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4 Creating Customer Value and Customer Relationships
4 Creating Customer Value and Customer Relationships
Creating
Customer Value
and Customer
Relationships
Chapter Questions
What are customer value, satisfaction, and
loyalty, and how can companies deliver them?
What is the lifetime value of customers and
how can marketers maximize it?
How can companies attract and retain
customers and cultivate strong customer
relationships?
What are the pros and cons of database
marketing?
Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from 4-2
the United States edition of Marketing Management, 14e.
Eureka Forbes’ “Gift of a Smile”
Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from 4-3
the United States edition of Marketing Management, 14e.
Figure 4.1 Customer-Orientations
Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from 4-4
the United States edition of Marketing Management, 14e.
Customer Perceived Value
Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from 4-5
the United States edition of Marketing Management, 14e.
Figure 4.2 Determinants of
Customer Perceived Value
Total customer benefit Total customer cost
Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from 4-6
the United States edition of Marketing Management, 14e.
Applying Value Concepts
Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from 4-8
the United States edition of Marketing Management, 14e.
What Is Loyalty?
Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from 4-9
the United States edition of Marketing Management, 14e.
Establishing Value
Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from 4-10
the United States edition of Marketing Management, 14e.
Delivering Superior Value
Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from 4-11
the United States edition of Marketing Management, 14e.
Measuring Satisfaction
Periodic surveys
Customer loss rate
Mystery shoppers
Monitor competitive performance
Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from 4-12
the United States edition of Marketing Management, 14e.
Managing Customers
Dealing with negative experiences and recovering
customer goodwill:
1. Set up a 7-day, 24-hour toll-free hotline to
receive and act on customer complaints.
2. Contact the complaining customer as quickly as
possible to avoid negative word of mouth.
3. Accept responsibility for the customer’s
disappointment; don’t blame the customer.
4. Use customer service people who are empathic.
5. Resolve the complaint swiftly and to the
customer’s satisfaction.
Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from 4-13
the United States edition of Marketing Management, 14e.
What is Quality?
Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from 4-14
the United States edition of Marketing Management, 14e.
Maximizing Customer Lifetime Value
Customer Profitability
Customer Equity
Lifetime Value
Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from 4-15
the United States edition of Marketing Management, 14e.
Figure 4.3 Customer-Product
Profitability Analysis
Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from 4-16
the United States edition of Marketing Management, 14e.
Estimating Lifetime Value
Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from 4-17
the United States edition of Marketing Management, 14e.
What Is
Customer Relationship Management?
Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from 4-18
the United States edition of Marketing Management, 14e.
Framework for CRM
Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from 4-19
the United States edition of Marketing Management, 14e.
Customer Reviews and
Recommendations
• The strongest influence on consumer choice
remains “recommended by relative/friend”.
• With increasing mistrust of some companies
and their advertising, online customer ratings
and reviews and recommendations from
consumers are playing an important role.
• Bloggers who review products or services,
online retailers who add their own
recommendations have also become important.
Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from 4-20
the United States edition of Marketing Management, 14e.
Attracting and
Retaining Customers
Reduce the rate of defection
Increase longevity
Enhance share of wallet
Terminate low-profit customers
Focus more effort on high-profit customers
Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from 4-21
the United States edition of Marketing Management, 14e.
Figure 4.4 The Marketing Funnel
Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from 4-22
the United States edition of Marketing Management, 14e.
Loyalty Programs
Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from 4-23
the United States edition of Marketing Management, 14e.
Database Key Concepts
Customer database Business database
Database marketing Data warehouse
Mailing list Data mining
Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from 4-24
the United States edition of Marketing Management, 14e.
Using the Database
To identify prospects
To target offers
To deepen loyalty
To reactivate customers
To avoid mistakes
Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from 4-25
the United States edition of Marketing Management, 14e.
Don’t Build a Database When
The product is a once-in-a-lifetime purchase
Customers do not show loyalty
The unit sale is very small
The cost of gathering information is too high
Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from 4-26
the United States edition of Marketing Management, 14e.
For Review
What are customer value, satisfaction, and
loyalty, and how can companies deliver them?
What is the lifetime value of customers and
how can marketers maximize it?
How can companies attract and retain
customers and cultivate strong customer
relationships?
What are the pros and cons of database
marketing?
Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from 4-27
the United States edition of Marketing Management, 14e.