbenefitsAddstructuralties5-20DatabaseKeyConceptsCustomerdatabaseDatabasemarketingMailinglistBusinessdatabaseDatawarehouseDatamining5-21UsingtheDatabaseToidentifyprospectsTotargetoffersTodeepenloyaltyToreactivatecustomersToavoidmistakes