Download Chapter 18: Attracting, Retaining and Growing Customers

Chapter 18
Competitive Strategies: Attracting,
Retaining, and Growing
Customers
Discussion Connections
More than three decades ago, Peter Drucker
observed that a company’s first task is “to create
customers”.
How to the following companies create
customers:




Intel,
Delta Airlines,
Your university or college,
American Online
What is Relationship
Marketing?
Relationship Marketing is the
Process of Creating, Maintaining,
and Enhancing Strong, ValueLaden Relationships With
Customers and Other
Stakeholders.
Customer Relationship
Marketing
Why the new emphasis on retaining and
growing customers?



Changing demographics, more sophisticated
competitors, and overcapacity in many industries
means fewer customers.
Costs five times as much to attract a new
customer as to keep a current one satisfied.
Losing a customer means losing the entire
stream of purchases over a lifetime of patronage
- the customer lifetime value.
The Service Profit Chain
Internal
Quality
Employee
Satisfaction
& Loyalty
External
Quality
Customer
Value &
Satisfaction
Growth &
Profitability
Customer
Retention
• Loyalty
• Repeat Purchase
• Relationship
• Positive WOM
Adapted From: Heskett, J. L, Sasser, W. E. and Schlesinger, L. A. (1997).
The Service Profit Chain. The Free Press: New York.
Customer Delivered Value
(Fig. 18.1)
Customer Satisfaction
Expectations are Based on
Customer’s Past Buying Experiences,
the Opinions of Friends, & Marketer
and Competitor Information and
Promises.
Product Falls
Short of
Expectations
Product
Matches
Expectations
Customer is
Dissatisfied
Customer is
Satisfied
Product
Exceeds
Expectations
Customer is
Highly
Satisfied
or
Delighted!
Customer Satisfaction
Today’s most successful companies are raising
expectations – and delivering performance to
match.
These companies embrace total customer
satisfaction.
Firm that seeks total customer satisfaction doesn’t
have to attempt maximum customer
satisfaction.
Purpose of marketing is to generate customer
value profitably – offer customer satisfaction
without sacrificing profits.
Loyalty - Customer Satisfaction
Percent of Customers That Intend to
Return
By rating on customer satisfaction scale 1-5
5 = very satisfied , 4 = satisfied
90
80
70
60
50
40
30
20
10
0
Rating
1
2
3
4
5
Customer Loyalty and
Retention
Highly satisfied (delighted) customers produce
benefits:




They are less price sensitive,
They remain customers longer,
They talk favorably about the company and products to
others.
Tremendous difference between the loyalty of satisfied
customers and completely satisfied customers.
Delighted customers have emotional and rational
preferences for products, and this creates high
customer loyalty.
Building Lasting Customer
Relationships
Financial Benefits
i.e. Frequency Marketing
Programs
Social Benefits
i.e. Learning Individual
Customer’s Needs & Wants
Structural Ties
i.e. Supply Customers With
Special Equipment
Marketing Tools to
Build Stronger Bonds
With Consumers
Customer-Product Profitability
Analysis (Fig. 18.3)
Customer Value-Delivery
Network
Customer
Producer
Vendor
Raw Material Supplier
Delivery
Order
Retailer
Total Quality Marketing
Japan was the first country to award a
national quality prize, the Deming prize.
Mid-1980’s, the U.S. established the
Malcolm Baldridge National Quality Award.
Europe has developed the ISO 9000 which
is an exacting set of quality standards.
Total quality has become a truly global
concern.
Total Quality Marketing
Quality is the totality of features and
characteristics of a product or service that bear
on its ability to satisfy stated or implied needs.
Marketers play a major role in helping their
companies define & deliver high quality products
and services to target customers:


Must correctly identify the customers’ needs and
requirements and communicate this to product
designers,
Marketing must deliver each marketing activity to
high quality standards.
Review of Concept
Connections
Discuss customer value and satisfaction and how
companies attract, retain, and grow profitable
customers.
Explain the roles of the company value chain,
value-delivery network, and total quality in
delivery of customer value and satisfaction.
Explain the relationship between value,
satisfaction, and loyalty.