Chapter 5 Building Customer Satisfaction Value and Retention

Chapter 5 Building Customer Satisfaction, Value and Retention and Loyalty 18/3/2003

What is a Customer? “The customer is value-maximizer, within the bounds of search costs and limited knowledge, mobility and income. ” 18/3/2003

What is needed by the Customer? • Value • Satisfaction • Retention 18/3/2003

Customer Value 18/3/2003

Customer Value “ Is the bundle of benefits expected” Customer Cost “ Is the bundle of costs expected” • What is Customer Delivered Value? Customer Delivered Value = Total Customer Value - Total Customer Cost 18/3/2003

Customer Delivered Value Total Customer Cost Product Value Money Cost Service Value Time Cost Personnel Value Energy Cost Image Value Psychic cost Determinants of Customer Delivered Value 18/3/2003

What are the factors that may hinder or stop the full implementation of the Customer Delivered Value System? • The buyer might be under orders to buy at the lowest cost. • Concentrating on the short-term benefits and over looking long term costs. • The effect of the Relation between the sales persons and the consumer. 18/3/2003

Customer Satisfaction 18/3/2003

What is Satisfaction? • It is a person’s feeling of pleasure or disappointment resulting from comparing a product’s perceived performance (or outcome) in relation to his or her expectations. Satisfaction = function (perceived performance /expectations) 18/3/2003

What are the tools for tracking and measuring Customer Satisfaction • Complaint and Suggestion system • Customer Satisfaction Surveys • Ghost Shopping • Lost Customers Analysis 18/3/2003

Attracting and Retaining Customers 18/3/2003

Benefits of Highly Satisfied Customer • • Stays Loyal Longer Buys more Talks favorably about the company Offer products and services ideas to the company • Costs less to serve than new customer 18/3/2003

Why retain Customers? • Acquiring a new customer costs 5 times retaining an old one. • The average company loss about 10% of its customers annually • Customer rate increase with time. 18/3/2003

What are the types of marketing? • Basic Marketing: selling the product • Reactive Marketing: selling the product and encouraging further contact • Accountable Marketing: Follow up on Customers satisfaction. • Proactive marketing: involving customers in product and company improvements • Partnership marketing: encouraging the customer to become a stakeholder in the company 18/3/2003

Tools to improving the marketing impact • Adding financial benefits – Adding social benefits – Individualizing and personalizing customer relationship 18/3/2003