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2003 Prentice Hall, Inc. Framework for Marketing Management, 11th Edition Slide 0 of 18

Chapter 3

Building CustomerSatisfaction, Value,and Retention

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2003 Prentice Hall, Inc. Framework for Marketing Management, 11th Edition Slide 1 of 18

Objectives

Understand how companiesdeliver customer value and

satisfaction.

Identify the factors that make ahigh performance business.

Understand how companiesattract and retain customers.

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2003 Prentice Hall, Inc. Framework for Marketing Management, 11th Edition Slide 2 of 18

Objectives

Realize how companies can

improve both customer and

company profitability.

Understand how companies can

deliver total quality.

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2003 Prentice Hall, Inc. Framework for Marketing Management, 11th Edition Slide 3 of 18

Customer Satisfaction

Satisfaction is defined as . . .

a persons feelings of pleasure ordisappointment resulting fromcomparing a products perceived

performance (or outcome) inrelation to his or her expectations.

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2003 Prentice Hall, Inc. Framework for Marketing Management, 11th Edition Slide 4 of 18

High Performance Businesses

Keys to Success

Stakeholders

Processes

Resources

Organization

Identify several

stakeholder

groups for yourUniversity

How might the

needs of thesegroups conflict

with each other?

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2003 Prentice Hall, Inc. Framework for Marketing Management, 11th Edition Slide 5 of 18

High Performance Businesses

Keys to Success

Stakeholders

Processes

Resources

Organization

New productdevelopment

Customer attractionand retention

Order fulfillment

Reengineering workflows

Building crossfunctional teams

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2003 Prentice Hall, Inc. Framework for Marketing Management, 11th Edition Slide 6 of 18

High Performance Businesses

Keys to Success

Stakeholders

Processes

Resources

Organization

Resources includelabor, materials,

machines, energy,and information

Outsourcing vs.

ownership: Ownand nurture corecompetencies

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2003 Prentice Hall, Inc. Framework for Marketing Management, 11th Edition Slide 7 of 18

High Performance Businesses

Keys to Success

Stakeholders

Processes

Resources

Organization

Organization refersto the organizations

policies, structures,and corporate culture

Corporate culture:shared experiences,

stories, beliefs, and

norms within an

organization

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2003 Prentice Hall, Inc. Framework for Marketing Management, 11th Edition Slide 8 of 18

Core Business Practices

Market Sensing

Customer Acquisition Customer Relationship

Management

Fulfillment Management

New Offering Realization

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2003 Prentice Hall, Inc. Framework for Marketing Management, 11th Edition Slide 9 of 18

Customer Retention

Reducing customer churn (defection)

is highly desirable

Define and measure retention rate

Identify causes of attrition

Estimate profit lost from customer

defection (customer lifetime value) Estimate cost to reduce defection; take

appropriate action

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2003 Prentice Hall, Inc. Framework for Marketing Management, 11th Edition Slide 10 of 18

Drivers of Customer Equity

Brand Equity

Relationship Equity Value Equity

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2003 Prentice Hall, Inc. Framework for Marketing Management, 11th Edition Slide 11 of 18

Strong Customer Bonds

Keys to Success

Adding FinancialBenefits

Adding Social

Benefits

Adding StructuralTies

Frequency

programs

Club

memberships

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2003 Prentice Hall, Inc. Framework for Marketing Management, 11th Edition Slide 12 of 18

Strong Customer Bonds

Keys to Success

Adding FinancialBenefits

Adding Social

Benefits

Adding StructuralTies

Personalize

customer

relationships

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2003 Prentice Hall, Inc. Framework for Marketing Management, 11th Edition Slide 13 of 18

Strong Customer Bonds

Keys to Success

Adding FinancialBenefits

Adding Social

Benefits

Adding StructuralTie

Create long-term

contracts

Charge less for

ongoing

purchases

Link product to

long-term service

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