MGT 103
Product Marketing
and Management
Session 2
Spring 2009
|
Undergraduate Program
Professor
Leif D. Nelson
Agenda
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Personal Information Forms
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Marketing, Customers, and Value
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Sources
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Fredrick F. Reichheld (1996),
The Loyalty Effect
(Boston: Harvard
Business School Press)
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Bradley T. Gale (1994),
Managing Customer Value
(New York:
Free Press).
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Stephanie Coyles & Timothy C. Gokey (2002), “Customer
Retention is Not Enough,”
McKinsey Quarterly
(2).
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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?
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Lifetime Customer Value
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The present value of the profit stream that the
company would have realized if the customer had
not defected prematurely.
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Examples of bad service
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Loyal customers are much more profitable
Economics of Loyalty
Why Loyal Customers Are More Profitable
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60
70
1
2
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7
8
Year
Annual Customer Profit
Economics of Loyalty
Acquisition Costs
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The cost of acquiring a new customer (direct sales,
mail, telemarketing, etc.)
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Initial Loss for any new customer
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There will also be some maintenance costs
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