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Creating Customer Value & Loyalty - 05
Creating Customer Value & Loyalty - 05
Creating Customer Value & Loyalty - 05
SUMMARY by
Chapter
This chapter discusses the importance and various methods of creating customer value and sustaining customer loyalty. As customers have become more informed and educated than ever, organisations have started to adopt business models where the customer is at the top.
Very often, a customer value analysis is undertaken by managers to better understand the companys strengths and weaknesses in comparison with competition. It follows the pattern below 1. Identify the major attributes and benefits that customers value. 2. Assess the quantitative importance of the different attributes and benefits.
Customer profitability
A profitable customer is one that over time yields a revenue stream that is significantly greater than that companys cost stream for attracting, selling and servicing that
150-20 Rule
The 20% most profitable customers generate as much as 150% of the profits of the company; the 20% least profitable customers lose 100% of the profits. Measuring customer profitability lies in the concept of Customer Lifetime Value (CLV). CLV describes the net present value of the future stream of profits expected over the customers lifetime purchases. CLV calculations are generally used by marketers to develop a long-term perspective.
Chapter 5 - Creating Customer Value, Satisfaction and Loyalty Trends Building Customer Loyalty
It involves the following procedures 1. Interacting with customers 2. Developing loyalty programs 3. Personalising marketing 4. Creating institutional ties
Database marketing
It is the process of building, maintaining and using customer databases and other databases to contact, transact and build customer relationships.
Customer Database
It contains customers past purchases, past volumes, past prices and profits; buyers personal details, status of current contacts, the companys share of the buyers business, competitive suppliers, etc.
Datamining
Through datamining, marketers can extract information about individuals, trends, etc. from the customer database. It uses techniques such as cluster analysis, predictive modelling, etc.