Phillip Kevin Lane

Kotler • Keller
Marketing Management • 14e
Creating Long-term Loyalty Relationships
 Discussion Questions
1. What are customer value, satisfaction, and loy
alty, and how can companies deliver them?
2. What is the lifetime value of customers, and h
ow can marketers maximize it?
3. How can companies attract and retain the righ
t customers and cultivate strong customer rela
tionships?
4. What are the pros and cons of database mark
eting?
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Customer Value, Satisfaction, and Loyalty

Holistic Marketing
• Inform
• Engage
• Energize

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 Traditional Organization vs. Cust
omer-Oriented Organization

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Customer Perceived Value

Customer-percei
Economic ved Value

Evaluating

Functional Obtaining

Using

Psychological Disposing
Total Customer Total Customer
Benefit Cost

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 Customer-
perceived valu
e

Total customer Total customer

benefit cost

Determinants Product benefi Monetary

t cost
of Customer Perc
Services Time
eived Value benefit cost

Personal benef Energy

it cost

Image Psychological
benefit cost

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Value Concepts - Caterpillar
Customer
Profit Price
Value
$6,000 $20,000 -0-
5,000 19,000 $1,000
4,000 18,000 2,000
3,000 17,000 3,000
2,000 16,000 4,000
Worth to farmer:
1,000 15,000 5,000
$20,000
-0- 14,000 6,000

Cost to produce: $
14,000
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Choice Processes and Implications

Friends with sales Lowest purchase

person price wins.

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 Customer Loyalty
“A deeply held commitment to rebuy or
repatronize a preferred product or servi
ce in the future despite situational influ
ences and marketing efforts having the
potential to cause switching behavior.”
-- Oliver
Value Proposition
Volvo
Core positioning:
• Safety

Other benefits:
• Good performance
• Design
• Environmentally friendly

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 Satisfaction
A person’s feelings of pleasure or di
sappointment that result from com
paring a product’s perceived perfor
mance to (or outcome) to expectati
ons.
 Customer Satisfaction

Expectations

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Customer Expectations

Previous purchases
Friends advice
Marketers’ / competitors
Expectations

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Monitoring Satisfaction
Influence of
Customer Satisfaction

Measurement
Techniques

Customer
Complaints
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Measurement Techniques
Customer Loss Rate

Surveys

Mystery Shopper
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Influence of Customer Satisfaction

Customer satisfaction

Speed of communication
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 Customer Complaints
54% - 70%
5% Buy again if resolved Tell 5
Complain people
95%
If resolved quickly
25%
Dissatisfied
95% Tell 11
Stop buying people

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Product and Service Quality
Performance Conformance

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Maximizing Customer Lifetime Value

20% of Cust 80% of Pr

omers ofits

Customers
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 Customer Profitability

Customer Profitability Analysis

Profitable

Customer Lifetime Value

Unprofitabl
e
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 A Profitable Customer

A person, household, or company that

over time yields a revenue stream exce
eding by an acceptable amount the com
pany’s cost stream for attracting, selling
, and serving that customer.
 Customer-Product
Profitability Analysis

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Cultivating Customer Relationships

Customer Information
• Differentiate
• Customize
• Personalize
• Share

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Customer Relationship Management (CRM)

Personalizing Marketing

Customer Empowerment

Customer Reviews & Recommendations

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Personalizing Marketing

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 One-to-One Marketing
Identify prospects Differentiat
and customers e
customers

Interact with Customize

each custome
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Customer Empowerment

Brand Evangelists
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Customer Reviews/Recommendations
Create Buzz

Negative reviews

Customer ratings
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 Customer Retention
Acquiring new customers costs

5x more
than retaining current customers The average company loses

10%
Of its customers yearly

Reducing customer defections by 5% can increas

e profits from

25% to 85%
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 Attracting and Retaining Customers
Manage
customer base

Reduce Defections
1.Define and measure
2.Determine causes
3.Compare CLV to costs

Retention Dynamics
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 The Marketing Funnel

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 Building Loyalty
Interact with customers

Create institutional ties

Develop loyalty programs

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 Databases & Database Marketing
Customer databases
• Name, address, telephone #
• Purchase history
• Demographics
• Psychographics
• Mediagraphics
Data mining

Data Warehouses

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 34 of 34