1. Chapter Five – Creating Long-
term, Loyal Relationships
Creating
Customer
Value,
Satisfaction
and Loyalty
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2. Perceived Customer Value
– Evaluation of benefits versus costs of
product/service bundle
– Value proposition???
4-2
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3. Benefits/Utilities
– Form
– Time
– Place
– Possession
– Psychological
– Social
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4. Costs
• Monetary
• Time
• Energy
• Psychological
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5. Starbucks - latest addition
to portfolio?
http://www.starbucks.com/
4-5
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6. Customer Satisfaction
• A person’s feelings of pleasure or
disappointment resulting from comparing a
product or service’s perceived performance
(or outcome) in relation to expectations.
• What is the new “average” on a 5-point
satisfaction scale?
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7. Customer Satisfaction Measures
• Appropriate
• Timely
• Provide an incentive
• Benchmarks and comparisons
• Typical – How satisfied? How likely to return?
How likely to recommend?
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8. Some example stats…
80% of customers won’t go back after
negative experience (up from 68% in 2006)
74% will register a complaint or tell others (up
from 67% in 2006)
49% swore or shouted and 29% had a
headache, chest pains or cried
(RightNow, 2007)
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9. Satisfaction Surveys
• http://www.polarismr.com
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10. What Brand Had Highest Loyalty
Ranking in 2012?
4-10
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11. What Brand Had Highest Loyalty
Ranking in 2012?
• http://www.dailyfinance.com/2012/02/28/th
e-11-brands-with-the-most-loyal-customers/
4-11
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12. CRM - Customer Relationship
Management
• Managing detailed information about
individual customers and all customer
“touchpoints” with the aim of maximizing
customer loyalty.
• (RFM)
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13. Customer Lifetime Value
• The present value of the stream of future
profits expected over the customer’s lifetime
purchases. Company must subtract costs of
attracting, selling and serving that customer.
• Complicated!
• Controllable and uncontrollable factors
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14. Customer Profitability
• Break-even point
• Acquisition and retention costs
• Applies to customers, not campaigns
• Forward-looking concept
• Projects behavior based on present and past
behavior
• Are all customers created equal? 80/20 rule
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15. Profitability/Loyalty (HBR)
• True Friends (profitable and loyal)
• Butterflies (profitable but disloyal)
• Barnacles (?????)
• Strangers (?????)
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16. Profitability/Loyalty (HBR)
• True Friends (approach softly, don’t communicate
too often, determine preferences, reward loyalty)
• Butterflies (milk them for the short-term, stop
investing once gone)
• Barnacles (try cross-selling and up-selling)
• Strangers (identify early and invest NOTHING)
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17. Reduce Defection (churn)
• Apologize and compensate
• Ask questions
• Loyalty programs
• Social benefits
• Structural ties
• Use datamining to determine needs
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18. CRM sites
www.customerthink.com
http://www.destinationcrm.com/
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