A look into Chapter 5 of Kolter and Keller's Marketing Management, 15th Edition and offering local (to the Philippines) and personal suggestions based on the information provided in the chapter. This chapter is about Creating Long-Term Loyalty Relationships and is useful to anyone wishing to learn more about fostering relationships with customers. Note: Edited slides for V2 for easier viewing. (Less clutter).

1. Building customer value, satisfaction and loyalty
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Richard S. Christie
Ateneo Graduate School of Business
v88 Marketing Management
Creating Long-Term
Loyalty Relationships

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1. Maximize value through perception
2. Performance and expectations - A buyer’s satisfaction
3. Key to retaining customers and reducing loss
4. Quality is the totality of features and characteristics
5. Calculating customer lifetime value
6. Importance of customer relationship management (CRM)
Creating Long-Term Loyalty Relationships
Outline

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1. Maximize value through perception
Traditional vs. Modern Org Chart
• Move toward customer-
oriented business
decisions.
• Frontline managers
serving close to the
customer
• Customers integrated
into all levels of
management - Traditional Organization versus Modern
Customer-Oriented Company
Organization

4. • Difference between customers valuation and perceived alternatives
• Total customer benefit vs total customer cost
• Increase value through rising benefits or reducing costs
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1. Maximize value through perception
Customer Perceived Value (CVP)

5. • Examples:
• Smart Vs Globe offering discounts, freebies and coverage
• Lazada innovates: Giving free shipping, easy returns
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1. Maximize value through perception
Examples of Maximizing Value

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2. Performance and expectations - A buyer’s satisfaction
Customer Value Analysis
1. Identify the major benefits customers value
2. Assess the importance of those benefits
3. Weigh up companies benefits against its competitors
4. Perform customer feedback to rate performance
5. Continuous monitoring to assess market

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• Measured against promises made by a company
• Set expectations by delivering more value
• Not restricted to expected value
2. Performance and expectations - A buyer’s satisfaction
Monitoring Value

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• Examples:
• Grab – Offering better experiences tailored to customers
• Firstaide - Results in 24Hrs, Home swabbing, walk-ins/Booking
2. Performance and expectations - A buyer’s satisfaction
Examples of Satisfying Customers

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3. Key to retaining customers and reducing loss
Total Customer Satisfaction
• The sum of fulfilment based on expectations
• Customer's feelings or disappointment stems from performance
• Typically associated with:
• Past experiences
• Friends' advice
• Marketers / advertisers
• Competitors
• Raise expectations to meet customer demands

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• Measurement techniques identify customers treatment rate
1. Classifying factors that shape satisfaction
2. Changing operations to fit customer needs Retains Customers
3. Marketing to meet customers changing needs
Measuring Satisfaction
3. Key to retaining customers and reducing loss

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• Examples:
• Sun Life – Largest insurance company in the Philippines
• Hilton – One of the highest rated hotels for service
Examples of Retaining Customers
3. Key to retaining customers and reducing loss

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4. Quality is the totality of features and characteristics
What is Quality?
• Totality of features and characteristics
• Ability to satisfy its implied needs
• Satisfying almost all customers needs = High quality
• Conformance quality: Two different products - same quality
• Performance quality: One product may perform better

13. • Companies that compromise on costs can lose quality
• Higher Quality can often lead to:
• Higher pricing offers to customer
• Lower costs to company through brand recognition
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Impact of Quality
4. Quality is the totality of features and characteristics

14. • Examples:
• Johnson and Johnson – PQA Winner, widely known for quality product
• The Medical City – JCI accredited with brand quality
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Examples of Delivering Quality
4. Quality is the totality of features and characteristics

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5. Calculating customer lifetime value
Maximizing Customer Lifetime Value (CLV)
• Profitable customers deliver the
most company value
• Preferring more revenue income
than costs incurred
• Customer profitability analysis (CPA)
tools support cost-saving
• Activity-based costing (ABC)
identifies real costs incurred
- Customer-Product
Profitability Analysis

16. • CLV projects customer's future profits
• (Expected returns – costs of transacting = net present value)
• More loyal customers produce stronger expected returns
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Customer Lifetime Value’s Forecast
5. Calculating customer lifetime value
- The Marketing Funnel

17. • Examples:
• BPI – Finances delivered to bank from individuals
• Manila HealthTek Inc – Loyal customers are worth high distribution costs
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Examples of Maximizing CLV
5. Calculating customer lifetime value

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6. Importance of customer relationship management (CRM)
Developing Customer Relationships
• Supporting loyalty through managing customers “touch points”
• Touch points: Occasions when customer encounters brand
• Customer Value Management (CVM) optimizes customer base’s value
• Providing real-time customer service
• Supports customer feedback – Complaints or reviews
• Increases customer empowerment

19. • Enables personalized marketing to target customers needs
• Opens the door to permission marketing
• Influence customers decisions through tailored marketing
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Impact of CRM on Marketing
6. Importance of customer relationship management (CRM)

20. • Examples:
• Facebook – Advertising tailored to site searches
• Agoda – Allows for customer feedback and recommendations
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Examples of CRM in Marketing
6. Importance of customer relationship management (CRM)

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1. Maximize value through perception
2. Performance and expectations - A buyer’s satisfaction
3. Key to retaining customers and reducing loss
4. Quality is the totality of features and characteristics
5. Calculating customer lifetime value
6. Importance of customer relationship management (CRM)
Creating Long-Term Loyalty Relationships
Summary

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Richard S. Christie
Ateneo Graduate School of Business
v88 Marketing Management
Creating Long-Term
Loyalty Relationships
Chapter 5