Chapter 4: Creating Long-Term Loyalty Relationships


Building Customer Value, Satisfaction, and Loyalty

• Customer-Perceived Value (CPV)- is the difference between the prospective customers' evaluation of all the benefits and costs of an offering and the perceived alternatives.
• Total Customer Benefit- is the perceived monetary value of the bundle of economic, functional, and psychological benefits customers expect from a given market offering because of the product, service, people, and image.
• Total Customer Cost- is the perceived bundle of costs customers expect to incur in evaluating, obtaining, using, and disposing of the given market offering, including monetary, time, energy, and psychological costs.
• Customer-perceived value- is a useful framework that applies to many situations and yields rich insights.
• 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."
• Value Proposition- consists of the whole cluster of benefits the company promises to deliver; it is more than the core positioning of the offering.
• A promise about the experience customers can expect from the company's market offering and their relationship with the supplier.
• Value Delivery System- includes all the experiences the customer will have on the way to obtaining and using the offering.

Total Customer Satisfaction

• Satisfaction- a person's feelings of pleasure or disappointment that result from comparing a product or service's perceived performance (or outcome) to expectations.
• Increasing customer satisfaction by lowering price or increasing services may result in a lower profits.
• The company might be able to increase its profitability by means other than increased satisfaction (improving manufacturing process).
• The company has many stakeholders, including employees, dealers, suppliers, and stockholders.

Building Loyalty

• Interact Closely with Customers- Listening to customers is crucial to customer relationship management.
• Develop Loyalty Programs- Frequency programs     (FPs) are designed to reward customers who buy frequently and in substantial amounts.
  • Club membership programs attract and keep those customers responsible for the largest portion of business.
• Create Institutional Ties    The company  may supply  business customers with special equipment  or services  that  help  them  manage  orders,  payroll, and  inventory.
• Create Value with Brand Communities- companies are collaborating with consumers to create value through communities built around brands. A brand community is a specialized  community of consumers and employees  whose identification and activities focus around the brand
  • Three  characteristics  identify  brand  communities:
    1. a sense  of  connect ion to the brand, company,  product , or community members
    2. shared  rituals,  stories, and  traditions that  help co n vey meaning
    3. shared responsibility y or duty to the community and individual members.

Win-Backs

• Some customers inevitably become inactive or drop out. The challenge is to reactivate them through win-back strategies. Exit interviews and lost-customer surveys can uncover sources of dissatisfaction and help win back only those with strong profit potential.