Kotler Krash Connecting With Customers

Connecting With Customers

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What Marketers See

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What Customers See

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Consumer Thinking

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Challenge

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Connecting with Customers by Creating Long-Term Loyalty Relationships

Solution

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• How can companies deliver customer value and satisfaction?

• What is the lifetime value of a customer, and why is it important to marketers?

• How can companies cultivate strong customer relationships?

• What is the role of database marketing in customer relationship management?

Connecting with Customers

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• How can companies deliver customer value and satisfaction?

• What is the lifetime value of a customer, and why is it important to marketers?

• How can companies cultivate strong customer relationships?

• What is the role of database marketing in customer relationship management?

Connecting with Customers

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Customer Value and Satisfaction

Shifting to a Holistic Marketing approach to deliver Customer Value and Satisfaction

Holistic marketing approach:• Inform • Engage • Energize

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Shifting to a holistic marketing approach to deliver customer value, satisfaction, and loyalty

Traditional Org vs Modern Customer-Oriented Org

Cust

omer

s

Cust

omer

s

Delivering Customer Value

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Figur

e

5.2

Customer Perceived value

Total customer benefit

Total customer cost

Product benefit

Monetary cost

Services benefit

Timecost

Personal benefit

Energy cost

Imagebenefit

Psychologicalcost

Determinants of Customer Perceived Value

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Value Concepts

Worth to farmer:$20,000

Cost to produce: $14,000

Profit Price Customer 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

1,000 15,000 5,000

-0- 14,000 6,000

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Value Proposition

Core positioning: • Safety

Other benefits: • Good performance• Design• Environmentally friendly

Satisfaction

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Customer Satisfaction

Expectations

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Customer Expectations

Expectations

Previous purchasesFriends advice

Marketers’ / competitors

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Monitoring Satisfaction

Customer Complaints

Measurement Techniques

Influence of Customer Satisfaction

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Measurement Techniques

Customer Loss Rate

Mystery Shopper

Surveys

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Customer Complaints

25%Dissatisfied

5%Complain

95%Stop buying

54% - 70%Buy again if resolved

95%If resolved quickly

Tell 5 people

Tell 11people

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Product and Service Quality

Quality

ProfitabilitySatisfaction

Performance Conformance

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• How can companies deliver customer value and satisfaction

• What is the lifetime value of a customer, and why is it important to marketers?

• How can companies cultivate strong customer relationships?

• What is the role of database marketing in customer relationship management?

Connecting with Customers

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Maximizing Customer Lifetime Value

20% of Customers

80% of Profits

Customers

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Customer Lifetime Value Cycle

Actual Value

Pote

ntial

Val

ueLo

wH

igh

Low High

Onetime buyer

Valuable customer Most Valuable customer

Onetime buyer

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• How can companies deliver customer value, satisfaction, and loyalty?

• What is the lifetime value of a customer, and why is it important to marketers?

• How can companies cultivate strong customer relationships?

• What is the role of database marketing in customer relationship management?

Connecting with Customers

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Customer Retention

Acquiring new customers costs

5x morethan retaining current customers

The average company loses

10%Of its customers yearly

Reducing customer defections by 5% can increase profits from

25% to 85%

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Cultivating Customer Relationships

Customer Information

• Differentiate

• Customize

• Personalize

• Share

CRM

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Customer Relationship Management (CRM)

One-to-One Marketing

Customer Empowerment

Customer Reviews & Recommendations

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One-to-One Marketing

2. Differentiate customers

3. Interact with each customer

4. Customize

1. Identify prospects and customers

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Customer Empowerment

Brand Evangelists

Energizing customers

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Customer Reviews and Recommendations

• Online Ads• Offline Ads

Brand identification

• Friends • Family

Personal circle influence • Reviews

• Forums• Product

comparison

Online research

Purchase

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The Marketing Funnel

Prospects

Customer

Tryer

Supporter

Advocate

Partner

Jour

ney

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• How can companies deliver customer value, satisfaction, and loyalty?

• What is the lifetime value of a customer, and why is it important to marketers?

• How can companies cultivate strong customer relationships?

• What is the role of database marketing in customer relationship management?

Index

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Databases & Database Marketing

Customer databases• Name, address, telephone #• Purchase history• Demographics• Psychographics

Data Warehouses Data mining

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Evolution of Database marketingMetric Initial Optimized Retention automation

Win by • Volume • Content • Data

Key Metrics • List size• Send

Volume

• Open• Clicks

• Conversions• Engaged subscriber• Churn

ESP selection • Cost • Better Feature sets

• Cost• Integration• Segmentation• Automation

Segmentation • None • Available buy limited

• Advanced• Purchase history• Automation

Automation • None • None • Post Purchase triggers• Win back campaign• Cross promotions• Survey

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RFM(Customer value)

Recency Frequency Monetary Value

Last purchase Points

3 months back 5

6 months back 4

9 months back 3

12 months back 2

15 months back 1

How often Points

5 5

4 4

3 3

2 2

1 1

Order value Points

100$ 5

80$ 4

60$ 3

40$ 2

20$ 1

Customer who purchased a product worth 80$, 12 months back214 RFM value

Thank you