Phillip Kevin Lane

Kotler Keller
Marketing Management 14e
Creating Long-term Loyalty Relationships
 Discussion Questions
1. What are customer value, satisfaction, and
loyalty, and how can companies deliver them?
2. What is the lifetime value of customers, and
how can marketers maximize it?
3. How can companies attract and retain the
right customers and cultivate strong customer
relationships?
4. What are the pros and cons of database
marketing?
Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 3 of 34
Customer Value, Satisfaction, and Loyalty

Holistic Marketing
Inform
Engage
Energize

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 Traditional Organization vs.
Customer-Oriented Organization

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Customer Perceived Value

Customer-
Economic perceived Value

Evaluating

Functional Obtaining

Using

Psychological Disposing
Total Customer Total Customer
Benefit Cost

Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 6 of 34

 Customer-
perceived value

Total customer Total customer

benefit cost

Determinants Product Monetary

benefit cost
of Customer
Services Time
Perceived Value benefit cost

Personal Energy
benefit cost

Image Psychological
benefit cost

Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 7 of 34

Value Concepts - Caterpillar
Customer
Profit Price
Value
$6,000 $20,000 -0-
5,000 19,000 $1,000
4,000 18,000 2,000
3,000 17,000 3,000
2,000 16,000 4,000
Worth to farmer:
1,000 15,000 5,000
$20,000
-0- 14,000 6,000

Cost to produce:
$14,000
Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 8 of 34
Choice Processes and Implications

Friends with Lowest purchase

salesperson price wins.

Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 9 of 34

 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
Value Proposition
Volvo
Core positioning:
Safety

Other benefits:
Good performance
Design
Environmentally friendly

Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 11 of 34

 Satisfaction
A persons feelings of pleasure or
disappointment that result from
comparing a products perceived
performance to (or outcome) to
expectations.
 Customer Satisfaction

Expectations

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Customer Expectations

Previous purchases
Friends advice
Marketers / competitors
Expectations

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Monitoring Satisfaction
Influence of
Customer Satisfaction

Measurement
Techniques

Customer
Complaints
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Measurement Techniques
Customer Loss Rate

Surveys

Mystery Shopper
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Influence of Customer Satisfaction

Customer satisfaction

Speed of communication
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 Customer Complaints
54% - 70%
5% Buy again if resolved Tell 5
Complain people
95%
If resolved quickly
25%
Dissatisfied
95% Tell 11
Stop buying people

Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 18 of 34

Product and Service Quality
Performance Conformance

Quality

Satisfaction Profitability

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Maximizing Customer Lifetime Value

20% of 80% of
Customers Profits

Customers
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 Customer Profitability

Customer Profitability Analysis

Profitable

Customer Lifetime Value

Unprofitable

Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 21 of 34

 A Profitable Customer

A person, household, or company that

over time yields a revenue stream
exceeding by an acceptable amount the
companys cost stream for attracting,
selling, and serving that customer.
 Customer-Product
Profitability Analysis

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Cultivating Customer Relationships

Customer Information
Differentiate
Customize
Personalize
Share

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Customer Relationship Management (CRM)

Personalizing Marketing

Customer Empowerment

Customer Reviews & Recommendations

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Personalizing Marketing

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 One-to-One Marketing
Identify prospects Differentiate
and customers customers

Interact with Customize

each customer
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Customer Empowerment

Brand Evangelists
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Customer Reviews/Recommendations
Create Buzz

Negative reviews

Customer ratings
Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 29 of 34
Customer Retention
Acquiring new customers costs

5x more
than retaining current customers The average company loses

10%
Of its customers yearly

Reducing customer defections by 5% can

increase profits from

25% to 85%
Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 30 of 34
 Attracting and Retaining Customers
Manage
customer base

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

Retention Dynamics
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 The Marketing Funnel

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 Building Loyalty
Interact with customers

Create institutional ties

Develop loyalty programs

Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 33 of 34
 Databases & Database Marketing
Customer databases
Name, address, telephone #
Purchase history
Demographics
Psychographics
Mediagraphics
Data mining

Data Warehouses

Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 34 of 34