CREATING CUSTOMER VALUE, SATISFACTION AND LOYALTY Chapter 5
May 16, 2015
CREATING CUSTOMER VALUE,
SATISFACTION AND LOYALTY
Chapter 5
Customers tend to be value-maximizers, within the bounds of search costs, limited knowledge, mobility and income.
Customer estimate which offer will deliver the most perceived value and act on it.
Customer perceived value (CPV)The difference between all benefits and all costs of an offering as perceived by the customers.
Benefits:Monetary value of the
bundle economic, functional and
psychological benefits of a product.
Costs:Bundle of costs customer
expect to incur in evaluating, obtaining, using
and disposing a product.Including monetary, time,
energy and psychic costs.
FB is measured in moneymoney, time, durationor physical measures
PB gives to the customer a pleasant feeling such as
self esteem, feeling of power, pleasant view and
so on.
MKTG PLAN !MKTG PLAN !
What value/benefits that
are important to customers ?
Performance < Expectation = Dissatisfied
Performance = Expectation = Satisfied
Performance > Expectation = WOW (Delighted)
A person’s feelings of pleasure or
disappointment resulting from comparing
a product’s perceived performanceperformance in
relation to his/her expectationsexpectations.
If expectation is raised too high, the buyer
is likely to be disappointed.
However, if the expectation is set too low,
it wont attract enough buyers
100 DissatisfiedCustomers
4% complain
96% don’t complain
75% retained
25% exit
5% retained
95% exit
3
1
5
91100
CCustomer Dissatisfaction
and Customer Exit
Ronni have already made a reservation
for a standard room at Tunas Hotel and
the booking has been confirmed.
However, when he arrived at the hotel a
week later, he was told that all standard
room has been taken up on that day.
He insisted to see the customer service
manager (CSM).
As a CSM, what your actions would
look like?
A Highly Satisfied Customer Generally:
a. Stays loyal longer
b. Buys more as the company introduces new
products and upgrades existing products
c. Talks favorably about the company and its
products
d. Pay less attention to competing brands
e. Less sensitive to price
f. Offers product or service ideas to company
g. ????????????????????????????
A Highly Satisfied Customer Generally:
a. Stays loyal longer
b. Buys more as the company introduces new
products and upgrades existing products
c. Talks favorably about the company and its
products
d. Pay less attention to competing brands
e. Less sensitive to price
f. Offers product or service ideas to company
g. Costs less to serve than new customers
because transactions are routine.
Methods to Measure Customer
Satisfaction:
• Customer complaint and
recommendation system
• Periodic surveys using standard
questionnaires
• Lost customer analysis (exit
interview)
• Mystery shoppers (ghost
shopping)
Although the customer-centered firm seeks to create high customer
satisfaction, that shouldn’t be their ultimate goal.
Why?
The company must operate on the philosophy that it is
trying to deliver a high level of customer satisfaction
subject to delivering acceptable levels of
satisfaction to the other stakeholders
The key to customer
satisfaction/loyalty or customer
retention is:
Relationship MarketingRelationship Marketing
Relationship marketing is about
forming a strong customer
bonds.
20-80 rule20-80 rule
The top 20% of the customers may
generate as much as 80% of the company’s
profits.
3 RETENTION-BUILDING APPROACHES:
1. Adding financial benefits
a. Frequency programs (FPs) – to
rewards customers who buy frequently
and in substantial amounts.
b. Club membership programs – open to
everyone who purchase a product or it
can be limited to an affinity group or to
those willing to pay a small fee.
2. Adding social benefits
- Cementing social bonds with customers by individualizing or
personalizing customer relationships
3. Adding structural ties
- Company may supply customers with special equipment or
computer links that help customers manage orders, payroll, and
inventory.
- More to B2B marketing
3. Adding structural ties
- Company may supply customers with special equipment or
computer links that help customers manage orders, payroll, and
inventory.
- More to B2B marketing