Chapter5 creating customer value, satisfaction, and loyalty sept23
CREATING CUSTOMER value, satisfaction and loyalty
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Transcript of CREATING CUSTOMER value, satisfaction and loyalty
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CREATING CUSTOMER value, satisfaction and loyalty
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CREATING CUSTOMER value, satisfaction and loyalty CONNECTING WITH CUSTOMER
Presented by:
SAYED SAJJAD HUSSAIN SHAH
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ROADMAP
1. What are customer value, satisfaction, and
loyalty, and how can companies deliver them?
2. What is the lifetime value of customers, and
how can marketers maximize it?
3. How can companies attract and retain the right
customers and
cultivate strong customer relationships?
4. What are the pros and cons of database
marketing?
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Building customer value, satisfaction and loyalty
Creating loyal customer is the heart of every business.
Businesses succeed by getting, keeping and growing customers
Customer are the only reason to build factories, hire employees etc.
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Organizational Charts
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Customer perceived value
CPV : the prospective consumer’s evaluation of all benefits and the perceived alternatives.
Total customer value: the perceived monetary value of the benefit of economic, functional and psychological benefits.
Total customer cost: the bundle of costs customers expect to incur in evaluating, using and disposing
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Customer perceived value
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Determinants of Customer perceived value
Total Customer
Cost
Customer Perceived Value
Total Customer Benefit
Product Benefit
Time Cost
Product Cost
Service Benefit
Personnel
Benefit
Psychological Cost
Image Benefit
Energy Cost
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Customer Value and Satisfaction
Total Customer Satisfaction
Satisfaction: feelings of pleasure or disappointment
Customer Expectations : 12/ 24 hours guarantee
Delivering High Customer Value
Value proposition: benefits the company promise such as Volvo -> gaining from customer experience
Value-delivery system -> all experiences the customer obtaining and using
Measuring Satisfaction
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Total Customer satisfaction
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Customer Value analysis
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Tools for Tracking and Measuring Customer Satisfaction
A customer-centered organization makes it easy for customers to register suggestions and complaints. Some customer-centered companies-P&G, General Electric, Whirlpool—establish hot lines with toll-free numbers. Companies are also using Web sites and e-mail for quick, two-way communication.
Studies show that although customers are dissatisfied with one out of every four purchases, less than 5 percent will complain. Most customers will buy less or switch suppliers. Responsive companies measure customer satisfaction directly by conducting periodic surveys. While collecting customer satisfaction data, it is also useful to ask additional questions to measure repurchase intention and to measure the likelihood or willingness to recommend the company and brand to others.
Complaint and suggestion systems:
Customer satisfaction surveys:
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Creating Long-term Loyalty Relationships
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Define
d
A person’s feelings of pleasure or
disappointment that result from
comparing a product’s perceived performance to (or
outcome) to expectations.
Satisfaction
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Define
d
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Customer Satisfaction
Dissatisfied Satisfied Delighted
Expectations
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Dissatisfied :/
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Customer Expectations
Expectations
Previous purchasesFriends
adviceMarketers’ / competitors
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Monitoring Satisfaction
Customer Complaints
Measurement Techniques
Influence of Customer Satisfaction
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Measurement TechniquesCustomer Loss Rate
Mystery Shopper
Surveys
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Are You Satisfied With Out Customer Service
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Influence of Customer Satisfaction
Customer satisfaction
Speed of communication
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Customer Complaints
25%Dissatisfied
5%Complain
95%Stop buying
54% - 70%Buy again if resolved
95%If resolved quickly
Tell 5 people
Tell 11people
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Complaints
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Product and Service Quality
Quality
Profitability
Satisfaction
Performance Conformance
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Maximizing Customer Lifetime Value
20% of Customers
80% of Profits
Customers
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Customer Profitability
Customer Lifetime Value
Customer Profitability Analysis
Profitable
Unprofitable
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Define
d
A person, household, or company that over time yields a revenue stream exceeding by an acceptable amount the company’s cost stream for attracting, selling, and serving that customer.
A Profitable Customer
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Figur
e
5.3
Customer-Product Profitability Analysis
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CRM Strategies To Increase The Value Of Customer Base
Reduce the rate of defectionReduce the rate of defection
Increase longevityIncrease longevity
Enhance “share of wallet”Enhance “share of wallet”
Terminate low-profit customers
Terminate low-profit customers
Focus more effort on high-profit customersFocus more effort on high-profit customers
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Customer Retention
Acquisition of customers can cost five times more than retaining current customers.
The average customer loses 10% of its customers each year.
A 5% reduction to the customer defection rate can increase profits by 25% to 85%.
The customer profit rate increases over the life of a retained customer.
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The Customer Development Process
Prospects
Suspects
Disqualified
First-timecustomers
Repeatcustomers Clients Members
PartnersEx-customers
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Using the Database
To identify prospectsTo identify prospects
To target offersTo target offers
To deepen loyaltyTo deepen loyalty
To reactivate customersTo reactivate customers
To avoid mistakesTo avoid mistakes
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Estimating Lifetime Value
Annual customer revenue: $500
Average number of loyal years: 20
Company profit margin: 10
Customer lifetime value: $1000
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Steps for Creating Customer Evangelists
Customer plus-delta
Napsterize your knowledge
Build the buzz
Create community
Make bite-size chunks
Create a cause
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Database Key Concepts
Customer database
Database marketing
Mailing list
Business database
Data warehouse
Data mining
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Don’t Build a Database When
The product is a once-in-a-lifetime purchase
Customers do not show loyalty
The unit sale is very small
The cost of gathering information is too high