bmgt 411 marketing management fall 2014 chris lovett

1. BMGT 411
Chapter 4: Creating Long Term Loyalty Relationships

2. Moving to Customer Centric
Marketing

3. Apple

4. Kohl’s

5. Walmart

6. Zappos.com

7. Building Customer
Value and Satisfaction
• Customer perceived value (CPV)—the
difference between the prospective
customer’s evaluation of all the benefits and
all the costs of an offering and the
perceived alternatives.

8. Determinants of Customer Perceived
Value (CPV)
• Total customer value
• Product value
• Services value
• Personnel value
• Image value
!
• Total customer cost
• Monetary cost
• Time cost
• Energy cost
• Psychic cost

9. Loyalty
• A 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
• What product are you loyal to?
• Why?

10. New Balance 990

11. Satisfaction
• A person’s feelings of pleasure or
disappointment that result from comparing
a product’s perceived performance (or
outcome) to expectations.
• What products or services exceed your
expectations?
• What would you do if a product or
service did not meet your expectations?

12. Wegmans

13. Product and Service
Quality
• Quality (or grade) is the totality of features and
characteristics of a product or service that bear on
its ability to satisfy stated or implied needs.

14. Marketers’ Roles in
Delivering Quality
• Correctly identifying customers’ needs and requirements
• Communicate customer expectations properly to product designers
• Be sure orders are filled correctly and on time
• Provide customers with proper instructions, training, and technical assistance
• Stay in touch with customers after the sale
• Gather customer ideas for improvements and convey them to the appropriate
departments
• Who do you feel is managing quality performance good today?

15. @comcastcares

16. Customer Profitability
• A profitable customer is one that over time
yields a revenue stream that exceeds by an
acceptable amount the company’s cost
stream for attracting, selling, and servicing
that customer.

17. Goal is to Maintain Profitable Customers
Shift Low Profit Customers Into Higher Profit Products Over Time

18. Customer Profitability
Analysis (CPA)
• Best conducted with an accounting
technique called Activity-Based Costing
(ABC).
• Estimate all revenue coming from the
customer, less all costs that go into serving
that customer.

19. Customer Lifetime
Value (CLV)
• Describes the net present value of the
stream of future profits expected over the
customer’s lifetime purchases.

20. CLV Equations

21. CLV Importance
• Example: Grocery Store
• AverageYearly Spend: $5,200 (a)
• Average LifeSpan: 30Years (t)
• Using the simple equation, what is the average
Customer Life TimeValue of a Grocery Store
Customer?
• CLV = (a x t)
• 15,000 Customers in this segment
• Segment CLV = $2,340,000,000

22. Cultivating Customer
Relationships
• Customer relationship management (CRM)
is the process of carefully managing detailed
information about individual customers and
all customer “touch points” to maximize
customer loyalty.

23. CRM Best Practices
• Identify Prospects and Customers: Don’t go after everyone. Build and mine
a customer database with information from all channels and customer touch
points
• Differentiate customers in terms of (1) their needs and (2) their value to
the company: Defend aggressively your most valuable customers, while trying
to grow relationships with less profitable customers
• Interact with individual customers to improve your knowledge about
their individual needs and to build stronger relationships
• Customize products, services, and marketing messages to each customer
• Who do you feel is doing this well for you?

24. Traditional Marketing
Funnel

25. Traditional Marketing
Funnel

26. Customer Database and Database
Marketing
• Customer database—an organized
collection of comprehensive information
about individual customers or prospects
that is current, accessible, and actionable
for marketing purposes.
• Database marketing—the process of
building, maintaining, and using customer
databases and other databases to make
contact, facilitate transactions, and build
customer relationships.

27. Data Warehouse and
Datamining
• Data warehouse—organized data where
marketers can capture, query, and analyze it
to draw inferences about an individual
customer’s needs and responses.
• Datamining—statisticians extract useful
information about individuals, trends, and
segments from the mass of data.

28. Database Uses
• Identify the best prospects
• Match a specific offer with a specific
customer as a way to sell, cross-sell, and
up-sell
• Deepen customer loyalty by remembering
preferences and offering relevant incentives
and information

29. Downside of Database
Marketing and CRM
• Large investment
• Difficulty in getting everyone to be
customer oriented
• Not all customers want an ongoing
relationship
• Assumptions behind CRM may not always
hold true

30. AthleteTrax
• What kind of ideas do
you have to increase
long term loyalty?
• How should AthleteTrax
use the CLV equation?