Chapter 5:

Marketing Management

Creating Customer Value, Satisfaction and Loyalty

By:
LINLIN XIAO

Rationale
The 3rd important task of Modern
Marketing:

Cone cting with Customers

Objectives
At the end of the presentation, the participants should be able to
understand concepts related to the 3rd marketing task of CONNECTING
WITH CUSTOMERS

1. Customer Value, Customer Satisfaction,

Customer Loyalty and how do we deliver
them?
2. What is the lifetime value of customers?
3. How can companies cultivate strong
customer relationships?
4. How can companies both attract and retain
customers?
5. What is database marketing?

To Win Customers and

.Beat Competition!!!
Satisfaction

Value

Loyalty

Create and Deliver

Customers Perceived Value

Customers are value maximizers

Total
Benefits

Total
Costs

Product

Money

Service

Time

Personnel

Effort

Image

Psychological

Delivered
Value

Steps in Customer Value

Analysis

Identify features & benefits

customers value

Assess qualitative importance

of attributes & benefits

Examine ratings of specific segments

Assess companys
and competitors
performance on different
values against rated
performance

Monitor customer values over tme

Delivering High Customer Value

Value Proposition

"I promise!"

Value Delivery System

Total Customer Satisfaction

Perceived
Performance

Buyers
Expectation

Satisfaction

Total Customer Satisfaction

Satisfaction is Related to Loyalty

Total Customer Satisfaction

Influence of Customer Satisfaction

Satisfaction is Both a Goal and a Marketing Tool

Total Customer Satisfaction

Monitoring Customer Satisfaction
Measurement Techniques

Periodic Surveys

Mystery Shopper

Customer Loss Rate

Competitors Performance

Total Customer Satisfaction

Satisfaction Will Also Depend on Quality

What is Quality?
Totality of features and characteristics of products or
services that satisfy stated or implied needs

Expectations

Product or Service
Meets or exceeds

= or >
Delivered Quality

Customer Lifetime Value

Art of attracting and keeping profitable
customers

Maximizing Customer Lifetime

Value
Customer Profitability

Customer Equity

150-20

Lifetime Value

Maximizing Customer Lifetime Value

Customer Profitability Analysis

C1
P1

P2

P3

C2
+

Highly
profitable
product
Profitable
product

P4
High-profit
customer

C3

Mixed-bag
customer

Unprofitable
product

Highly
unprofitable
product

Losing
customer

Maximizing Customer Lifetime Value

Customer Profitability Analysis

Activity-Based Costing

Customer Portfolios
acquaintances
friends
partners

Cultivating Customer Relationships

Customer Relationship Management

Key to retaining customers is relationship
marketing

1. Identify prospects and customers

2. Differentiate customers in terms of:

a. Their needs
b. Their value to your company

3. Interact with individual customers to 4. Customize products, services

improve knowledge about needs and
and messages to each customer
build stronger relationships

Customer Relationship Management

Increasing

Value of Customer Base

1. Reduce customer defection

2. Increase longevity of relationship
3. Enhance growth potential
of each customer
4. Make low-profit
customers profitable
or weed out

5. Focus on high-value customers

Customer Relationship Management

Focuses on attracting and keeping right
customers,
and satisfying their needs

Customer Relationship
Management
Attracting and Retaining Customers

Reducing Defections

Retention Dynamics

Partners

Customer Development Process

Advocates
Members

Clients
Repeat
Customer
1st-Time
Customer
Prospects

Potentials

Disqualified
Prospects

Inactive or
Ex-Customers

Customer Relationship
Management
Building Customer Loyalty

Interacting with Customers

Personalizing Marketing

Creating Loyalty Programs

Creating Institutional Ties

Customer Database and

Database Management

Customer Database

Data Warehousing

Data Mining

Customer Database and

Database Management

Identify prospects

Choose which customers

receive a particular offer

Reactivate customer purchases

Deepen loyalty

Avoid mistakes

Summary
The 3rd important marketing task of
CONNECTING WITH CUSTOMERS

1. Customer Value, Customer Satisfaction,

Customer Loyalty and how do we deliver
them
2. Lifetime value of customers
3. How companies cultivate strong customer
relationships
4. How companies attract and retain customers
5. Database marketing

end