Creating

Long‐term
Loyalty Relationships
Discussion Questions

Customer
Customer
Customer

VALUES How can companies

SATISFACTION
LOYALITY DELIVER them?
Discussion Questions

Customer Life Time Value

Life Time Value

Customer
+ + + =
Implementation
Lifetime Operating Cost of
& Delivery
Revenue Expenses Acquisition
Costs
Discussion Questions

Cultivate strong customer

relationships

Attract Retain

The right
customers
 Customer
Value, Satisfaction, and Loyalty

Holistic Marketing
• Inform
• Engage
• Energize
 Customer
Perceived Value
Customer‐
Economic perceived Value

Evaluating

Functional Obtaining

Using

Psychological Disposing

Total Total
Customer Customer Cost
Benefit
 Customer
perceived value Determinants
of Customer Perceived
Total customer Total customer
Value
benefit cost

Monetary
Product benefit
cost

Services Time
benefit cost

Energy
Personal benefit
cost

Image Psychological
benefit cost
Customer Loyalty
 Customer Loyalty
“A deeply held commitment to rebuy or
repatronize a preferred product or
service in the future despite situational
influences and marketing efforts having
the potential to cause switching
behavior.”
‐‐ Oliver
Customer Satisfaction

A person’s feelings of pleasure or

disappointment that result from
comparing a product’s perceived
performance to (or outcome) to
expectations.
Customer Satisfaction

Expectations
Customer Expectations
Previous purchases

Friends advice

Marketers’ /competitors
Expectations
Monitoring Satisfaction

Influence of
Customer Satisfaction

Measurement
Techniques

Customer
Complaints
Measurement Techniques

Customer Loss Rate
Surveys

Mystery Shopper
 Influence of
Customer Satisfaction
Customer satisfaction

Speed of communication
Customer Complaints

54% ‐ 70%
5% Buy again if resolved
Tell 5 
Complain
95% people
25% If resolved quickly
Dissatisfied

95% Tell 11
Stop buying people
Product and Service Quality

Performance Conformance

QUALITY

SATISFACTION PROFITABILITY
 Maximizing
Customer Lifetime Value

20% of  80% of 
Customers Profits
Customer Profitability
Customer Profitability Analysis

Unprofitable Profitable

Customer Lifetime Value
 A Profitable Customer

A person, household, or company that over

time yields a revenue stream exceeding by
an acceptable amount the company’s cost
stream for attracting, selling, and serving
that customer.
 Customer‐Product 
Profitability Analysis
Cultivating Customer
Relationships
Customer Information
• Differentiate
• Customize
• Personalize
• Share
Customer Relationship Management (CRM)

 Personalizing Marketing
 Customer Empowerment
 Customer Reviews & Recommendations
Personalizing Marketing
 One-to-One Marketing

Differentiate 
Identify prospects 
customers
and customers

Interact with 
each customer
Customize
Customer Reviews/Recommendations
Customer ratings
Negative reviews

Create Buzz
 Customer Retention
Acquiring new customers costs 

5x more The average company loses
than retaining current customers
10%
Of its customers yearly
Reducing customer defections by 5% can 
increase profits from 

25% to 85%
 Attracting and Retaining
Customers
Manage 
customer base

Reduce Defections
1. Define and
measure
2. Determine causes
3. Compare CLV to
costs

Retention Dynamics
The Marketing Funnel
 Building Loyalty
Interact with customers

Develop loyalty programs

Create institutional ties
 Databases & Database
Marketing
Customer databases
• Name, address, telephone #
• Purchase history
• Demographics
• Psychographics Data mining
• Mediagraphics

Data Warehouses
Value Proposition
Core positioning:
• Safety

Other benefits:
• Good performance
• Design
• Environmentally
friendly

Volvo
SCREEN CRM
SCREEN CRM
SCREEN CRM
SCREEN CRM
SCREEN CRM