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Chapter 5 Creating Customer Value, Satisfaction And Loyalty
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Chapter 5 Creating Customer Value, Satisfaction And Loyalty

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  • 1. Part 3 : Connecting with Customers Chapter 5 - Creating Customer Value, Satisfaction and Loyalty
  • 2. Maximizing Customer Lifetime Value
    • Ultimately, marketing is the art of attracting and keeping profitable customer.
    • 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
    • Implication is that a company could improve its profits by “firing” its worst customers
    • The key to retaining customers is relationship marketing
  • 3. Cultivating mCustomer Relationships
    • 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
    • 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
    • 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
    • These steps can be done because of business information technology
  • 4. Customer Relationship Management (CRM)
    • 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).
    • A customer touch point is any occasion on which a customer encounters the brand and product
    • Example: For a hotel, the touch points include reservation, check in & out, room service, exercise facilities, restaurant & bar
    • A four step framework for one to one marketing that can be adapted to CRM marketing:
    • Identify your prospects and customers.
    • Differentiate customers in terms of their needs and their value to your company
    • Interact with individual customers to improve your knowledge about their individual needs and to build stronger relationships
    • Customize products, services, and messages to each customer
  • 5. Customer Databases and Database Marketing
    • 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
    • Customer database is an organized collection of comprehensive information about individual customer or prospect that is accessible for marketing purposes
    • Database marketing is the process of building, maintaining, and using customer databases for the purpose of contacting, transacting, and building customer relationship
    • In general, companies can use their database in five ways:
    • To identify prospects
    • To decide which customers should receive a particular offer
    • To deepen customer loyalty
    • To reactivate customer purchases
    • To avoid serious customer mistakes