9/8/2025

Chapter Questions
1  What are customer value, satisfaction, and
loyalty, and how can companies deliver them?
5  What is the lifetime value of customers and
how can marketers maximize it?
Creating Long-Term
 How can companies attract and retain
Loyalty Relationships customers and cultivate strong customer
relationships?
 What are the pros and cons of database
marketing?

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Harrah’s Builds Relationships Figure 5.1 Customer-Orientations

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Dell Reestablished What is

Its Commitment to Value Customer Perceived Value?
 Customer perceived value is the
difference between the prospective
customer’s evaluation of all the benefits
and all the costs of an offering and the
perceived alternatives.

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Figure 5.2 Determinants of Caterpillar Maximizes

Customer Perceived Value Customer Value
Total customer benefit Total customer cost

Product benefit Monetary cost

Services benefit Time cost

Personal benefit Energy cost

Image benefit Psychological cost

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Steps in a
What is Loyalty?
Customer Value Analysis
 Identify major attributes and benefits that Loyalty is a deeply held commitment to re-
customers value buy or re-patronize a preferred product or
 Assess the qualitative importance of different service in the future despite situational
attributes and benefits influences and marketing efforts having the
 Assess the company’s and competitor’s potential to cause switching behavior.
performances on the different customer values
against rated importance
 Examine ratings of specific segments
 Monitor customer values over time

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Top Brands in Customer Loyalty Establishing Value

 Apple iPhone  Google

 Clairol  Amazon
 Samsung  Bing
 Mary Kay  [Link]
 Grey Goose  AT&T Wireless
 Clinique  Discover Card
 Avis  Verizon Wireless
 Wal-Mart  Cheerios

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Measuring Satisfaction Managing Customers

 Periodic surveys
 Customer loss rate
 Mystery shoppers
 Monitor competitive performance

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What is Quality? Maximizing Customer Lifetime Value

Customer Profitability
Quality is the totality of features and
characteristics of a product or Customer Equity
service that bear on its
ability to satisfy Lifetime Value
stated or implied needs.

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Figure 5.3 Customer-Product

Estimating Lifetime Value
Profitability Analysis
 Annual customer revenue: $500
 Average number of loyal years: 20
 Company profit margin: 10
 Customer lifetime value: $1000

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What is
Customer Relationship Management?
Framework for CRM

CRM is the process of carefully managing  Identify prospects and customers

detailed information about individual  Differentiate customers by needs and value to
customers and all customer touch points to company
maximize customer loyalty.  Interact to improve knowledge
 Customize for each customer

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Attracting and
Amy’s Maximized Word of Mouth
Retaining Customers
 Reduce the rate of defection
 Increase longevity
 Enhance share of wallet
 Terminate low-profit customers
 Focus more effort on high-profit customers

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Figure 5.4 The Marketing Funnel Loyalty Programs

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Database Key Concepts Using the Database

 Customer database  Business database  To identify prospects

 Database marketing  Data warehouse  To target offers
 Mailing list  Data mining  To deepen loyalty
 To reactivate customers
 To avoid mistakes

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Don’t Build a Database When For Review

 The product is a once-in-a-lifetime purchase  What are customer value, satisfaction, and
 Customers do not show loyalty loyalty, and how can companies deliver them?
 The unit sale is very small  What is the lifetime value of customers and
 The cost of gathering information is too high how can marketers maximize it?
 How can companies attract and retain
customers and cultivate strong customer
relationships?
 What are the pros and cons of database
marketing?

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