MARKET RELATINGSatisfaction TheoryWhat else do we know about satisfaction?What’s the answer?Lifetime Customer ValueHow LT Relationships Pay OffBuilding RelationshipsRelationship SpectrumLevels on Which Relationships are FormedWho Needs CRM?Devising a Relationship StrategySlide 12Slide 13Slide 14Slide 15MARKET RELATINGCUSTOMER RELATIONSHIP MANAGEMENTSatisfaction TheorySatisfaction is determined by comparing expectations to performance•When P > E, there is positive disconfirmation, or satisfaction•When E > P, there is negative disconfirmation, or dissatisfactionManagerial implication?Satisfaction-dissatisfaction continuumWhat else do we knowabout satisfaction?What’s the answer?Lifetime Customer ValueMultiply a customer’s expected # of visits times the average amount of money spent per visit.Deduct costs of acquiring and servicing.Add in value of accounts the customer refers to you.Discount the sum appropriately for the time period being analyzed.How LT Relationships Pay OfAcquisitionCostBase ProfitRevenue GrowthCost SavingsReferralsPrice Premium0 1 2 3 4 5 6 7Building RelationshipsWhat are successful relationships built on?What kind of relationship will be most beneficial to firms?Relationship SpectrumTransactional exchangesValue-adding exchangesCollaborative exchangesLevels on Which Relationships are FormedConsumer-ProductBondsConsumer-ConsumerBondsConsumer-FirmBondsConsumer-BrandBondsWho Needs CRM?IIIIIVII AirlinesPackaged Goods MfrsGas Stations PharmaciesComputer Systems Cos.BookstoresUniform HighlydiferentiatedCUSTOMER NEED Uniform Highly diferentiated CUSTOMER VALUATIONSDevising a Relationship StrategyCreate a databaseof customer knowledgeCreate a databaseof customer knowledgeAnalyze reasons for loyalty and defectionCreate a databaseof customer knowledgeSelect customers toattract and retainAnalyze reasons for loyaltyand defectionCreate a databaseof customer knowledgeDesign and implement programs focused on customer retentionSelect customers totarget and retainAnalyze reasons for defectionand loyaltyCreate a database of customer knowledgeMonitor performance forcontinuous improvementDesign and implement programfocused on customer retentionSelect customers to target and retainAnalyze reasons for loyaltyand