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session2 - Spring 2009| Undergraduate Program Agenda...

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MGT 103 Product Marketing and Management Session 2 Spring 2009 | Undergraduate Program Professor Leif D. Nelson Agenda z Personal Information Forms z Marketing, Customers, and Value z Sources z Fredrick F. Reichheld (1996), The Loyalty Effect (Boston: Harvard Business School Press) z Bradley T. Gale (1994), Managing Customer Value (New York: Free Press). z Stephanie Coyles & Timothy C. Gokey (2002), “Customer Retention is Not Enough,” McKinsey Quarterly (2). z Fredrick F. Reichheld and Pil Schefter (2000), “E-Loyalty: Your Secret Weapon on the Web,” Harvard Business Review , July- August. Value Marketing, Customers & Value Firms’ Valuation of Customers Value to Customer Economics of Loyalty Acquisition Costs (credit card example) Revenue & Savings Lifetime Value of a Customer Cox example Customer Retention Management Customer Satisfaction Value Maps Loyalty Programs Economic Value Functional Value Psychological Value Economics of Loyalty Why firms like to value and retain customers? z Lifetime Customer Value z The present value of the profit stream that the company would have realized if the customer had not defected prematurely. z Examples of bad service z Loyal customers are much more profitable Economics of Loyalty Why Loyal Customers Are More Profitable -20 -10 0 10 20 30 40 50 60 70 1 2 3 4 5 6 7 8 Year Annual Customer Profit Economics of Loyalty Acquisition Costs z The cost of acquiring a new customer (direct sales, mail, telemarketing, etc.) z Initial Loss for any new customer z There will also be some maintenance costs
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