Chapter 5 Creating Customer Value, Satisfaction And Loyalty

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Chapter 5 Creating Customer Value, Satisfaction And Loyalty

  1. 1. Part 3 : Connecting with Customers Chapter 5 - Creating Customer Value, Satisfaction and Loyalty
  2. 2. Maximizing Customer Lifetime Value <ul><li>Ultimately, marketing is the art of attracting and keeping profitable customer. </li></ul><ul><li>Losing profitable customers can dramatically affect a firm’s profits. The cost of attracting a new customer is estimated to be five times the cost of keeping a current customer happy </li></ul><ul><li>Implication is that a company could improve its profits by “firing” its worst customers </li></ul><ul><li>The key to retaining customers is relationship marketing </li></ul>
  3. 3. Cultivating mCustomer Relationships <ul><li>Maximizing customer value means cultivating long term customer relationships. Companies are now moving away from mass marketing to mass customization to build strong customer relationships </li></ul><ul><li>As companies have grown proficient at gathering information about individual customers and business partners, they have increased their ability to individualize market offerings, messages, and media </li></ul><ul><li>Mass customization is the ability of a company to meet each customer’s requirements – to prepare on a mass basis individually designed products, services, programs & communications </li></ul><ul><li>These steps can be done because of business information technology </li></ul>
  4. 4. Customer Relationship Management (CRM) <ul><li>Thus, the process of managing detailed information about individual customers and carefully managing all customer “touch points” to maximize customer loyalty is Customer Relationship Management (CRM). </li></ul><ul><li>A customer touch point is any occasion on which a customer encounters the brand and product </li></ul><ul><li>Example: For a hotel, the touch points include reservation, check in & out, room service, exercise facilities, restaurant & bar </li></ul><ul><li>A four step framework for one to one marketing that can be adapted to CRM marketing: </li></ul><ul><li>Identify your prospects and customers. </li></ul><ul><li>Differentiate customers in terms of their needs and their value to your company </li></ul><ul><li>Interact with individual customers to improve your knowledge about their individual needs and to build stronger relationships </li></ul><ul><li>Customize products, services, and messages to each customer </li></ul>
  5. 5. Customer Databases and Database Marketing <ul><li>Marketers must know their customers. And in order to know the customer, the company must collect information and store it in a database and do database marketing </li></ul><ul><li>Customer database is an organized collection of comprehensive information about individual customer or prospect that is accessible for marketing purposes </li></ul><ul><li>Database marketing is the process of building, maintaining, and using customer databases for the purpose of contacting, transacting, and building customer relationship </li></ul><ul><li>In general, companies can use their database in five ways: </li></ul><ul><li>To identify prospects </li></ul><ul><li>To decide which customers should receive a particular offer </li></ul><ul><li>To deepen customer loyalty </li></ul><ul><li>To reactivate customer purchases </li></ul><ul><li>To avoid serious customer mistakes </li></ul>

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