This document discusses how companies can build customer loyalty through increasing customer value, satisfaction, and lifetime value. It explains that customer-perceived value is the total customer benefit versus total customer cost. Companies monitor satisfaction through surveys and measure customer retention rates. Maximizing customer lifetime value involves analyzing customer profitability and calculating the net present value of future profits from each customer. Companies work to attract and retain the right customers by reducing customer churn, managing their customer base effectively, and developing loyalty programs and brand communities.

1. • Chapter 5
• Creating Long-Term Loyalty
Relationships

2. Learning Challenges
What are customer value, satisfaction, and loyalty, and how
can companies deliver them?
What is the lifetime value of customers, and how can marketers
maximize it?
How can companies attract and retain the right customers and
cultivate strong customer relationships and communities?
How do customers’ new capabilities affect the way companies
conduct their marketing?

3. Building Customer Value, Satisfaction, and Loyalty
• Customer-Perceived Value (CPV)
– Total customer benefit vs. total customer cost

4. Determinants of CPV

5. Building Customer Value, Satisfaction, and Loyalty
• Total customer satisfaction
– A person’s feelings of pleasure or disappointment that
result from comparing a product or service’s perceived
performance (or outcome) to expectations

6. Building Customer Value, Satisfaction, and Loyalty
• Monitoring satisfaction: many companies are
systematically measuring how well they treat
customers, identifying the factors shaping
satisfaction, and changing operations and marketing
as a result
– Periodic surveys, customer loss rate, mystery
shoppers, satisfaction ratings

7. Maximizing Customer Lifetime Value
• Customer profitability analysis
– Activity-Based Costing (ABC)
• Customer Lifetime Value (CLV)
– The net present value of the stream of future profits expected over the
customer’s lifetime purchases

8. Attracting and Retaining Customers
• Reducing defection/customer churn
‒ Define and measure retention rate
‒ Distinguish/identify customer attrition causes
‒ Compare lost CLV to reducing defection rate

9. Attracting and Retaining Customers
The Marketing Funnel

10. Attracting and Retaining Customers
• Managing the customer base
– Reduce customer defection
– Focus on high-profit customers
– Increase customer longevity
– Terminate low-profit customers
– Share of wallet and cross/upselling

11. Building Loyalty
• Interact closely with customers
• Develop loyalty programs
• Create institutional ties

12. Brand Communities
• A specialized community of consumers and
employees whose identification and activities focus
around the brand

13. Value Creation Practices
• Social networking
– Welcoming, empathizing,
governing
• Impression management
– Evangelizing, justifying
• Community engagement
– Staking, milestoning,
badging, documenting
• Brand use
– Grooming,
customizing,
commoditizing

14. Brand Communities
• A specialized community of consumers and
employees whose identification and activities focus
around the brand

16. • Note- This is from a case study on durable products such as home appliances

17. Customer Classification: Loyalty vs Profitability

18. • MARKETING FUNNEL CONCEPT