by Group 4, Markma: Chapter 5 - Creating Customer Value, Satisfaction and Loyalty

1. Chapter 5:
Creating Customer
Value, Satisfaction and Loyalty
Group 4
Crisostomo, Kathleen Lizette
Jongco, Kristoffer
Pinon, Ralph Raymund
Siton, Galicano

2. Selected Presentation

3. Visual Model: Creating Customer
Value, Satisfaction and Loyalty
Raymund C. Piñon
Marketing Management V57
April 27, 2010

4. Rationale
• The 3rd important task of Modern Marketing:

5. 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?

6. To Win Customers and
….Beat Competition!!!
Customer-centered
X Traditional

7. To Win Customers and
….Beat Competition!!!
Satisfaction
Value Loyalty

8. Customers’ Perceived Value
Customers are value maximizers
Total Total Costs Delivered
Benefits Value
Money
Product
Time
Service
Effort
Personnel
Psychological
Image

9. Steps in Customer Value Analysis
Identify features & benefits Assess company’s
customers value Assess qualitative importance and competitors’
of attributes & benefits performance on different
values against rated
performance
Examine ratings of specific segments Monitor customer values over tme

10. Delivering High Customer Value
Value Proposition Value Delivery System

11. Total Customer Satisfaction
Perceived Buyer’s
Performance Expectation Satisfaction
_ =

12. Total Customer Satisfaction
Satisfaction is Related to Loyalty

13. Total Customer Satisfaction
Influence of Customer Satisfaction

14. Total Customer Satisfaction
Monitoring Customer Satisfaction
Periodic Surveys
Customer Loss Rate
Mystery Shopper
Competitors’ Performance

15. Total Customer Satisfaction
Satisfaction Will Also Depend on Quality

16. What is Quality?
• Totality of features and characteristics of products or services that
satisfy stated or implied needs
Product or Service Expectations
Meets or exceeds
= or >

17. Customer Lifetime Value
Art of attracting and keeping profitable customers

18. Maximizing Customer Lifetime Value
Customer Profitability
Customer Equity Lifetime Value

19. Maximizing Customer Lifetime Value
Customer Profitability Analysis
C1 C2 C3
Highly
P1 + + + profitable
product
Profitable
P2 + product
Unprofitable
P3 - - product
Highly
P4 - unprofitable
product
High-profit Mixed-bag Losing
customer customer customer

20. Maximizing Customer Lifetime Value
Customer Profitability Analysis
Customer Portfolios
• acquaintances
Activity-Based Costing
• friends
• partners

21. Maximizing Customer Lifetime Value
Measuring Customer Lifetime Value
Year 0 Year 1 Year 2 Year 3 Year 4
Number of Customers
Revenue per Customer
Variable Cost per Customer
Margin per Customer
Acquisition Cost per Customer
Total Cost or Profit
Present Value

22. Maximizing Customer Lifetime Value
Measuring Customer Lifetime Value
Year Year Year Year Year Year Year Year
0 1 2 3 4 5 6 7
Number of Customers
Revenue per Customer
Variable Cost per Customer
Margin per Customer
Acquisition Cost per Customer
Total Cost or Profit
Present Value

23. Cultivating Customer Relationships

24. Customer Relationship Management
Key to retaining customers is relationship marketing
2. Differentiate customers in terms of:
1. Identify prospects and customers 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

25. 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

26. Customer Relationship Management
Focuses on attracting and keeping right customers,
and satisfying their needs

27. Customer Relationship Management
Attracting and Retaining Customers
Reducing Defections Retention Dynamics

28. Partners
Advocates
Members
Clients
Repeat Inactive or
Customer Ex-Customers
1st-Time
Customer
Prospects
Disqualified
Potentials Prospects

29. Customer Relationship Management
Building Customer Loyalty
Interacting with Customers Creating Loyalty Programs
Personalizing Marketing Creating Institutional Ties

30. Customer Database and
Database Management
Customer Database
Data Warehousing
Data Mining

31. Customer Database and
Database Management
Choose which customers
Identify prospects receive a particular offer Deepen loyalty
Reactivate customer purchases Avoid mistakes

32. 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

33. Individual Reports

34. Crisostomo, Kathleen Lizette C.
MARKMA
Chapter 5 - Creating Customer Value, Satisfaction,
and Loyalty

35. The CUSTOMER is
now a top priority in
the modern
organization chart

36. Customer Perceived Value (CPV) =
Difference between all benefits
and costs of an offering and the
perceived alternatives

37. Loyalty = deeply held commitment
to re-buy or re-patronize a
preferred product or service in the
future despite situational
influences and marketing efforts
having the potential to cause
switching behavior
Quality = totality of features and
characteristics of a product or
service that bear on its ability to
satisfy stated or implied needs

38. Marketing is the art of
ATTRACTING and KEEPING
profitable customers
Profitable Customer = revenue
from
person/household/company is
greater than the company’s cost
of attracting, selling and
servicing
Satisfaction = Customer
Lifetime Value

39. Customer Relationship Management =
carefully managing detailed information
about individual customers and all
customer touch points to maximize
customer loyalty

40. Framework for CRM:
1. Identify prospects and
customers

41. 2. Differentiate customers by
needs and value to company

42. 3. Interact to improve knowledge

43. 4. Customize for each customer

44. CRM Strategies (how winning companies
improve their customer base):
1. Reduce the rate of defection

45. 2. Increase longevity

46. !
3. Enhance share of wallet

47. !
4. Terminate low-profit customers

48. !
5. Focus more effort on
high-profit customers

49. Creating Customer Value,
Satisfaction and Loyalty
KRISTOFFER Z. JONGCO
APRIL 27, 2012

50. Objective:
How is this created?
• Through customer value
• Steps in customer value analysis?
• Through customer satisfaction
• The CRM Framework?
• Through customer loyalty
• Customer retention: using database

51. Customer Value
• What customer gets from a product & what he
has to give to attain it

52. Steps:
Customer Value Analysis
• Know major attributes & benefits
• Assess importance
• Assess performances
• Examine ratings
• Monitor customer values

53. Customer Satisfaction
Measured
by number of repeat and happy customers

54. CRM Framework
• Identify customers
• Differentiate customers
• Interact
• Customize for each customer

55. Customer Loyalty
Measure of success
of supplier in retaining
a long term relationship with customer

56. Customer Retention
• Use Database
-Identify/attract prospects
-Target offers
-Deepen loyalty
-Reactivate customers
-Avoid mistakes

57. 5 Steps: Customer Value
Retention
CUSTOMERS
Customer Loyalty
Customer Satisfaction
Framework

58. Summary
• What is customer value
• 5 Steps in customer value analysis
• Customer satisfaction and framework
• What is customer loyalty
• All about customer retention
• Using Database

59. Creating Customer Value, Satisfaction
and Loyalty
by Galicano Siton

60. Creating Customer Value, Satisfaction
and Loyalty
Value Quality Perceived by
the Customer
Customers
Customer Satisfaction
Frontline People
Loyalty
Middle
Management
Top Management
Profit for the stakeholders